After a year of attempting a settlement with five of the nation's major banks, an agreement was made on Thursday with 49 states (Oklahoma being the exception) to resolve "abusive and negligent foreclosure practices" that were charged against the banks back in 2008. With $26 billion, the big lenders will aim to benefit both those that were wrongly foreclosed on in the past, and many home owners who are currently under water. An approximate $17 billion will go towards reducing principals for distressed home owners who are either under water or behind on payments. $3 billion will go towards helping those who are current on their payments but wish to refinance in able to take advantage of the record low interest rates. Another $5 billion will go to states and the federal government, and will then be dispersed to those who have already lost their homes to foreclosure in settlement amounts of $1,500 to $2,000 per household. According to the agreement, it will also be the end of robo-signing (the source of the sloppy foreclosure practices) and harassment to delinquent borrowers. The banks have also agreed to reduce the principal interest more frequently during loan modifications. Wondering how the new agreement may benefit you? *If you borrowed from Bank of America, Wells Fargo, JPMorgan Chase, Citigroup or Ally Financial, you may be in luck! Unfortunately loans backed by Freddie Mac and Fannie Mae were not included in the agreement. *If you were foreclosed on between 2008 and 2011 you may qualify for a settlement of up to $2,000. Contact your lender to have your case reviewed. The payment amount will depend on how many households apply for the program."The U.S. Department of Housing and Urban Development expects about 750,000 former homeowners to take part". *If you're struggling financially with house payments, now is the time to look into refinancing (to lock in amazing rates) or loan modification. Unlike many debt forgiveness programs, principal reductions on home loans will not be considered taxable income in 2012 thanks to the Mortgage Debt Relief Act of 2007! Courtesy of CNN Money
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