Notices are being mailed to thousands of Tennesseans who may be eligible for a portion of the National Mortgage Settlement.
Tennessee is among 48 other states making claim to the $25 billion available.
The bulk of the money from the long-awaited landmark settlement went into programs that help homeowners needing loan modifications now or borrowers who are current on their home payments but underwater.
A smaller portion, totaling $1.5 billion, will go to those who lost their homes to foreclosure. Of that, approximately $24 million will go to Tennesseans.
The settlement came about after a lengthy investigation into mortgage servicing and foreclosure practices nationwide.
“It was kind of a recurring pattern,” said Jennifer Peacock, Senior Counsel with the Consumer Protection Division. “[Homeowners] were trying to get a loan modification. They fill in the application, the paperwork gets lost. Every time they call, they get a different person on the phone. That person doesn't know what's going on with their situation.”
As part of the final agreement, lenders must provide homeowners seeking assistance with a single point of contact.
Homeowners current on their loans must be given consideration to refinance at a lower rate. Lenders must reduce loan balances for qualifying homeowners who owe more than their homes are worth.
For many Tennesseans, it's too late to take advantage of those provisions, but they could be eligible for a portion of the nationwide settlement.
“There are approximately 37,000 Tennesseans who have unfortunately lost their homes to foreclosure who should be receiving a claim form in the mail,” Peacock said.
Those eligible would have lost their homes to foreclosure between January 1, 2008, and December 31, 2011, to one of five mortgage lenders including Ally/GMAC, Bank of America, Citi, JP Morgan Chase, and Wells Fargo.
The three-page claim form does not require proof of financial hardship, and it is not a waiver of future legal rights.
State and federal officials warn consumers of potential scams. The claim process is free and cannot be expedited.
At this time, it is not clear how much the claims could be worth.
“It's going to depend on how many people return the claim form,” Peacock said, “but we think the average will be probably somewhere around $1,500 to $2,000.”
Claim form mailings will continue through October 12. The deadline to return the claim form is January 18, 2013.
Click here for more information on the National Mortgage Settlement.