OKLAHOMA CITY (AP) — A program designed to help Oklahomans who lost their homes or experienced problems with their mortgages due to misconduct by their mortgage company has already helped 525 homeowners with up to $20,000 in compensation to help put their lives back together.
Administrators of the program hope to help hundreds more Oklahomans as the deadline for applying for the program's second phase draws near.
The Oklahoma Mortgage Settlement Fund was created last year after Attorney General Scott Pruitt's office reached a settlement with five of the nation's largest mortgage servicers following a multistate investigation into practices that wrongfully led to foreclosure or other mortgage issues for homeowners. The lenders are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and GMAC.
"We've been able to change a lot of people's lives for the better," said Assistant Attorney General Ethan Shaner, from the attorney general's Public Protection Unit that manages the fund.
"We're trying to reach as many people as possible," Shaner said.
The settlement followed an 18-month investigation by attorneys general in all 50 states and the Department of Justice into mortgage servicing practices by five lenders during the nation's mortgage and foreclosure crisis. Oklahoma was the only state that did not participate in a $25 billion settlement agreement with the mortgage lenders and reached a separate $18.6 million agreement with the lenders.
Pruitt said at the time he was concerned that the national settlement had broadened into an attempt by President Barack Obama's administration to restructure the mortgage industry rather than compensate victims of lending abuses. Pruitt, a Republican, said his decision to reach a separate agreement was based on legal principles and not political differences with the Democratic president.
The fund provides payments from $5,000 to $20,000 to homeowners who qualify. So far, 525 people who experienced problems with their mortgages have received payments averaging $11,206.
In May, Pruitt launched the program's second phase for Oklahomans who missed the deadline for applying for the first phase in September 2012. The new phase also extends the time frame for when harm occurred to include 2012.
The deadline for applying for the program's second phase is Dec. 31, and 450 people have already filed applications for compensation from the fund, Shaner said.
"Some have already been approved," he said. About $10 million remains in the mortgage fund, he said.
Direct compensation is available to Oklahomans who were harmed by a mortgage servicer during the foreclosure process on their primary residence by such practices as dual-tracking or robo-signing.
Dual-tracking is a practice where banks would tell homeowners they will work with them on a loan modification, refinancing or some other mortgage option while simultaneously pursuing foreclosure. In many cases the servicer would tell the homeowner to go delinquent on their loans for 90 days in order to get help. Once they went delinquent, the bank would act like it was working with them, but was actually keeping them on a dual track to foreclosure.
Robo-signing is the practice of having a computer robo-sign foreclosure documents or servicer employees sitting in a room signing hundreds of affidavits a day without the requisite personal knowledge of what entity owns the note, the identity of the borrower or the payment status on the note — facts required as proof that the proper parties are suing and being sued and that the loan is in fact delinquent.
Shaner said the misconduct by mortgage servicers was often the result of being overrun with foreclosures during the crisis.
"So they began to cut corners," Shaner said. "They just weren't prepared for the sheer volume they had to deal with."
In other cases, mortgage servicers misapplied payments, added fees that were not warranted, lost paperwork and forced homeowners to repeatedly reapply for mortgage modifications.
"These delays were actually intentional," Shaner said.
Along with direct payments from the state's fund, Oklahomans also may qualify for portions of the federal settlement. The settlement requires banks to work with homeowners on short sales, principle write-downs and mortgage modifications.
Homeowners who need help to avoid foreclosure or to negotiate a loan modification can also apply for a voucher for up to $5,000 worth of legal assistance from a private attorney through the attorney general's Resolution Oklahoma program.
The program includes a $1.27 million grant to Legal Aid Services of Oklahoma to provide free legal help on mortgage issues to lower-income homeowners and seniors who are currently facing mortgage issues as well as a voucher program in which Oklahomans who do not qualify for Legal Aid assistance but can't afford a lawyer can apply for free legal services for up to $5,000.
Resolution Oklahoma also provides free legal assistance for lower income Oklahomans and seniors through a partnership with Legal Aid Services of Oklahoma. The program is provided by a grant from the Oklahoma Mortgage Settlement Fund.Oklahoma Attorney General's Oklahoma Mortgage Settlement Fund at www.oag.ok.gov; email PublicProtection@oag.ok.gov; or call (405) 521-2029 or (918) 581-2885.