As the seventh year of the foreclosure crisis began along with the New Year, 5.3 million U.S. homeowners remain behind on their payments, according to a report from ProPublica.
The ProPublica report reveals issues of transparency, conflicting interests, and misspent money surrounding the National Mortgage Settlement. In February, 2012, 49 state attorneys general and the federal government reached a $25 billion settlement with the five biggest mortgage lenders—Wells Fargo, JPMorgan Chase, Citicorp, Bank of America, and Ally Bank, formerly known as GMAC. However, two other large banks—Goldman Sachs and Morgan Stanley—have yet to begin their regulator-ordered review of their former mortgage-servicing subsidiaries.
JPMorgan Chase executive Rebecca Mairone, formerly of Bank of America and Countrywide, is overseeing the bank's compensation process for victims of its foreclosure practices. Last October, the Justice Department named Mairone in a suit alleging that she and others in the organization, engaged in a scheme to defraud the government-sponsored Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, more commonly referred to as Fannie Mae and Freddie Mac, respectively.
There's also the $2.5 billion that the federal government doled out to the states in an effort to help them cope with the effects of the housing crisis. ProPublica mapped out how much each state has received along with the dollar amounts it has put towards its own housing recovery. The debt-ridden state of California received just over $410 million--but only 4% of that, or rather $18.4 million, has gone towards mortgage settlement efforts.
Where is the rest of it going? To plug up holes in California's $617 billion debt, in spite of the fact that the state has the fifth highest mortgage delinquency rate in the country at 9.41%. (Meanwhile, the national average is 8.06%.) Texas and Florida also received large disbursements, $134.6 million and $334.1 million respectively. Homeowners in both states are still waiting to see any of that money. While Texas has a below-average delinquency rate, Florida claims the top spot in the country with a 17.88% delinquency rate, more than twice the national average.
The deadline to file for claims is January 18, a little more than two weeks away, and at last count, fewer than half a million mortgage holders had done so.