Attorney General J.B. Van Hollen and Gov. Scott Walker revealed in a conference Thursday a national settlement which will bring $140 million to Wisconsin to go toward damages for families affected by the foreclosure crisis.
Van Hollen and Walker said Wisconsin joined a landmark $25 billion joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices.
“For those who have suffered damage to unfair practices related to foreclosure,” Walker said, “not only will they be getting compensation, but compensation will also be given to make sure these types of practices don’t continue again in the future.”
During the conference, Van Hollen said almost half of the funds, more than $60 million, would go to direct relief for loan holders.
He also said $17.2 million would go toward payments of up to $2,000 for eligible Wisconsin borrowers who lost their homes to foreclosures during the crisis, and $31.3 million in refinancing benefits for eligible borrowers who are currently making payments but owe more than their home is worth.
“It is these types of success that we bring about through bipartisan efforts time and time again [that] we operate together in the best interest of consumer protection,” Van Hollen said.
A statement released by Van Hollen before the conference also specified $31.6 million of the funding will be used as a payment to the state, which may be used for compensation to the state and additional relief to foreclosure victims.
The funds are part of a larger settlement announced by U.S. Attorney General Eric Holder early Thursday morning. Holder said the federal government and 49 state attorneys general reached a $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.
President Barack Obama said in a statement Thursday he is glad the funds will be going to the 4 million families who had to foreclose homes during the crisis.
“We have reached a landmark settlement with the nation’s largest banks that will speed relief to the hardest-hit homeowners, end some of the most abusive practices of the mortgage industry and begin to turn the page on an era of recklessness that has left so much damage in its wake,” Obama said in the statement.
The five mortgage services included in the federal settlement were Bank of America, J.P. Morgan Chase & Co., Citigroup, Residential Capital and Wells Fargo, the statement said.
Milwaukee Mayor Tom Barrett said in a statement funds should be directed to the communities hit the hardest in the foreclosure practices in response to the allocated funds.
“All of the settlement funds, including the $31.6 discretionary payment, should be used to help mitigate local concerns,” Barrett said. “Not one dime should be used to fund the unbalanced state budget. Families and local communities did not cause the foreclosure crisis, nor did they have a hand in the mismanaged state budget.”
When Van Hollen said the vast majority of the funds would be going to Milwaukee, where a majority of foreclosures in the state occurred during the crisis.
