Settlement isn't doing enough to help families save homes

MCRC was one of the first organizations to highlight problems with abusive and predatory mortgage products in Maryland. We've been working for years on a number of policies to make housing affordable and sustainalbe for Maryland's families, while reducing the number of foreclosures in the state. Read our full report: Protecting Homeownership: The Challenge Of Preventing Abusive Lending And Foreclosure Practices.

The $25 billion National Mortgage Settlement signed by five big banks and 49 state attorneys general in Feb. 2012 promised to offer relief families struggling to keep up with their mortgages across the country. But the fifth and final progress report on the settlement, released by the Office of the Settlement Monitor in Sept. 2013, confirms that far too few homeowners have gotten the kind of relief from the settlement that helps them save their homes. 

At the same time, the settlement monitor's office, the CFPB, some state attorneys general along with thousands of complaints from consumers raise serious questions about whether the banks are living up to the servicing standards the settlement mandates.

In response to those concerns the settlement monitor's office has introduced new tests to be conducted in 2014 to determining whether the banks are meeting the pact's servicing standards.

You can:

Asking Baltimore to use settlement funds to help families save their homes

Baltimore City is receiving $10 million in housing aid under the settlement. But under the city's current plans, none of the money will be spent to help families facing foreclosure save their homes. The city instead plans to use almost all the money to fund the demolition of more than 550 dilapidated homes in troubled neighborhoods. 

On Aug. 1, MCRC wrote Baltimore Housing Commissioner Paul Graziano to ask that the city use some of the settlement money to help families save their homes. Twelve other MD fair housing and social justice groups also signed on to the letter. You can also read the full letter and list of signatories.

To make the settlement more effective, MCRC is calling for:

  • The big banks to step up the pace of principal reductions.
  • The Office of the National Settlement Monitor to penalize banks that aren't living up to the terms of the settlement..
  • The Settlement Monitor to demand census-tract level data on settlement relief to help us see if the communities hardest hit by the foreclosure crisis are getting the relief they need.

Demanding data on who's getting help from the settlement

MCRC and other fair housing advocates have long been concerned that most of the settlement relief appears to have gone to upper-middle income and wealthier communities, with the big banks offering few principal reductions or other relief to the low and middle-income areas hit hardest by the foreclosure crisis.

But we can't know for certain where the relief has gone because the banks aren't required to report that information. That's why MCRC has for many months been asking the Office of the National Settlement Monitor to mandate that the banks break down the data on settlement relief by zip code or census tract. 

In Nov. 2012, MCRC, joined by other MD fair housing groups, wrote the Office of the National Settlement Monitor to ask for this data and demand that it be mandated in any future settlement. You can:

For more background on the national mortgage settlement, you can: