Connecticut Borrowers Tap Into Mortgage Settlement Funds

Connecticut home loan borrowers have tapped into about a third of the $190 million the state is receiving from a landmark settlement nationally with five major servicers over foreclosure practices, according to a report card from the state attorney general.

The report shows 1,043 Connecticut borrowers received some form of debt relief between March 1 and June 30, totaling about $65 million, or about $63,000 on average. In addition, as of June 30, another $82 million of loan principal forgiveness modifications were in the pipeline for more than 800 borrowers, according to the report.

The report on Connecticut is part of a larger, national report by the national monitor responsible for overseeing compliance with the servicers involved in the $25 billion settlement: Bank of America, CitiMortgage Inc., Ally Financial, Inc., J.P. Morgan Chase and Wells Fargo. The settlement agreement over shoddy mortgage servicing practices went into effect April 5 and involves 49 states.

“The monitor’s snap shot signals that the settlement is off to a good start, providing real relief to borrowers — both in Connecticut and nationally,” Attorney General George Jepsen said. “Although encouraging, it is clear the process is only beginning and that the servicers have much work ahead to fulfill their obligations under the settlement.”

In Connecticut, the deal includes $119 million for loan term modifications and other benefits; $1,500 in cash payments for an estimated 7,500 borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011; $36 million to refinance “underwater” home loans; and $26 million to pay for foreclosure prevention programs, including the state’s mediation program.

Nationally, 137,846 borrowers received some form of aid in the same period, totaling $10.6 billion, with an average of $76,615 per borrower, Jepsen said.