(Host) Vermont will get $6.7 million under a national settlement with mortgage lenders over foreclosure abuses.
Attorney General Bill Sorrell says the settlement will provide financial relief to distressed homeowners and will prevent banks in the future from taking advantage of borrowers.
VPR’s John Dillon has more:
(Dillon) The $26 billion settlement is between the federal government, the states and five of the nation’s largest mortgage lenders,
Attorney General Sorrell says that while Vermont was spared the worst of the foreclosure crisis, the settlement will put money in the pockets of some borrowers. And he says it will reform mortgage loan servicing practices to prevent abuses in the future.
(Sorrell) There will be no ‘robo signing’ which we saw here in Vermont, where representatives of these lenders were signing affidavits in foreclosure proceedings where they didn’t have a file in front of them, or they had no personal knowledge of what they were attesting to swearing to.
(Dillon) Vermont’s share of the settlement includes $3.1 million in benefits to borrowers.
(Sorrell) That could mean principal reductions of outstanding mortgages, support for refinancing in today’s historic low mortgage rates, and other forms of relief.
(Dillon) For example, Vermont borrowers who lost their homes to foreclosure will be eligible for $2,000 payments to compensate for any abuses they may have experienced while the loans were being serviced.
Sorrell says borrowers still have the right to sue the banks on their own. Bank officials could still face criminal prosecution.
(Sorrell) One of the things that’s important to know about this settlement is what it does not do. And first, it does not release any criminal liability on the part of anyone in the lending industry.
(Dillon) Sorrell says that Vermont banks acted responsibly during the mortgage crisis. But he says the settlement does include many of the institutions that bought loans from local banks.
The state also reaps a financial windfall under the settlement. The Department of Banking, Securities and Health Care Administration will get $1 million while the state general fund will get a direct payment of almost $2.7 million. $200,000 of the state’s share is expected to go to regional homeowner centers to help struggling borrowers.
For VPR News, I’m John Dillon in Montpelier.