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Historic Settlement Affects Veterans, VA Borrowers

February 15, 2012


Historic Settlement Affects Veterans, VA Borrowers

The Department of Housing and Urban Development recently announced a historic $25 billion settlement between the federal government and five major lenders over loan servicing and foreclosure abuses.

According to a HUD press release, this arrangement offers “substantial financial relief to homeowners and establishes significant new homeowner protections for the future”.

The settlement, which involves Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly known as GMAC) is the result of investigations by the Department of Justice, HUD and the HUD Office of the Inspector General, plus state attorneys general and state banking regulators.

“This agreement–the largest joint federal-state settlement ever obtained–is the result of unprecedented coordination among enforcement agencies throughout the government,” said U.S. Attorney General Eric Holder.

“It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will ensure the abuses of the past are not repeated.”

Department of Housing and Urban Development Shaun Donovan said, “”This historic settlement will provide immediate relief to homeowners, forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers…”

This settlement has implications for veterans, who are specifically named in the settlement.

According to the HUD press release, “The agreement will also provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the four servicers that had not previously resolved certain portions of potential SCRA liability have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of SCRA since Jan. 1, 2006.”

We’ll talk more about this portion of the settlement in another blog post. For more information about the mortgage servicing settlement, visit To find your state attorney general’s website, go to and click “The Attorneys General.”

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  1. [...] In our previous blog post we mentioned that this settlement mentions veterans specifically. How does this landmark agreement affect VA borrowers and veteran home owners? [...]

  2. Jim

    Can I use a VA loan to buy land in order to build on???

  3. Steve Gaylo

    Hi Joe: I'm wondering if this settlement addressed any of the concerns about lenders applying unauthorized fees to VA loan closing costs, as I read in a news report last year? Sorry, I don't recall if that report, which I read in my local paper, actually named the lending institutions that were caught, or not.

  4. Joe A.

    Hi Joe. I have a problem. My wife lost her job a few years ago and we lost our house to Wells Fargo. Though it was a forecloser, We did end up selling it in a short sale, And received a letter that it had been paid in full. We closed on March 13th 2011, with one year almost up, I have no ideal where to go for a loan. I talked the the Rock Island federal credit union that I've been a member since 1981 and was turned down. I guess that shocked me since I'm a vet. We both work. though the wife is less then one year at her new job. I've been at mine 8 years. When we lost our house. My wifes sister and husban helped us by buying a fixer upper we found. with an agreement we would buy it back when we get financed. IT APPRISED at 60K was listed for 40k they paid 37K. we have about half of it done. spent about 10K on it. I think it would apprise at high 70's now. But all we want is 30K to pay them off. any suggestions where i might go ? Lowden iowa and Thanks ☺

    • Joe Wallace

      Hi Joe, I answer this question in detail at: Hope this helps!

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