State receives foreclosure-abuse funds

DENVER – Distressed Colorado homeowners will be able to benefit from the $204.6 million given to the state as part of a $25 billion settlement reached with the country’s biggest mortgage lenders over foreclosure abuses.

The settlement includes refinancing opportunities for struggling homeowners and reductions in principal, among other things. Cash payments also will be made to owners who were improperly foreclosed on between 2008 and 2011, according to the Colorado attorney general’s office.

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Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial are named in the multistate settlement.

The state will receive:

$73.3 million available to grant reductions in principal on home loans. About 40 percent of the funds also will be available to ease the effects of foreclosure, including waiving deficiency balances and blight prevention programs, according to the state attorney general’s office.

$52.5 million in cash to the state to be used for foreclosure prevention, housing-counseling services, legal services and to promote loan-modification opportunities

$46.3 million in refinancing benefits to underwater borrowers, those who owe more on their homes than their homes are currently worth

$32.49 million in payments to homeowners who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2009.

Money from the settlement is expected to help homeowners in Boulder and Broomfield counties and across the state, said Shannon Peer, director of housing counseling at Brothers Redevelopment Inc. in Denver, which oversees the Colorado Foreclosure Hotline.

“In my mind, it could make a world of difference for the state of Colorado and Boulder and Broomfield counties,” Peer said “Even if it’s another 50 to 100 people who it helps here, it’s a huge help.”

Nationally, the five banks have agreed to a variety of new mortgage loan rules. As part of the settlement, they’ll be overseen by an independent monitor to ensure mortgage service compliance as to the way the money is distributed. They’ll also provide homeowners with new protections through new servicing and foreclosure standards, the Colorado attorney general’s office said.

“As a result of this settlement, the banks will end a series of problematic processes that put homeowners at a severe disadvantage during the foreclosure process,” John Suthers, Colorado attorney general, said in a statement. “This settlement will not solve every problem with the housing market, but it goes a long way to helping homeowners in distress now and leveling the playing field for consumers.”

Customers of the five settling banks who are still in their homes but either behind on their payments should contact the banks directly through dedicated toll-free contact numbers to determine if they are eligible for assistance:

Bank of America: 1-877-488-7814

Chase: 1-866-372-6901

Citi: 1-866-272-4749

GMAC/Ally Financial: 1-800-766-4622

Wells Fargo: 1-800-288-3212