Big Bank Foreclosure Fraud, Robo-Signer Settlement
Federal officials announced a $25 billion settlement Thursday with the five largest mortgage lenders over foreclosure abuses — a deal that requires the banks to reduce some loans, send out checks to foreclosed Americans and refinance mortgages for underwater borrowers.
Bank of America will pay the most to borrowers as part of the deal — nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase will pay roughly $4.2 billion, Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. This does not include $5.5 billion in federal and state payments.
Who gets what?
At least $10 billion will go toward reducing the principal for borrowers who are delinquent or underwater borrowers at risk of default. Tha is in stark contrast to President Obamas recently proposed housing re-fi program that disallowed owners who missed more than one payment.
Remember, its estimated that in order to completely wipe out ALL of the negative equity for the 11,000,000 underwater owners it would cost…700-800 BILLION. Cold hard fact is that one in five Americans with mortgages are underwater. On average, these homeowners are underwater by $50,000 each. With this settlement, at least $3 billion will go toward refinancing. Other payments will go toward state governments, and the federal government.
What does this mean to you…?
Roughly one million underwater owners are expected to have their mortgage debt reduced by lenders or able to refinance their homes at lower rates. Another 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000. The aid is to be distributed over three years. The settlement money will be doled out under a complicated formula that gives banks varying degrees of credit for different kinds of help. As a result, banks are incentivized to help harder-hit borrowers with homes worth far less than what they owe.
Is this the end of it…housing crisis over? You tell me…
4,000,000 have already lost their homes to foreclosure.
6,000,000 are currently IN default
11,000,000 are underwater (NOT including those who are termed, “near-underwater”. They would be underwater if they were to list their homes for sale factoring in normal selling fees etc)
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This sounds like a good start to a recovery. Thanks for sharing.
Great info on this post thanks for your sharing it with us