Hawaii Part of Landmark $25B Foreclosure Relief Deal

US House of Representatives Mazie Hirono. File. photo.

By Sonia Isotov

Hawaii is one of 49 states that agreed to a $25 billion settlement with the nations five largest mortgage lenders, according to the US Dept. of Justice on Thursday.

“This agreement is a promising step that will provide the State of Hawaii approximately $60-70 million to help responsible homeowners stay in their homes by meeting their financial commitments,” said Congresswoman Mazie Hirono, a member of the Congressional Housing Stabilization Task Force.

“This agreement is also important because it doesn’t let the banks off the hook. It requires them to make much-needed lending reforms and institutes stiff penalties if they fail to meet the terms of the agreement.”

The US Department of Justice, Department of Housing and Urban Development, and 49 State Attorneys General (including Hawaii Attorney General David Louie) announced a $25 billion agreement between federal and state governments and the nation’s five largest mortgage lenders: Bank of America, JP Morgan Chase, Wells Fargo, Citi, and Ally Financial to address mortgage loan servicing and foreclosure abuses.

The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.

Shaun Donovan, US Secretary of the Department of Housing and Urban Development (HUD). Courtesy of HUD.

“This historic settlement will provide immediate relief to homeowners, forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan, in a written statement.

Lenders will provide at least $20 billion in financial relief for homeowners, including principal reduction, refinancing, and forbearance. They will provide at least $5 billion directly to federal and state governments to support foreclosure prevention efforts and compensate certain victims of fraud and abuse. The settlement also requires significant changes to the mortgage servicing process, and imposes financial penalties on banks that fail to meet the terms of the settlement.

Additional information on the settlement is available at http://nationalmortgagesettlement.com.