By Gene Meyer

Kansas’ $50-million slice of a record national settlement of mortgage-abuse claims won’t offer quick relief for beleaguered homeowners, credit experts say. 

Even the attorneys general who helped put the national $25-billion package together say it will take a month or more to determine distribution plans for the money. It may take as long as three years to distribute the promised help, according to information on a national attorneys general website, www.nationalforeclosuresettlement.com.

Five of the nation’s largest home-mortgage companies agreed to pay the money to settle allegations of loan-processing abuses. The money will help, said Justin Robinson, education director of the Consumer Credit Counseling Service Inc. chapter in Wichita. 

“People had good jobs and were making their mortgage payments, then they lost their jobs,” Robinson said. “What we’re seeing in Wichita is that even if they find another job right away, many don’t get the same pay as before, and it gets difficult to keep up with the mortgage.”

Homeowners should not expect immediate relief, and strict application rules could slow the process even further.

It may take a long time to deliver the promised relief if the process is too rigid, said Rick Sippel, a Consumer Credit Counseling Service Inc. counselor in Salina, who already works daily to help clients out of mortgage jams.

Mortgage reduction is time-consuming work, and the lenders’ agents he works with are each handling as many as 100 cases a month, Sippel said.

“It’s impossible to deal with that many cases now,” Sippel said.

“I know it would be more costly, but I would like to see the lenders spend more money up front training the people who are manning the phones and doing the paperwork to think on their feet instead of reading a script on a computer screen,” he said.

Any help is welcome, said Kevin Andrews, a mortgage counseling executive at the Urban League of Wichita, where 694 Wichita-area homeowners last year sought help in trying to make their mortgages more affordable.

“When you are upside down in your home and are unemployed or under employed, this helps,” Andrews said.

Realtor John Brocker  said he fears that fully restoring the financial health of housing markets may take even longer than the three years outlined in the settlement timetable.

“It’s a lot like the crisis in farmland values we had back in the 1970s and ‘80s,” said Brocker, president of Allen County Real Estate in Iola and the Kansas Association of Realtors. 

“Farmland prices didn’t turn around and start coming back up until all the farm foreclosures we had back then cleared the market, and that took years,” Brocker said. “We’re still deep in the woods, even though we’re starting to walk out.”

Realtytrac, the Irvine Calif., firm that has become the U.S.’ most widely recognized collector of home foreclosure market statistics, estimates 996 homes in Kansas, or one in 1,239, are in some stage of foreclosure proceedings and predicts the number will rise in 2012. That’s on top of nearly 15,300 homes on the Kansas market now, which the Kansas Association of Realtors calculates is a seven-month supply at the current pace of sales.

More than 88,000 Kansans were unemployed last month, according to the Kansas Department of Labor, said Angela Berland, a deputy director of the Kansas department’s Labor Market Information Services Division. Other federal Labor Department statistics indicate that almost that many more are discouraged workers who temporarily stopped looking for jobs or were working part time or in lower-paying jobs.

Kansas Attorney General Derek Schmidt, a Republican, estimates that at least 4,000 Kansans who lost their homes to foreclosure will be eligible to receive at least $2,000 apiece from the settlement and that an unknown number of others still in their homes will qualify for help refinancing their mortgages.

Mortgage giants Bank of America, JP Morgan Chase, Citibank, Wells Fargo and Ally Bank, formerly known as General Motors Acceptance Corp., or GMAC, agreed to pay $25 billion to settle allegations by 49 states, the District of Columbia and the federal government that the lenders forced homeowners into foreclosure without due process. Oklahoma is the only state not participating in the settlement, the largest of its kind in U.S. history

Kansas’ share of that total is $50 million. About $14 million will be kept by the state attorney general’s office for consumer-education programs and to investigate similar conduct by other lenders, said Jeff Wagaman, a Kansas Attorney General’s Office spokesman. 

Wagaman said the package includes $12 million in direct refinancing help for troubled Kansas borrowers, and up to $15 million to cover costs of relocating homeowners, selling homes below mortgage balances and other mortgage expenses. Another $8 million will go to an estimated 4,000 homeowners who will get $2,000 apiece because their foreclosures may have been mishandled.

More about the plan will be posted on the Kansas Attorney General’s website www.ksag.org/mortgage or a National Association of Attorneys General website, www.nationalforeclosuresettlement.com.

But many details still need to be worked out before help becomes available, said Kansas Banking Commissioner Kevin Glendening, who also is in charge of state mortgage regulation.

“We would hope to have the processes in place and information available in the next few months,” Glendening said. The broad agreement allows the mortgage companies as many as three years to provide the refinancing relief.

And many of the T-WORKS projects being scheduled now are for preserving roads not expanding them, Reece said.

“Kansas has done a good job with its highways, but you have to keep them going,” she said. “This would be devastating.”

User Comments

• Mortgages

  "I feel that the government should not be in the banking business nor doing more bailouts. "

  Posted by chad Parker on Feb. 22, 2012

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