Today, Federal and State officials announced the largest mortgage relief settlement, $26 billion dollars, aimed to address the robo-signing scandal where banks seized foreclosed homes without appropriate paperwork.  The deal settles potential state charges about allegations of improper foreclosures.

What does it mean for you?

The settlement sets up a federal monitor to oversee the process and try to prevent the challenges that tripped up many homeowners seeking help in earlier programs designed to address the housing crisis.

Most of the relief will go to those who are underwater on their homes.  That relief will come over the course of the next three years, with banks having incentives to provide most of the relief in the next 12 months.

Principal Reduction:  At least $17 billion will go to reducing the principal owed by homeowners who are underwater and behind on their mortgages.  However, the $17 Billion is supposed to be spread across 1 million people equating to $17,000 each.  Most home owners that are upside down on their loans in Pasadena will need significantly more than a $17,000 principal reduction.   However, certain "troubled areas and loans" in California have been identified and could potentially get more than $17,000.  I have not seen a list of criteria or areas yet.

Refinancing:  Up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates.  They will not receive a reduction in principal, but with mortgage rates near record lows, they could receive substantial savings on their monthly payments.  $3 Billion dollars are set aside for the refinancing portion of this plan.

Robo-Signing Payments:  Approximately $1.5 billion will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria.  They will receive up to $2,000 each.

The five mortgage servicers that are parties to the settlement include Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial (formerly GMAC).

Negotiations are underway with additional mortgage servicers.  I will bring you the latest information as it becomes available.

So it’s not yet clear which mortgage borrowers will ultimately be eligible.  Here’s where you can call, keeping in mind that specifics won’t come quickly:

• Ally/GMAC: 800-766-4622,

• Bank of America: 877-488-7814, Look for a link to the settlement.

• Citi: 866-272-4749,

• JPMorgan Chase: 866-372-6901,

• Wells Fargo: 800-288-3212,

Loans owned by Fannie Mae or Freddie Mac are not covered by the agreement.

Irina is a Top  Realtor and the founder and President of Pasadena Views Real Estate Team.  She is available to assist you in all of your Real Estate transactions. Email or call her today at (626)629-8439.

READ MORE:  Pasadena Real Estate Guide - Everything You Need to Know about Buying or Selling Your Home

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