I have already heard a lot of misinformation about the latest government/ servicers/ lenders regard to allegedly unlawful foreclosure activity. So, let’s set the record straight!! : Ten “major mortgage servicers,” including Bank of America and Wells Fargo, have agreed to pay a total of about $8.5 billion to atone for “alleged foreclosure abuses.” The latest settlement will send a whole 38 percent of damages paid in the direction of “eligible borrowers” who suffered foreclosure abuses, but the bulk of the money will go to “assisting borrowers in other ways, such as through loan modifications”. While 38 percent might not sound like much, it’s actually a great deal of money compared to the amount of money that has actually been disbursed in the wake of last year’s $25-billion mortgage settlement between many of the same banks and 49 of 50 state attorneys general (Oklahoma was asleep that day – LOL).
The ten banks participating in the agreement are Aurora Bank, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign Bank, SunTrust, U.S. Bank, and Wells Fargo. According to the settlement, “more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 will receive assistance under the agreement.” The terms of the settlement eliminate the traditional “case-by-case review” and promise to contact borrowers directly, whether they requested a foreclosure review or not, about a payment within the next two months. The agreement has received criticism from Congress because it effectively eliminates the foreclosure review process. “I have serious concerns that this settlement may allow banks to skirt what they owe and sweep past abuses under the rug,” said Maryland representative Elijah Cummings in response to the announcement.
Any settlement is a good thing because it provides some relief for distressed homeowners. However, we should keep things in perspective. The USA has about 14 TRILLION dollars of mortgage debt so this is a drop in the bucket, but it will help distressed owners to receive loan modifications and that is a good thing!! Yes, $14 TRILLION in mortgage debt…our government deficit is not higher than all of the mortgage debt combined!!!!!!!!!!!!!!!!
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