$26 Billion Foreclosure Banking settlement may net Highlands Ranch Homeowners up to $2,000.
This article from RISMedia/MCT states that after more than a year of negotiations, the nation’s biggest banks, states attorneys general and federal officials have announced the largest housing settlement ever—more than $26 billion—over foreclosure practices. The deal is expected to offer relief to more than one million U.S. homeowners who are having trouble paying their mortgages or have lost their homes to foreclosure.
The settlement is with five big banks: Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc., the company formerly known as GMAC, owned by the taxpayers.
Of the $26 billion, $17 billion must be spent toward direct relief to borrowers, with a big chunk of that—60%—going toward principal reductions, or the write-downs of mortgage debt, as well as other kinds of loan modifications or assistance.
Under the terms of the settlement, $5 billion will go toward a reserve account for state and federal programs and to individual homeowners harmed by bank practices. Negotiators have said that about 750,000 people could receive checks for about $1,500 to $2,000.
About $3 billion will go toward helping borrowers who are current on their mortgages but have no equity in their homes to refinance into new, lower-cost loans. The program will be similar to an existing Obama administration program that seeks to help underwater homeowners, that has yet to work to the way it was designed.
It was also announced Thursday that the government will resolve its claims against Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates for underwriting and origination mortgage fraud. As part of the settlement, Bank of America will pay $1 billion to resolve the wrongdoing uncovered during the office’s investigation.
Peter Hunt, president and CEO of Hunt Real Estate ERA, and a member of RISMedia’s Real Estate Information Network® (RREIN), said, “I don’t believe that the settlement will in and of itself solve the significant problems in the entire housing market. Some markets have already gone a long way toward self-correction and lenders all across the country are slowly getting on board with realistic means to deal with ‘short-sale’ situations to avoid even larger losses from foreclosures. Investors have also moved in to soak up a good portion of the toxic inventory in many parts of the country.”
Bill Plattos, executive vice president and broker of First Team Real Estate in Irvine, California, also a member of RREIN, took an opposing view of the settlement, stating, “I do not know all of the details behind the settlement but I do not see how homeowners who are not making payments, taking no responsibility, put nothing down, etc., are going to be rewarded because the government in my opinion wants to look like they are taking no responsibility and just making the banks the sole bad guys.”
Richard Green, also was not impressed with the outcome. “I really don’t see this as being that big a deal,” he said. “In reality, the total number of dollars is still small compared to the value of the mortgages that are underwater.
Donovan continued to state that this move is critically focused on ensuring homeowners who have been wronged by abuses are able to benefit as well. “Roughly 1 million homeowners will be able to benefit from principal reductions of their loans, and from refinancing.” Donovan then went on to discuss how neighborhoods will also benefit, as homes that have been left vacant will be purchased and renovated, so property values will increase.
The next step is for the settlement to be filed as a judgment in federal court within a couple weeks. The court will need to approve the judgment. After that, servicers will be obligated to write a check and deposit some funds into an escrow trust that will distribute cash to federal governments and states.
Watch for more details as to who gets a check, how they a check, who will scam the system, and abuses the system, and why its not fair to everyone else who pays ontime and abides by their terms.
Contact Michael at firstname.lastname@example.org to discuss this huge settlement.