Q: For the past year, my wife and I have been behind on our mortgage payments, just barely avoiding foreclosure. A couple months ago, I heard about a big mortgage deal between lenders and the government that was supposed to help home owners, but once the news stories died down, I haven't heard anything more about this. Is this just for people who had their houses foreclosed on them, or can I benefit from this deal as well?
A: Based on what you describe, you may well stand to benefit. While the settlement, negotiated with major mortgage lenders by the federal government and various state attorneys general, was focused on foreclosure practices, people who lost their homes to foreclosure are eligible for a relatively small financial settlement under the deal.
The group targeted for the most substantial relief was homeowners who are still in their homes, but are behind on payments and possibly facing foreclosure. From what you describe, your situation may fit the terms of the settlement. That settlement provides a total of $17 billion for principal reduction, loan modification and refinancing. The idea is to reduce, restructure and refinance these mortgages to get those homeowners on a payment schedule they will be able to meet.
The process of applying the settlement to eligible home owners is slated to take place over the next three years. Supposedly, home owners who are eligible for relief under the settlement terms will be notified in the months ahead, but it's probably best not to sit back and wait. Contact your state's attorney general's office and ask how you can make sure you are considered for relief under the settlement. They should be able to provide you with information on how to keep up with the process.
One major caveat regarding all of the above: If you live in Oklahoma, none of this applies to you, because that state's attorney general decided not to participate in the settlement.