Attornies General Foreclosure Settlement Summary

Fact Sheet: Mortgage Servicing Settlement

Financial Relief for Homeowners:

The servicers will be required to dedicate $20 billion to various forms of relief to borrowers.

Principal reduction.


At least $10 billion will be dedicated to reducing principal for borrowers who, as of the date of the settlement, owe more on their mortgages than their homes are worth and are either delinquent or at imminent risk of default.



At least $3 billion will be dedicated to a refinancing program for borrowers who are current on their mortgages but who owe more on their mortgages than their homes are worth. All borrowers who meet basic eligibility criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates.

Other forms of relief.

To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months – and additional cash payments required for any servicer that fails to meet its obligation within three years.

Servicers will receive only partial credit for every dollar spent on some of the required activities, so the settlement will provide direct benefits to borrowers in excess of $20 billion.

Servicers will be required to dedicate up to $7 billion to other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their homes at a loss as a result of a Permanent Change in Station, and other programs.

Payments to State and Federal Governments:

In addition to the $20 billion of financial relief for homeowners, the servicers will make $5 billion in cash payments to the states and federal government. Of the $5 billion:

Payments to Foreclosed Borrowers.


Through the settlement, a $1.5 billion Borrower Payment Fund will be established to provide cash payments to borrowers whose homes were sold or taken in foreclosure between and including Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. This program is distinct from, but complimentary to, the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct.

State and federal payments.


misconduct, fund housing counselors, legal aid, and other similar purposes determined by state attorneys general. The funds coming to the federal government will primarily be allocated to the FHA Capital Reserve Account, with portions also going to the Veterans Housing Benefit Program Fund and to the Rural Housing Service.

The remaining funds will go to state and federal governments to be used to repay public funds lost as a result of servicer


Financial Obligations of Individual Servicers:


Federal and State Payments

Relief to Borrowers

(Principal Writedown, Refinancing,

and Other Programs)

Ally Financial, Inc.

$110 million

$200 million

Bank of America Corp.

* including EDNY FHA origination settlement

$3.24 billion

$8.58 billion

Citigroup, Inc.

$415 million

$1.79 billion

J.P. Morgan Chase & Co.

$1.08 billion

$4.21 billion

Wells Fargo & Co.

$1.01 billion

$4.34 billion


We welcome your comments and suggestions