Tuesday, May 1, 2012

Reagor: Lenders settlement spurs scams

Scams to try to cash in on the $25 billion settlement with the nation's largest lenders have already begun, and the deal was finalized just last month.

The Arizona attorney general is warning consumers to watch out for companies contacting them about the settlement. People who are eligible for part of the settlement will be contacted directly by one of the five major lenders involved -- BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo.

Arizona's portion of the settlement is $1.6 billion. About $1.3 billion of that amount will go toward principal reduction on mortgages and won't be cash paid directly to the state or consumers.

Only borrowers with loans owned by the five lenders involved are eligible for aid from the national settlement, and those lenders are responsible for contacting eligible homeowners in the coming month to offer assistance.

"Consumers should be aware that scammers are already using the media coverage of the settlement to exploit homeowners by promising quicker assistance in obtaining the refinancing, principal reduction or cash payments available to eligible consumers under the settlement," Arizona Attorney General Tom Horne said in the consumer alert issued earlier this week. He warns consumers to be wary of any unsolicited contact about the settlement.

Here are tips from the Attorney General's Office to help consumers eligible for the settlement avoid scams.

Beware of anyone calling and asking for your routing number, checking-account number or other financial information over the phone. Lenders will not do that.

You may receive legitimate mail from your servicer regarding the settlement if your mortgage loan is serviced by one of the lenders in the settlement. If you do receive a call or mail regarding the settlement, examine it closely to make sure it's the same entity handling your mortgage payments.

If you are unsure whether a caller is legitimate, ask for the person's name and title and say you are going to call your bank to confirm.

Here are numbers for the lenders involved in the settlement: Bank of America: 877-488-7814; JPMorgan Chase: 866-372-6901; Wells Fargo: 800-288-3212; CitiBank: 866-272-4749; GMAC/Ally: 800-766-4622.

Lenders also agreed to use part of the funds to reduce borrowers' interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.

The national settlement does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage holders.

Federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates, and the national average for a principal reduction is $20,000 per mortgage.

Horne said homeowners whose mortgage balances are 175 percent or more of their current home values and who are current on their payments probably will be the first to receive principal reductions.

by Catherine Reagor, columnist - Apr. 27, 2012 03:07 PM The Republic | azcentral.com

Reagor: Lenders settlement spurs scams

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