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.
President Obama Speaks on Landmark Housing Settlement with Banks
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.
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?