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Mortgage help to be directed to thousands of Missouri homeowners

This article first appeared in the St. Louis Beacon, Feb. 10, 2010 - At least 20,000 Missourians who lost their homes in foreclosure by one of the nation's five largest mortgage providers could be eligible for payments of up to $2,000 apiece as partial restitution if their cases were mishandled.

And tens of thousands of other homeowners may qualify for reductions in their mortgage payments.

Those are among the provisions laid out Thursday by Missouri Attorney General Chris Koster, who flew around the state for a series of news conferences to promote the details of a national mortgage settlement of close to $26 billionacross almost all 50 states -- including Missouri and Illinois -- and five institutions: Bank of America, Citigroup, JP Morgan Chase, Wells Fargo and Ally Financial.

"This settlement is in the best interest of the state of Missouri," Koster said.

Missouri's share is about $196 million, with about $155 million to go to affected homeowners, including those who lost their homes due to foreclosure since Jan. 1, 2008.

Illinois' share is about $1 billion. Each state's allocation is based  on population and foreclosure rates, he said.

"This settlement does not close the door to possible criminal charges," Koster added during his news conference in St. Louis. He implied that such charges would be directed primarily at financial institutions that handle mortgages.

The next step is to engage in settlement negotiations with the next 15 largest such financial firms, he said.

Of Missouri's share of the $196 million, most of the remaining $41 million will go into general revenue. Gov. Jay Nixon already has announced plans to use $40 million to restore some of the cutsthat his budget proposal for the coming fiscal year makes to state-run colleges and universities.

Many other states are using their designated share of the settlement -- the smaller portion not targeted directly to homeowners -- for other housing-related programs and services. But Koster said he believed that, in Missouri, such a decision should be left to the governor and the General Assembly, which approves the state's budget.

In light of the state's financial troubles, Koster said, "I support the governor's effort to restore this vital funding" to higher education.

Koster said his office was retaining just over $1 million to cover its administrative costs, which will include publicizing the details of the settlement to the public -- some of whom may qualify for financial help under the program.

Settlement Terms for Homeowners

Negotiations involving the nation's state attorneys general and the five institutions took place over about 18 months, with many of the crucial meetings held in Washington, D.C., in the offices of the U.S. Department of Housing and Urban Development.

Although Nixon was advised a couple weeks ago of the possible terms, the agreement wasn't final until late Wednesday, Koster said.

Under Missouri's share of the settlement earmarked for homeowners:

  • $31 million in direct payments for "borrowers who lost their homes to foreclosure from Jan. 1, 2008, through Dec. 31, 2011, and suffered servicing abuse," Koster said. The top per-borrower payment will be about $2,000.
  • Just under $38 million will be allocated to homeowners with mortgages "whose homes are worth less than they owe and who are current on their payments," Koster said. That money is expected to be used for refinancings and loan modifications.
  • About $86.5 million will be directed to "borrowers whose homes are worth less than they owe and are behind on their payments but who could afford to make them at a reduced rate," Koster said. The money would be used for "principal reductions and other borrower assistance programs," Koster said.

The assistance will be available and spent over over three years, he said.
The five financial institutions will be responsible for contacting some homeowners who might qualify, including those who lost their homes to foreclosure. But much of the responsibility also will fall to the public.

Homeowners who believe they may qualify for help under the settlement are encouraged to call a special hotline set up by Koster's office: 855-870-7676.

Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.