A Resolved Legal Case that Benefits Millions of Borrowers Nationwide
Greetings to all our readers! Today, we are going to talk about an issue that rocked the world of mortgage borrowers in America, known as the Litton Loan Servicing Settlement. With the rise of the housing crisis in the late 2000s, many homeowners found themselves struggling to pay their mortgage loans. Litton Loan Servicing, a large mortgage lender based in Houston, Texas, was one of the companies accused of using unfair and deceptive practices against borrowers. But, what happened, and what does this settlement mean for those affected? In this article, we will provide an in-depth explanation of this matter.
What is Litton Loan Servicing Settlement?
In 2011, Litton Loan Servicing reached a major settlement agreement with the federal government, 49 state attorneys general, and the District of Columbia. The company agreed to pay over $537 million to settle allegations that it engaged in fraudulent activities against borrowers who were struggling to make their monthly mortgage payments. The settlement covered mortgage loans serviced by Litton between 2008 and 2011, and it is considered one of the largest mortgage servicing settlements in U.S. history.
The Allegations Against Litton Loan Servicing
The allegations against Litton Loan Servicing were serious and widespread. The company was accused of engaging in illegal foreclosure practices, such as robo-signing, which involved signing affidavits and other legal documents without verifying the information contained therein. Litton was also accused of using deceptive and unfair practices, such as charging unauthorized fees and failing to properly disclose information about loan modifications and payment plans.
The Impact of the Settlement
The settlement provided relief to millions of borrowers who were adversely affected by Litton’s practices. Under the terms of the settlement, eligible borrowers who lost their homes due to foreclosure between 2009 and 2010 could receive payments of up to $1,480. Borrowers who experienced other types of harm, such as receiving unfair fees or being improperly denied a loan modification, could also receive compensation. Additionally, Litton was required to adopt new servicing standards and provide enhanced disclosures and communications to borrowers.
The Lessons Learned from Litton Loan Servicing Settlement
This settlement served as a wake-up call about the importance of fair and transparent lending practices. It highlighted the need for stronger regulations and oversight to protect borrowers from abusive and fraudulent practices. Moreover, it emphasized the importance of borrowers being informed about their rights and options when facing mortgage-related difficulties. The settlement also demonstrated that, in cases of wrongdoing, justice can be served, and those responsible can be held accountable.
Table: Key Information About Litton Loan Servicing Settlement
Year of Settlement Agreement |
Amount Paid by Litton Loan Servicing |
Type of Borrowers Eligible for Compensation |
New Servicing Standards Adopted by Litton |
|---|---|---|---|
2011 |
Over $537 million |
Borrowers who lost their homes due to foreclosure between 2009 and 2010; borrowers who received unfair fees or were improperly denied a loan modification |
Enhanced disclosures and communications to borrowers; prohibition on robo-signing and other improper foreclosure practices; requirement to provide more timely and accurate information about loan modifications and payment plans |
Frequently Asked Questions About Litton Loan Servicing Settlement
1. How do I know if I am eligible for compensation under the settlement?
The settlement covered borrowers who had mortgage loans serviced by Litton between 2008 and 2011 and experienced harm as a result of Litton’s practices. If you are unsure whether you are eligible, you can contact the settlement administrator or your state attorney general’s office.
2. How do I file a claim for compensation?
You can file a claim online, by mail, or by phone. The deadline for filing a claim was January 18, 2013, so it is no longer possible to file a claim under this settlement.
3. What if I already received a payment under the settlement, but I believe the amount was inadequate?
You can request a review of your claim by an independent consultant. However, the deadline for requesting a review was July 31, 2014, so it is no longer possible to request a review under this settlement.
4. Can I sue Litton Loan Servicing if I did not file a claim under the settlement?
Yes, you can still sue Litton Loan Servicing for any harm you suffered as a result of its practices. However, the deadline for filing a lawsuit may have passed, depending on the applicable statute of limitations.
5. What do I need to do if I receive a notice from Litton Loan Servicing about my mortgage loan?
If you receive a notice from Litton Loan Servicing about your mortgage loan, it is important to read it carefully and take appropriate action. If you are having difficulty making your payments, you should contact Litton as soon as possible to explore your options for loan modification or other forms of assistance.
6. Are there similar settlements involving other mortgage servicers?
Yes, there have been several large settlements involving mortgage servicing practices in recent years. These include settlements with Bank of America, JPMorgan Chase, and Wells Fargo.
7. How can I protect myself from unfair or deceptive lending practices?
You can protect yourself by being a knowledgeable and informed borrower. Before taking out a mortgage loan, make sure you understand the terms and conditions, including the interest rate, fees, and repayment schedule. If you experience difficulty making your payments, contact your loan servicer, and explore your options for assistance or modification. You can also contact a housing counselor or legal aid organization for help.
In Conclusion
The Litton Loan Servicing Settlement was a landmark case that brought relief and justice to millions of borrowers who were affected by fraudulent and deceptive lending practices. It demonstrated the importance of transparency, fairness, and accountability in the lending industry. While the settlement is no longer accepting claims, its legacy continues to inform and shape the way we think about lending practices and consumer protection. We encourage all borrowers to be informed, engaged, and proactive about their rights and options when it comes to mortgages and housing-related issues.
Thank you for reading, and we hope you found this article informative and useful. If you have any questions or comments, please feel free to contact us.
Closing or Disclaimer
This article is for educational purposes only and does not constitute legal advice. The information contained herein is accurate to the best of our knowledge but may be subject to change. We are not affiliated with Litton Loan Servicing or any other mortgage servicer, and we do not endorse any specific products or services. We encourage readers to seek professional advice and assistance regarding their specific legal and financial situations.