This week a $25+ billion settlement was announced, the so called mortgage relief fund, thus being one of the biggest multi-state settlement since the 1998 tobacco agreement. This settlement is between the federal government/state attorneys general and with the banks Bank of America, Wells Fargo, JP Morgan, Citigroup and Ally Financial (formally GMAC).
The $25+ billion settlement goes as following:
$17 billion in credits to the banks on homeowners in risk of defaulting on their mortgage. Up to $20k per homeowner on their modification. (hmmm... it not the average home underwater about $50k?)
$5 billion in cash payments to borrowers who were wrongly or illegally foreclosed on between Sept.2008 to Dec. 2011. The max payout for the borrower to receive is $2k. (which is a nominal amount for a person foreclosed on that was forced to sign a loan they should not be in...yes, sarcasm)
$3 billion in credits to the borrowers that are currently in need of refinancing or some sort of modification.
$1 billion is the plus "+" that is currently unknown???
Now before you all think this is a great idea or win for the little man. This settlement is going to be funded from investors and taxpayers and not the banks. So get ready for more government issues, mortgage backed securities issues, and a longer recession.