Justice Center Statement: National foreclosure settlement a positive step, but vigilance still needed

Questions remain about restitution for families who lost their homes, enforcement of settlement terms and other issues
RALEIGH (Feb. 9, 2012) – Today's national foreclosure settlement offers some help to homeowners at risk of default and the promise of protection from future abuses. Based on initial review, there are many positive aspects to the settlement, experts say, but enforcement is a critical question.
If well-enforced, the settlement may lead to better mortgage servicing, fewer foreclosures, some restitution for foreclosed homeowners and a healthier housing market and economy for North Carolina.
The settlement includes:
  • New rules and potential for enforcement of servicing standards. The settlement will be a good thing if it can actually improve mortgage servicing and result in fewer homeowners losing homes to foreclosure. 
“Unfortunately, to date, federal and state efforts to address poor servicing practices have failed to make any appreciable difference and we will have to see whether this settlement results in better outcomes,” said Rochelle Sparko, housing attorney with the NC Justice Center. “We hope it will, but it is important to be vigilant.”
  • To address those homeowners at risk of foreclosure the settlement will bring badly needed resources to NC homeowners by helping with housing counseling, foreclosure defense, and mortgage refinancing.
  • Restitution to people who have unfairly lost their homes is a key issue. While money is allocated for compensation, there are concerns among consumer advocates that the funds will not truly compensate foreclosed homeowners for their losses or enable these homeowners to achieve homeownership again. 
  • Prosecution of lending and financial crimes: the settlement allocates $10 million to prosecute crimes and an additional $5 million to stop lending and financial fraud.
While the settlement is a step in the right direction, observers say, there is much more that needs to be done to stabilize the mortgage lending industry, restore confidence in the housing market, and help rebuild North Carolina’s economy.

“In terms of future conduct, we hope that the settlement is a step in the right direction in reforming the mortgage industry and in forcing mortgage servicers to treat homeowners fairly,” said Sparko. “In this regard, there is more that must be done to restore fairness and responsible conduct in the mortgage industry.”
FOR MORE INFORMATION CONTACT: Rochelle Sparko, NC Justice Center, (919) 410-7645