This presentation gives a summary of the National Mortgage Settlement Act, including key provisions of the Act and how it has benefited affected borrowers.

1. Understanding
the
National Mortgage
Settlement Act
By: Scott Potter, Attorney at Law

2. ABOUT JACKSONWHITE
We offer a full range of legal
services to assist individuals,
families, and businesses.
JacksonWhite was founded in
1983.
The firm has grown steadily
to include 24 highly
experienced attorneys.
We are proud to be one of the
largest law firms in the East
Valley.

3. SCOTT L. POTTER
Foreclosures, Real Property Interests, Title Claims

4. How Did We End Up Here?
2000 – Stock Market Crash: Dollars shift from stock market to housing.
Financial innovation = new lending types: interest only loans, zero down loans, interest
adjustable loans. Banks quickly securitize then pass risk to someone else.
2003-2007: Subprime loans increase from 332 billion to 1.3 trillion
2006 – Housing Market Peak
2007 – Housing Market Crash
2008 – Senate passes $700 billion bailout plan; fed
announces will provide $900 billion in short-term
loans to banks.
By 2008, 3 million foreclosures. AZ rate is 4%.
Over 3 million foreclosures in 2009 alone.
Amid concerns from consumers about lost
paperwork, missed deadline, and long delays, the 2013: number of foreclosures in
state attorneys general launched an investigation in AZ decreased by 56.2 %; the
October 2010. The National Mortgage Settlement is a first time since housing market
result of that investigation. crash, our rate is out of the top
four.

6. A History of Foreclosures in AZ

8. What is the National Mortgage Settlement Act?
February 2012, federal government and 49 state attorneys general announce
settlement.
Settlement will provide $25 billion in relief to distressed borrowers and
direct payments to states and federal government.
Arizona will get over $1.3 billion.
Holds banks accountable for wrongdoings on mortgage servicing and robo-
signing.
2nd largest consumer financial protection settlement in U.S. history.

10. The Banks
These 5 banks control an
estimated 60% of the mortgage
servicing market.

12. What About GSEs?
Government-sponsored enterprises (GSEs), Fannie Mae and Freddie
Mac, are not eligible for parts of this settlement because of the
position that the Federal Housing Finance Administrator has taken.
Homeowners with GSE-controlled mortgages will not directly benefit
from this settlement but they will see benefits through stabilizing
home values, new mortgage servicing standards, and reduced
foreclosures.

14. Key Provisions of the Act
1. Homeowners needing immediate loan modifications
2. Borrowers whose mortgages exceed value of home
3. Borrowers who lost home to foreclosure
4. Nationwide reforms to bank servicing standards
5. Payments to signing states
6. Attorney General oversight

15. What Loans are Covered?
The settlement focuses on principal reduction, aimed at forgiving
portions of some loans to stabilize the housing market.
Some investor-owned loans are affected, depending on the existing
agreements between the servicers and the investors.
Foreclosed Homeowners are eligible for payment if
they meet the following criteria:
• Loan foreclosed between1/1/08 & 12/31/11
• Loan serviced by 1 of 5 mortgage servicers
• Borrower made at least 3 payments on loan
• Borrower lived in or intended to live in property
at time of loan origination
• Property was 1-4 unit residential property
• Unpaid principal balance of first-lien mortgage
did not exceed $729,750 for a 1 unit property;
$934,200 for 2 unit; $1,129,250 for 3 unit; or
$1,403,400 for 4 unit.

16. Homeowners Needing Immediate Loan Modifications
Home owners who need loan modifications.
1st & 2nd lien principal reduction.
Banks are required to work off $17 billion in principal reduction
(among other forms of loan modification) across the country.

18. “Underwater” Borrowers
Borrowers whose mortgages exceed the value of their homes will be
able to refinance at present interest rates, even if they are current on
their payments.
Banks will be required to provide $3 billion in refinancing relief.

19. Borrowers Who Lost Home to Foreclosure
Borrowers who lost their homes between January 1, 2008 and
December 31, 2011 will be eligible to receive payments if their loans
were serviced by one of the 5 involved banks.
Banks will pay $1.5 billion to approximately 2 million eligible
borrowers. The minimum payout is $840 (checks are expected to
exceed this).

20. Claim Form
Borrowers who lost their home to foreclosure between Jan. 1, 2008 and
Dec. 31, 2011 and whose loans were serviced by one of the five
participating mortgage servicers, have received a Notice Letter or Claim
Form from the National Mortgage Settlement Administrator.
Claim forms were sent to eligible borrowers Sep 2012. Deadline to submit
form has passed for foreclosure victims. Checks are expected to mail mid-
summer of 2013.

22. Nationwide Reforms to Servicing Standards
• See all loan documents to ensure legality of potential foreclosure
• Opportunity to modify loans before foreclosure
• More, well-trained staff & prompt responses
• Single-point of contact

24. Payments to Signing States
Signing states will receive payments to help fund state foreclosure protection
efforts and consumer protection.

25. What Happens if the Banks Don’t Comply?
Attorney General Oversight:
Banks will be required to report compliance to independent
monitors, and will pay fines and suffer significant penalties for non-
compliance.
Monitors will follow strict set of objective measuring standards and
will oversee the carrying out of the settlement.

26. The Act Does Not:
• Release private claims by individuals, class action claims, or
claims against Mortgage Electronic Registration Systems
• Release criminal liability or grant criminal immunity
• Include the state of Oklahoma
• End state attorneys general investigations of Wall Street related to
financial fraud
• Address the banks failure to properly securitize loans; the state
attorneys general have released claims on these matters to instead
focus on obtaining release for homeowners, not hedge fund
investors

27. Is it Working?
Between March and December of 2012, over 550,000 homeowners received
almost $46 billion in consumer relief, with roughly $82,000 in average
benefits.
$300 billion allocated to housing counseling & legal aid for borrowers.
Banks have provided over $22.5 billion in principal reduction, lowering
monthly payments on 266,000 loans.
Total consumer relief is expected to grow to over $50 billion.

29. How Will the Act Affect
ATA Members?

30. Resources:
http://www.nationalmortgagesettlement.com/faq
http://www.huffingtonpost.com/shaun-donovan/mortgage-settlement-
helpi_b_2837307.html
https://www.azag.gov/foreclosure/mortgage-settlements
http://www.stockpickssystem.com/housing-market-crash-2007/
https://www.azpm.org/p/top-news/2013/3/14/23141-az-foreclosure-rate-falls/
http://www.frbsf.org/community/issues/assets/preservation/resources/foreclosure/ariz
ona_0409.pdf
http://www.foreclosureradar.com/arizona-foreclosures

31. spotter@jacksonwhitelaw.com
480-464-1111
www.jacksonwhitelaw.com