A federal judge has approved the $25 billion multistate mortgage loan settlement between 49 state attorneys general and five major lenders, one of the last steps before more than $300 million in mortgage relief will start flowing into Massachusetts.
Massachusetts Attorney General Martha Coakley said Friday that the settlement—and subsequent funding—is key to helping troubled homewners and slowing the flood of foreclosures in the state.
US Housing and Urban Development Secretary Shaun Donovan also praised federal District Court Judge Rosemary M. Collyer’s decision to approve the accord as a “victory” for homeowners fighting to save their homes.
“We know that now the real work begins to hold these [loan] servicers accountable and ensure that the nearly 2 million homeowners who are expected to receive help and relief actually get it,’’ he said.
The deal—signed by Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc.—is expected to provide some $257 million in mortgage relief to Massachusetts homeowners, including loans rewritten to reduce homeowners’ principal and interest rates.
Local borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011 and were treated improperly by the five banks may qualify for a cash payment of about $2,000 each.
The state also is expected to receive abut $45 million in direct funding that it can use to assist homeowners. It is still unclear how the funding will be allotted, but more information is expected in the next few weeks.
Peter True, a HUD spokesman, said money going directly to states will be sent out within about 10 days. Under the terms of the agreement, he said, banks have three months to draft a plan detailing how they will contact and provide help to borrowers.
“Based on that timeline, we expect to see servicers taking significant action taken toward meeting their obligations under the settlement by the fall.,’’ he said. “Banks have an incentive under the settlement to take action to help homeowners up front.”
Coakley’s office declined to provide any more information about the settlement on Friday, but a state website advises consumers to contact their loan servicers with questions or call the attorney general’s consumer hotline at 617-727-8400.
Those who have already lost their homes to foreclosure and believe they are eligible for settlement funds can fill out a form provided by Coakley’s office, or wait to be contacted by a government administrator. More information is available at www.nationalmortgagesettlement.com.