Foreclosed Homeowners May Gain Little in Huge Bank Settlement
Foreclosed borrowers abused by their lenders won't get their homes back, but they could get a little cash from a settlement under negotiation between state officials, the Obama administration, and the nation's biggest banks.
A coalition of attorneys general led by Iowa AG Tom Miller and federal housing chief Shaun Donovan is currently pushing for a $25 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and Ally Financial (formerly known as GMAC). At issue is bad mortgage servicing and fraudulent foreclosure paperwork.
Attorneys General Eric Schneiderman of New York and Beau Biden of Delaware have warned Miller's focus is too narrow and the deal would let banks off the hook for too much wrongdoing. In August, Schneiderman and Biden broke off from the talks; they are now pursuing their own investigations.
The deal as currently stands would extract $17 billion worth of mortgage modifications and principal reduction for struggling borrowers, among other things, according to a source familiar with the situation. Another $3 billion would be set aside to boost refinancing. And from $5 billion paid directly to state and federal governments, foreclosure victims abused by one of the five banks would be eligible for restitution payments of around $1,500 or $2,000.
Read the full story at The Huffington Post.
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