Five major banks are shelling out more than $25 billion to help clean up the housing mess. It is the largest consumer financial protection settlement in history.
The federal government accused the banks of deceiving homeowners and breaking the law. Now relief is on its way and it is not costing taxpayers a dime. The settlement should help millions of homeowners and Texas is getting a windfall.
"The top box is for Goodwill," said Karen Sartell, pointing to a stack of boxes. The Arlington woman is packing up and moving out. She no longer owns her home. She says to avoid foreclosure she was forced to give it back to her mortgage company after falling behind on her payments.
"Morally this is so wrong," Sartell said. "They have a legal license to steal. That equity is all that I had."
"They said you give us $2,700 and do all the paper documents and we will take it from there," said Carmela Tranthan.
Tranthan says when her bank would not lower her interest rate she went to a Phoenix company to help her refinance her home. The company promised a 2.5 percent interest rate. Now she cannot get anyone to answer the phone or return calls.
"As soon as we sent them the money, that was it," Tranthan said.
Both of these families are in need of a rescue and on the surface it looks like one is coming.
"America's biggest banks, banks that were rescued by taxpayer's dollars will be required to right these wrongs," said President Barak Obama announcing the settlement. Last month, attorneys general from across the country negotiated a deal. Twenty five billion dollars from some of the largest banks is going toward housing relief and individual states also get a piece of the pie. Our take in Texas is $134 million.
So where is that money going? That is the $134 million question. Since our legislature meets every two years, lawmakers in Texas won't be able to decide until next year if homeowners get any of it. The money is now just sitting in Austin.
"This is an absolutely golden opportunity," said Robert Doggett, a lawyer who works with homeowners through Texas RioGrande Legal Aid.
Doggett says Texas could create a safer loan program that could help long term. But many states are quickly grabbing that money to pay off other debt since the federal government is only recommending the money go for housing relief.
He says this is the time for homeowners to speak up and contact their lawmakers.
"We are hopeful. There are definitely folks that think it should be used for the way it was intended which is to address foreclosures and prevent foreclosures instead of going to the general fund," Doggett said.
Part of the settlement will also require banks to lower interest rates and reduce principle for homeowners who owe more than their house is worth which may help homeowners like Tranthan. She is upside down and desperately needs a lower fixed rate.
"We are struggling. We make things by the skin of our teeth," Tranthan said.
And homeowners who were foreclosed on between January 2008 and December 2011 may qualify for a pay out. The banks will be forced to shell out $ 1.5 billion to homeowners who lost their homes during that time.
That won't help homeowners like Sartell who lost her home in 2012. Her only hope is that lawmakers in Austin will use the $134 million to help Texas homeowners.
"I think they should do what is right. Use it for what it was meant for. Wake up people. You are screwing with the American people," Sartell said.
Fox 4 tried to contact Integris Support Services in Phoenix but got no response.
If you need assistance this is the time to contact your mortgage servicer. There are only certain companies involved. You need to find out if you are eligible for modification.
Experts warn homeowners to never pay a third party any up front fees. That is a giant red flag.
For more information about the National Mortgage Settlement go to: nationalmortgagesettlement.com.
Representative Jim Pitts is Chairman of the Appropriations Committee in Austin. He can be contacted by email or phone, or at www.house.state.tx.us/members/member-page/?district=10
Nationstar Mortgage sent this statement to Fox 4 regarding Karen Sartell's loan:
"We are committed to treating borrowers fairly, and we take every reasonable step to help borrowers struggling to make their mortgage payments – including Ms. Sartell – understand their options. In Ms. Sartell's case, we took a number of steps to help her pursue all available options, and as a last resort we completed a deed in lieu of foreclosure in January. In addition, we have not received any documentation from Ms. Sartell consisting of an offer on her home to date."
KDFW FOX 4
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