Government lawyers announced a settlement has been reached with the 5 largest mortgage lenders in the country. The settlement came in response to the banks deceptive practices relating to foreclosures. A draft of the settlement s with the parties for review.
The deal is unlikely to really benefit those who lost their homes over the last few years, they will not be able to return to their houses. They may be eligible for up to $1,800 in reimbursement for their troubles. The settlement is said to be for around $25 billion dollars, second only to the settlement between the States and Big Tobacco.
The major benefit to the agreement is that those who are in trouble with their mortgages may find it much easier to restructure their payments allowing them to stay in their homes.
Five major banks -- Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial in addition to the States Attorneys general could adopt the deal within weeks.
Nearly 8 million Americans have faced foreclosure since the housing bubble burst. In some cases, companies that process mortgages failed to verify the information on foreclosure documents. The worst practices, known collectively as "robo-signing," included employees signing documents they hadn't read or using fake signatures to sign off on foreclosures.
Sources say President Barack Obama is going to talk about the settlement in the State of the Union address. There are some who are not happy with the deal because they say no one is being held responsible for the illegal actions of some of the banks.
Sen. Sherrod Brown, who was less than thrilled with the settlement said in a statement,
"Wall Street again is trying to pass the buck. Instead of criminal prosecutions, we're talking about something that's not more than a slap on the wrist."As part of the deal about a million homeowners will be able to restructure loans where they owe more than the house is worth. Up until now these people had very little hope of being able to refinance.
The deal allegedly is made up of the following points,
-- $17 billion would help struggling homeowners reduce the principal of their loans.
-- $5 billion would be placed in State escrow to pay $1,800 to those who lost their home due to the banks deceptive practices
-- About $3 billion would to help homeowners refinance at 5.25 percent.
Do you think the banks are getting off easy with this settlement?