National Mortgage Servicing Settlement for New York
Picture of a row of houses

About the Settlement

After many months of negotiation, 49 state attorneys general and the federal government reached agreement on a settlement with the country’s five largest loan servicers:

This bipartisan settlement will provide up to hundreds of millions of dollars for New York State in:

  • Relief to distressed borrowers including approximately $495 million in loan modifications and approximately $140 million in loan refinancing, the largest amount per distressed borrower of any state; and
  • Direct payments of more than $130 million for New York, that can be used to fund legal services and housing counseling for borrowers facing foreclosure so that no New Yorker has to go through the foreclosure process without an attorney.

The agreement settles state and federal investigations finding that the country’s five largest loan servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers in New York and other states whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.


Immediate aid to homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to provide up to $495 million in principal reduction and other forms of loan modification relief for borrowers in New York State. Chase and Citi have agreed to contact borrowers in New York State who are eligible for modifications.

Immediate aid to borrowers who are current, but whose mortgages currently exceed their home’s value. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to an estimated $140 million in refinancing relief for eligible New Yorkers.

Immediate payments to borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers. This piece of the settlement is not intended to serve as compensation for lost homes. That’s why we preserved the ability of homeowners who were defrauded in the foreclosure process to sue. No individual foreclosure victim has to give up any claims in exchange for this money. An estimated $13 million will be distributed in New York State, and an estimated 6,400 victims in New York may qualify to receive compensation.

Immediate payments to signing states, including more than $130 million for New York State, which can be used to help fund legal services and housing counseling for homeowners who are facing foreclosure, or servicer abuse. State law provides strong protections for New York homeowners, including mandatory settlement conferences to try to avoid foreclosure, but in recent years about half of the New York homeowners navigating this process have had to do so without a lawyer. These funds will help ensure that every New York homeowner facing foreclosure will be represented by an attorney.

For more information on the funding of legal services from the national settlement, click here.

First ever nationwide reforms to mortgage servicing standards>; something that no other federal or state agency has been able to achieve. These servicing standards require single point of contact, adequate staffing levels and training, better communication with borrowers, and appropriate standards for executing documents in foreclosure cases, ending improper fees, and ending dual-track foreclosures for many loans.

State oversight of national banks for the first time. Something no court could award. National banks will be required to regularly report compliance with the settlement to an independent, outside monitor that reports to state Attorneys General. And servicers will have to pay heavy penalties for non-compliance with the settlement, including missed deadlines.


This agreement holds the banks accountable for their wrongdoing on robo-signing and mortgage servicing. But from the beginning of the Attorney General’s involvement in the negotiations, one of the top concerns was to make sure that the settlement did not immunize the banks from liability for other misconduct that may have contributed to the housing bubble and the housing market crash that precipitated the recession. This agreement achieved that goal. Among the critical legal claims the Attorney General fought for, and successfully preserved, this settlement does not:

  • Release any criminal liability or grant any criminal immunity
  • Release any private legal claims by individuals or any class action claims
  • Release legal claims related to the securitization of mortgage backed securities that were at the heart of the financial crisis
  • Release claims against Mortgage Electronic Registration Systems or MERSCORP
  • End state attorneys general investigations of Wall Street related to financial fraud or the financial crisis.

The agreement settles only some aspects of the banks conduct related to the financial crisis (foreclosure practices, loan servicing, and origination of loans) in return for the second largest state attorneys general recovery in history and direct relief to distressed borrowers while they can still use it.

State cases against the rating agencies and bid-rigging in the municipal bond market, for example, continue. Claims and investigations against MERS and how Wall Street packaged mortgages into securities also continue.