Kentucky will receive $58.8 million, or 0.2 percent, of the $25 billion national mortgage settlement with five of the country's largest banks.
"I'd be careful to say this is a good first step," Attorney General Jack Conway told the Herald-Leader. "We're going to be continuing our investigation."
The portion of the settlement coming to Kentucky will be divided four ways:
■ $12 million to be available to homeowners through methods such as loan-term modifications and principal write-downs.
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■ $10.8 million in direct payments to homeowners who were foreclosed on with improper documentation from 2008 to 2011. Each borrower would be eligible for as much as a $2,000 payment from the banks, depending on how many borrowers participate. Borrowers do not have to give up their right to sue the banks to claim the money.
■ $15.9 million for refinancing for borrowers who are current on their mortgages but own homes that are valued at less than the mortgages.
■ $20 million to the state for consumer-protection programs.
Conway said he expects that the program to assist affected Kentuckians will begin almost immediately, and the states expect to "really get it moving within the next nine months."
"The whole thing is envisioned to be completed within three years," he said.
The banks are among the largest in the country, but they don't have the top share of mortgages nationwide. Conway said that more than half of mortgages nationally are handled by government-affiliated Fannie Mae and Freddie Mac, which are not part of the settlement.
Of the roughly 66,000 foreclosures in the state from 2008 to 2011, the five banks signing on to the settlement announced Thursday were responsible for 5,400 of them, or 8.1 percent.
Kentucky stands to gain more, Conway said, if nine more large banks, including Fifth Third and U.S. Bancorp, sign on to a similar future settlement.
"We may get a bigger bounce because those nine coming up have a larger share of the mortgages in Kentucky," he said.
Conway said he has issued a subpoena to the Mortgage Electronic Registration System, a company that he said might have been used by the banks to circumvent state law through failing to properly record mortgages and pay filing fees throughout the state.
The participating banks are expected to notify affected consumers; but to learn whether you are eligible for assistance, you can do the following:
■ Go to NationalMortgageSettlement.com.
■ Go to Ag.ky.gov/mortgagesettlement.
■ Call banks directly at the following numbers: Bank of America, 1-877-488-7814; JP Morgan Chase, 1-866-372-6901; Wells Fargo, 1-800-288-3212; Citi, 1-866-272-4749; and Ally/GMAC, 1-800-766-4622.