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The joint federal-state agreement is a mortgage settlement used by Barack Obama`s Financial Fraud Enforcement Task Force to wage war on financial crime and assist American homeowners. This task force is working hard across the federal executive branch with state and local partners to investigate and prosecute serious financial crimes and to ensure just and effective punishment for the perpetrators as well as to combat discrimination in the lending and financial markets and recover capital to help crime victims.
In his State of the Union address president Obama spoke of a Blueprint for an America Built to Last and encouraged help for homeowners and their families. He called for relief measures to help servicemembers and veterans and made special mention of those wrongfully foreclosed upon or refused a lower mortgage interest rate. Also looked for were reduced fees for FHA borrowers who need to refinance. Additional help to support those communities hardest hit by the housing crisis even helping families avoid foreclosure were called for.
Under the agreement between the Federal Government and the 49 state Attorneys General the main servicers are to provide help to thousands of servicemembers and veterans. They are to conduct a review of each servicemember who was foreclosed upon since 2006 and to compensate with a minimum of lost equity plus interest and $116,785 for those who were wrongly foreclosed upon. They must also refund those who were wrongfully denied lower interest rates. Servicemembers who were forced to sell their homes for less than the amount owing on the mortgage due to a Permanent Change in Station will be provided with financial relief. The servicers are obliged to pay $10 million into the Veterans Affairs fund which guarantees favorable terms for veterans as well as extending certain foreclosure protection to servicemembers serving in harm`s way under the Servicemember Civil Relief Act.
Another aspect of the efforts on the part of the President to lower barriers and costs for refinancing is the announcement that the FHA will cut its fees for refinancing loans that are already insured by the FHA . The Department of Justice`s Civil Rights Division will oversee a review by servicers of sericemembers`s files back to 2006.Any violations of the Civil Relief Act will be compensated. Another review, this time going back to 2008, will check interest charged. Any interest over 6% will be compensated by at least four times the amount wrongly charged. In the case of those forced to sell their homes for less than the amount owed on the mortgage due to a PCS( permanent change in station) they may be compensated for the loss in their home`s value. The benefits of that program will include those servicemembers who bought their homes between July 2006 and December31,2008, or who received a PCS after October 1 2010. Any servicemember who is on active duty is protected from foreclosure unless the servicer procures a court order. Servicemembers stationed away from home who received Hostile Fire or Imminent Danger Pay within 9 months of the foreclosure are protected.
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