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Homeowners in TN get $141 million settlement

Homeowners in Tennessee, like many throughout the nation, have felt the impact of the economy. The downturn and its aftermath have literarily hit, "close to home." For many it started with a job loss, leading to unpaid bills and mortgage debt. An unexpected event like an injury, illness or divorce could have left couples and families unable to keep up with mortgage obligations. In some cases, banks entered into agreements with individuals who could not afford their payments in the first place.

Chapter 7 and Chapter 13 bankruptcy are options for homeowners who want to stop foreclosure proceedings. Bankruptcy puts an immediate end to creditor action, including foreclosures, lawsuits and harassment.

The Tennessee Housing Development Agency's "Hardest Hit Fund" is another option. This fund has helped more than 1,100 families save their homes. The program helps those who have suffered a 30% loss of income and are able to get THDA to pay their mortgage up to 12 months or $20,000.

In a recent settlement against major banks, Tennessee stands to collect $141 million to save their homes from foreclosure. The lawsuit with five of the largest mortgage lenders in the country arose from unfair lending practices.

While the money awarded to Tennessee homeowners hasn't been signed over by the court yet, the award will be broken in to four areas, including loan term modifications ($46 million), upside-down borrowers ($33 million), people who have lost their homes ($24 million) and programs similar to THDA ($41 million). It was not reported how the funds will be distributed or the process to make funds accessible, but the state now has additional resources to assist home owners who have suffered because of the mortgage crisis.

Source: News Channel 5, "Lawsuit Settlement Could Save Homes From Foreclosure," Marcus Washington, April 5, 2012.

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