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Landmark Settlement in Illegal Foreclosures

Today, history was made. Federal and state officials announced that they’ve reached a $25 billion dollars settlement with the nation’s biggest banks over the banks’ various foreclosure fraud abuses, such as “robo-signing” foreclosure documents and submitting falsely notarized documents to courts. The settlement has been in the works for several months, as a few key states — most notably California and New York — were holding out for tougher terms against the banks.

The agreement involves five lenders: Wells Fargo, Citigroup, JPMorgan Chase, Bank of America, and Ally Financial.

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President Obama Speaks on Landmark Housing Settlement with Banks


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Forty-nine states will receive funds from the settlement — Oklahoma being the only state who didn’t agree to the terms. What’s up with Oklahoma??? BoxcarOkie? Any insight?

Under this landmark settlement, lenders will pay penalties and reimburse borrowers for wrongful foreclosures and their roles in creating underwater mortgages. In addition, the five lenders agree to reduce mortgages and revise lending guidelines. In return, the 49 states agree not to file civil charges against the banks (although homeowners can still file civil suits, and states can file criminal charges, if they choose) for their abuses.

Though the deal does offer some money — up to $2,000 — for those who lost their homes during the housing bust, its primary thrust is forward-looking, offering partial loan forgiveness or “principal reduction,” to struggling homeowners.

This does not make me happy. In fact, it makes me very angry! Here is where this settlement appears to be a buyout. Only “up to $2,000”??? You’ve got to be kidding me! For losing your home to illegal foreclosure. If the true value of the homes were awarded to the homeowners, the banks listed in this settlement would most likely go under. At the minimum, suffer severe monetary damages.

Although this settlement is a step in the right direction, it is not enough for the victims who have lost their homes. The banks may incur a “ding” in their profit line, but they will still go on being crooks and liars.

Officials were careful to note that the deal does not end the government’s investigation into the housing bust. I am glad to hear this, and I hope the investigation continues and criminal felony charges are filed against them all.

Under the deal:

• The five lenders agree to pay $1.5 billion to nearly 750,000 homeowners who suffered unfair or improper home foreclosures. Each homeowner will receive $2,000 within the next three years.

• $3.5 billion will be paid directly to the 49 states who signed on. Okay, fellow readers, help me out here. I’m not making the connection as to why the states are receiving a settlement.

• $10 billion will be used to reduce existing mortgages, making monthly payments affordable so homeowners can stay in their homes.

• $7 billion will be contributed to state homeowner programs.

• Approximately $3 billion will be used to refinance mortgage loans for homeowners who owe more than their home is worth (otherwise known as underwater mortgages). Now this is wonderful news, and I hope these refi’s happen with urgent speed.

More details on the agreement can be found at this government website.

Related Articles

Forbes: How The $25 Billion Foreclosure Settlement Will Really Affect The Housing Market
CNN Money: Big banks’ bloated mortgage tab
The Washington Post: What does the foreclosure settlement mean for you?

14 Comments »

  1. Doesn’t do a damn thing to help me out. I’m meeting with a lawyer in a couple weeks to determine what can be done about the sudden appearance of an extra $20,000.00 on my credit report, which is NOT being reported as being owed to the company in question to the IRS, AFTER the sale of my foreclosed home was reported to me along with the funds I owed due to that sale. I was never told of this money, what it is, why it’s there, etc.

    I’m wondering what is being done about questionable practices such as this. My guess is, nothing.

    • I thought about you when I heard this news yesterday. Your loan company is a shark – even I refused to use them when I was working in that market. There has to be someone who can help, we just have to keep looking.

      • Well, if the lawyer can’t, or won’t, help me out, I will bombard the media with emails and phone calls on this matter. I ain’t letting this one drop without making noise. They were, and are, totally and completely aware of my situation and have been since 3 months before foreclosing. I informed them. They also know I’m a disabled veteran and my income is all disability income.

        Sharks, indeed.

        I was willing to pay them the initial small amount I owed. Now, they ain’t getting a dime.

        • Just wanted to follow up that you had no idea what your company was about. You trusted them, as all people applying more mortgages should do . Sharks should not exist – especially when it comes to the most important thing they ever buy – their home. You most likely will not get help directly from them, as you can tell, but will have to seek help which will apply pressure to your company.

        • You are absolutely right! I DID trust them due to the way they “acted” when I first informed them of my situation. They held off the foreclosure of my home since they were completely aware I had a pending claim with the VA which was coded “homeless” for expedited processing, AND it had a Congressional on it, meaning the Congressman was involved due to errors with the claim by the VA.

          I trusted them due to the way they responded when I called once I received the letter in April explaining all fees and charges once the home was sold after the foreclosure was completed. I was told to call again when I knew more about the status of the claim and we could work out a payment plan for the small amount I owed as outlined in that letter.

          They abused that trust, as have so many others; individuals and institutions. As payment for abusing my trust, they now receive nothing… except quite possibly media exposure and litigation.

  2. Really, 2000 FRIGGIN bucks! When GMAC forclosed on me illegally, when I didn’t owe them a dime they cashed my checks right up to the day they sent intent to forclose. Because I filed BK due to loss of job They wanted me to reimburse them for their attorney fees, I even had a judge throw out their motion, GMAC, NOW ALLY, can kiss my A**!!

    • I know. It’s horrible. They really should have done a LOT more for the victims of illegal foreclosure. One’s home is NOTHING to take lightly. It is almost always the most important thing someone buys.

  3. A measly $2,000!? And even that not coming for up to three years? It’s pretty obvious who bought off whom in this deal.

    As for Oklahoma, my old home state, I’ve absolutely no idea. There are most certainly as many dispossessed and floundering homeowners there as anyplace else. Maybe the banks there bought off the state lawmakers …

  4. Rose, I don’t know you, but I feel like getting the news media all over this too. I am also a DIsabled Veteran and they totally deceived and scammed me on my home. I had to go bankrupt and foreclosure. We Veterans are supposed to get extra money. I am trying to find all the information for myself and also my fellow Veterans. I called Wells Fargo and they don’t even have me in their system as if I am lost and they don’t even care. I am willing to fight for myself and the other people stuck in this messed up situation. I am tired of getting stepped on!!!

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