And unlike big consumer protection settlements in the past, the Legislature won't be able to get its hands on these dollars to balance the state budget, Attorney General Rob McKenna said during a Seattle news conference.
McKenna said he met with legislative leaders, plus members of the governor's staff, earlier this week to brief them on the settlement he and seven other state attorneys general helped negotiate and to make sure they understood that these dollars will be protected by a court order and must be used as prescribed.
The state will get $483 million to help borrowers with loan modification, relocation help and other assistance for those who can't afford their mortgage payments.
Another $84 million will help Washington borrowers who are current on their mortgage payments but owe more than their homes are worth.
People who lost their homes through foreclosures may be eligible for a $2,000 payment. And the state will get another $45 million for foreclosure prevention hotlines, free legal help for borrowers and other assistance.
"Our No. 1 goal is to reform practices that harmed consumers," McKenna said. He noted that banks that do not comply with the terms of the settlement will be subject to multi-million dollar fines.
Thousands of Washington residents will benefit from the settlement between 49 states, the federal government and five big mortgage lenders, McKenna said. The settlement affects about 20 percent of the U.S. mortgage market and others will benefit from the way the results of this agreement will help stabilize the real estate market.
Under the national agreement, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will reduce loans for nearly 1 million households that owe more than their homes are worth. They will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.
Consumers were advised to check online or call the settlement hotline to see if they will benefit. Only people whose mortgages are held by these banks - not those whose loans were just serviced by them - will be party to the settlement, McKenna said.
The message for Washington consumers: "Don't give up. Look into whether or not you're eligible. We may have more news about other banks in the future as well," McKenna said.
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