An announcement was made this morning by Federal and state officials, 49 state attorneys and the federal government have agreed on a $25 billion settlement with the nation’s five largest mortgage servicers in regards to what was known as “loan servicing and foreclosure abuse”. Evidence of robo-signing began to show in 2010 during a high number of foreclosures.
These five banks include: Wells Fargo, Bank of America, JPMorgan Chase, Ally Financial and Citigroup. An estimated $17 billion of the $25 billion will go towards mortgage principals for nearly 850,000 borrowers, $3 billion may go towards restitution payments, meaning $1,500 for each borrower who has lost their home due to foreclosure. The rest of the money is expected to go towards state funds for foreclosure relief.
California and New York showed interest in the deal but ended up staying out. Attorney Generals from Nevada and Delaware have also not agreed with the deal, given their February 6 deadline. However, states may still sign on and it is expected that more will.
"This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan. “Banks must follow the laws. Any bank that hasn’t done so should be held accountable and should take prompt action to correct its mistakes. And it will not end with this settlement."
Do you think this judgment is significant?
Do you think the lenders are getting off easy?
What impact will this have on future and current foreclosure proceedings?
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