The $10,000 check Joe Shuffield received from the Oklahoma Mortgage Settlement wasn't enough to save his home from foreclosure.
Earlier this month, Shuffield, an Army veteran who served in the Gulf War, filed for chapter 13 bankruptcy to prevent having the 1,700 square-foot brick ranch house in The Village where he lives with his wife Shannon from being auctioned at a sheriff's sale.
“We used the money to get caught up on our bills,” Joe Shuffield said of the mortgage settlement. “It didn't really help, plus we were still fighting in court to save our home at the time.”
The Shuffields are among the more than 300 Oklahomans who have been awarded cash settlements of up to $20,000 through the $18.6 million settlement that Oklahoma Attorney General Scott Pruitt negotiated with Bank of America, Citi, JPMorgan Chase, GMAC/Ally, and Wells Fargo in 2012 for improper foreclosure practices.
While the settlement can't fully compensate homeowners for the loss of their homes, Oklahomans are being served faster and are receiving more compensation than consumers in the 49 states that participated in the $25 billion National Mortgage Settlement are expected to receive, Pruitt said.
However, eight months after state officials distributed the first checks to Oklahoma consumers victimized by illegal practices such as robo-signing and dual-track foreclosures, the attorney general's office has committed only a little more than $6 million from the settlement toward compensating homeowners, records show.
“It's probably representative of the extent and type of conduct that occurred in Oklahoma,” Pruitt said. “We didn't have the rash of foreclosures that there was in Florida, Nevada and California.”
With more than $12.6 million remaining, Pruitt has decided to reopen the settlement fund again to Oklahomans who have been victimized. Beginning Monday, the attorney general's office will begin accepting applications for a second round of settlement payments. The agency will also continue to give grants to the Oklahoma Bar Association and Legal Aid Services of Oklahoma to fund foreclosure education and defense programs.
While the initial phase of the mortgage settlement was available to homeowners who experienced harm between 2008 and 2011, Pruitt's office is expanding the settlement period to people who were victims of improper foreclosure practices in 2012, because investigators noticed similar practices on the part of mortgage servicers after the settlement cut off.
“Oklahomans are going to be served by the settlement in a very meaningful way,” Pruitt said. “We are very intent on going through those files and making sure harm is addressed.”
The attorney general's office also has committed to once again review applications for Oklahomans who did not qualify for cash compensation during the first phase of settlement payouts because the applicants missed the deadline.
Shuffield said he hadn't missed a mortgage payment in 10 years before his income from a satellite and computer installation business dried up during the last recession.
After the Shuffield's home went into foreclosure, the couple also fell victim to a company based in Florida that claimed it would help them keep their home in exchange for a $900 fee. The firm did little to assist them after taking their money.
Shuffield claims their mortgage servicer, Ocwen Financial Corp., which acquired the couple's note from GMAC Mortgage, has been unwilling to work with the couple to reduce their monthly payments. A representative for Ocwen last week said the company would review the Shuffield's file.
With the settlement money he received gone, Shuffield said all he has left is hope that things will get better.
“The only thing I can say is that we keep our heads up and pray,” Shuffield said. “There are a lot of people out there who are worse off than us.”
For Tulsa residents Crystal and Charles McCormick, a $10,000 check from the Oklahoma Mortgage Settlement fund came after their home was auctioned at a sheriff's sale. The cash was enough to buy them a used car to get them to work at their new jobs at Disney World. They now live in a rented home in Haines City, Fla., with their two adult sons.
Crystal McCormick says she is grateful to have received the money, but she and her husband are still trying to rebuild their lives after losing their home two years ago. The couple fell behind on their mortgage payments after Charles underwent knee surgery and was unable to work for an extended time. Crystal McCormick says she was never served with foreclosure papers, but instead had to find out her home was in foreclosure by looking up court records on the Internet.
“No amount of money can compensate us for what we went through — it was a nightmare,” she said.
State opts out
Oklahoma was the only state to opt out of the $25 billion settlement that attorneys general in 49 states negotiated with the five mortgage servicers after Pruitt voiced concerns that the settlement talks had strayed too far from compensating wronged consumers and more into the realm of housing policy. In March 2011, Pruitt joined with the attorneys general of Alabama and Nebraska to object to some of settlement negotiations, including loan reductions for underwater borrowers.
Pruitt stands by his decision not to join with 49 other attorneys general, noting that not a single check has yet been mailed out to homeowners from the national settlement. While mortgage servicers agreed to pay out the multi-billion-dollar settlement over a period of three years, Oklahoma received its $18.6 million settlement almost immediately after the judgment was entered in Oklahoma County District Court, Pruitt said.
A separate $1.5 billion settlement between mortgage servicers and the U.S. Office of the Comptroller of the Currency and the Federal Reserve Board is being used for cash payments to borrowers who lost their homes to foreclosure between 2008 and 2011. However, homeowners who are receiving funds from the settlement could receive as little as $840, according to the latest estimates.
Pruitt likens the federal settlement to that of a plaintiff's lawsuit, where much of the money recovered will not go to the people harmed.
“Unfortunately, we are seeing that type of dynamic with the national mortgage settlement where individuals suffered true harm — they lost their home through unlawful practices by a servicer — and they're going to get a check arbitrarily, likely for less than $1,000 dollars.”
While the federal government has hired the third-party company Rust Consulting to administer claims from its $1.5 billion settlement fund, Oklahoma has handled its administration of its settlement in-house, using investigators in Pruitt's to sift through files and sometimes conduct interviews with consumers to document their cases.
The attorney general's office has so far approved 326 borrowers out of about 400 applications to receive payments ranging between $5,000 to $20,000. The average settlement Oklahoma borrowers received from the first round of settlement payments was $11,173.
“There has been no file that has been finally denied — we have asked for additional documentation several times,” said Tom Bates, first assistant attorney general, who oversaw the review process for the first round of settlement payments. “ We are trying to give homeowners every benefit of the doubt.”
How to apply
Oklahomans who believe they have been victimized by improper mortgage practices can apply for up compensation at www.oag.ok.gov.