Del. AG commends military protections in $25B foreclosure settlement
WASHINGTON (Legal Newsline) - Delaware Attorney General Beau Biden praised the recent $25 billion national settlement with five mortgage servicers on Tuesday for including provisions that protect service members and their family members.
Biden testified before the Senate Committee on Banking, Housing and Urban Affairs on Tuesday during a hearing called "Empowering and Protecting Servicemembers, Veterans and Their Families in the Consumer Financial Marketplace: A Status Update."
Biden, who spent a tour of duty in Iraq with the Delaware Army National Guard, said he would not have joined the settlement if not for provisions relating to the Servicemembers Civil Relief Act.
"I know that the need to expand the SCRA as well as strongly enforce its current provisions is well understood by the members of this committee," Biden said. "You have heard the stories about countless servicemembers who have had to contend with the frustration and uncertainty of mishandled mortgages and other SCRA infractions while also carrying out the duties of service.
"Servicemembers should not have to worry about these issues while deployed. They must be able to focus on the mission without distraction."
The national settlement made several changes relating to permanent change of station orders, mortgages taken out after staring military services and methods for mitigating losses incurredbecause of military life demands.
The settlement established:
-That PCS orders must be considered when servicers and banks are making hardship determinations about deeds in lieu, short sales and loan modifications;
-An increase in servicemember access to loss mitigation options such as a mandate that information and contact with SCRA-trained employees is readily available;
-That servicers go beyond SCRA requirements to make sure that more borrowers are entitled to assistance before foreclosure; and
-That in most instances, homes of active duty servicemembers deployed in combat areas cannot be foreclosed on.
Other provisions include making direct payments to servicemembers who experienced wrongful foreclosures and interest charged above the six percent allowed by the SCRA, which will come from funds secured on top of the $25 billion amount for the settlement.
"We were able to achieve a great deal with this bipartisan settlement, but as is evident from the servicing guidelines issued by the (Consumer Financial Protection Bureau) last week, we must work to make such changes permanent," Biden said.
"My fellow attorneys general and I stand together across state and party lines in our commitment to vigilant enforcement. This settlement was an important step in the right direction, but a great deal of work remains to be done."
The national settlement was made in February with the country's five largest loan servicers including Wells Fargo, JPMorgan Chase, Citi, Bank of America and Ally/GMAC.
Biden and Delaware Gov. Jack Markell announced a plan on Thursday to use funds from the settlement to help Delaware residents harmed by the housing crisis.
Biden's office secured over $45 million for Delaware, with $35 million provided by banks to former and current homeowners for loans and $11.7 million paid directly to the state.
"The recovery of the housing market is the best way to keep the economy moving forward, but it won't happen without help for homeowners facing foreclosure," Biden said.
"A foreclosure not only ruins the financial life of the borrower, but also causes neighboring home values to plummet, and leaves communities with vacant properties that are magnets for crime.
"We're putting the funds my office secured to work helping Delawareans avoid foreclosure, strengthening our housing market and revitalizing our economy."
The plan would allocate $4 million to the Delaware Emergency Mortgage Assistance Program, $3.5 million to fund housing counselors and outreach and education programs for homeowners, $2.75 million to Biden's office for continuing enforcement and fraud investigation initiatives, $888,923 in grants to support legal representation for homeowners and $500,000 to the state's new Mortgage Mediation Program.