Oklahoma’s attorney general delivered $20,000 to a Tulsa couple on Oct. 15, the first of hundreds of mortgage settlement checks to be given to homeowners who were victims of wrongful lending practices and in some cases lost their homes.
“It will absolutely change our lives,” said Zachary Zuniga of the check. He and his wife, Melissa, saw their $105,000 house go into foreclosure after they attempted to participate in a mortgage modification program with their lender.
Now, with Melissa expecting their fourth child in December, the family is starting over and planning to use the money to pay off debt and buy a new home.
Oklahoma was the only state that did not sign off on a $25 billion settlement with mortgage lenders instead of reaching a separate $18.6 million settlement with the companies.
Attorney General Scott Pruitt said the check he gave the Zunigas represents the first mortgage compensation payment in the nation to be delivered to victims of unfair and deceptive practices by five national lenders: Bank of America, Citigroup, JP Morgan Chase, GMAC and Wells Fargo.
“I pray that this is helpful to you,” Pruitt told the couple as he presented them with an envelope containing their check.
The first Oklahoma payments will be mailed this week. All mortgage compensation checks in the state will be sent by January, Pruitt said. National settlement checks will not be sent until April at the earliest, he said.
A total of 732 Oklahomans have applied for relief from the Oklahoma Mortgage Settlement Fund, and 107 have been approved so far. Mortgage compensation checks will range from $5,000 to $20,000 and will average $11,000.
Estimates indicate that residents of states participating in the national settlement could receive as little as $840 and no more than $2,000. Pruitt said those states are using some of their settlement money to fund areas unrelated to housing, including higher education, economic development, marketing and hiring additional staff for attorneys general offices.
Pruitt said the mortgage compensation checks will hold lenders accountable for the wrongful practices committed during the height of the nation’s financial crisis.
“We have laws on the books that banks violated,” Pruitt said.
Banks engaged in such practices as robo-signing in which signatures were applied to documents without proper oversight, and dual-tracking in which banks guide homeowners on adjusting mortgages while still pushing ahead with foreclosure.
The Zunigas were the victims of dual-tracking after they approached their bank about a mortgage modification three years ago. Their lender said a mortgage modification was possible but lost their paperwork, gave them false and misleading instructions and eventually notified them their loan had been paid in full before it finally foreclosed.
Three days after their home was sold at a sheriff’s sale, they received a third modification packet in the mail with a note that said the bank wanted to help them avoid foreclosure.
“The stress, the pain, the heartache,” Zachary Zuniga said. The house had been in his family for 23 years.
The settlement money that doesn’t go to homeowners will be used to fund a $1.27 million grant to Legal Aid Services of Oklahoma to provide free legal assistance to low-income residents facing mortgage and foreclosure issues. The money also will help pay for legal services for veterans and active service members in connection with mortgage and housing needs.