Deal may net $500M for state’s strapped mortgage holders

Brian O’Connor, Detroit News

MI AG Bill Schuette

Checks for as much as $2,000 could be headed to Michigan residents who wrongly lost their homes to foreclosure between 2008 and 2011, Attorney General Bill Schuette announced Tuesday.

The state should get more than half a billion dollars, Schuette said, as part of a nationwide settlement worth up to $25 billion between the attorneys general of more than 40 states that is still being finalized.

The negotiations with five major lenders — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — would settle complaints that they foreclosed on homes with illegal, forged or incomplete documents, or wrongly turned down mortgage modifications. The deal wouldn’t absolve lenders of all wrong-doing, and homeowners would retain the right to sue.

The deadline for states to sign on was Monday, but those with significant foreclosure problems — including California, Florida, Massachusetts and others — are still negotiating. Schuette said he expected the agreement to be finalized this week. It then goes to a federal judge for approval. Tuesday was the first time the attorney general’s office had announced it would join the settlement, which has been led by the Iowa attorney general and been in the works for more than a year.

“We’ve been following it closely and felt that this was an important step…,” Schuette said.

Beyond the cash settlements to improperly foreclosed homeowners, Schuette expects the state to get $101 million that he wants used to aid trouble homeowners in the state, including foreclosure counseling, restitution to people who have been scammed in phony foreclosure prevention schemes, and aid to veterans and children left homeless by foreclosure.

The prospect of more money to bolster foreclosure prevention programs sounds good to Mary Lou Keenon, communications director at Michigan State Housing Development Authority.

“We’re very excited about it,” Keenon said. “Any time we can have funds for helping with the foreclosure issue in Michigan, we’re happy.”

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