A settlement to the tune of $25 billion dollars has been reached after 5 of the nations largest mortgage providers have been found accountable by Federal and State officials of foreclosure abuses. The settlement will prove to be huge windfall for up to 2 million homeowners seeking help in the wake of the housing market collapse.
The deal reached between the 5 banks (Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial) and federal officials comes after a year of negotiating the settlement of investigations into exploitive foreclosure methods like “robo-signing.”
Attorneys from 48 states worked alongside Federal officials to secure what they felt were appropriate restitution amounts for homeowners.
In a Washington news conference, U.S. Housing and Urban Development Secretary Shaun Donovan stated: “This isn’t just about punishing banks for their irresponsible behavior. It’s also about requiring them to help the people they harmed by funding efforts to help homeowners stay in their homes.”
With the settlement in place, an independent monitor will be placed in charge of enforcing a new set of national standards tailored to benefit the consumer. Individuals looking to modify their existing mortgage will find the process to be far less difficult and drawn-out.
Also, as part of the multi-state settlement, the 5 banks held accountable are committed to infusing a range of compensation and aid programs with billions of dollars. Portions of the benefit amount include 1 million homeowners receiving $17 billion in relief in mortgage principal reduction.
State and Federal officials are working to sign nine large mortgage servicers onto the settlement, potentially increasing the final deal to $30 billion. Banks will receive a range of credits for executing settlement actions, increasing assistance totals to homeowners. The total amount of assistance to homeowners could reach $40-45 billion.
Even after the settlements have been paid out, banks and servicers are not off the hook. New standards and regulations set for financial institutions will be enforced and suspected abuses investigated.
U.S. Atty. Gen. Eric Holder said: “While today’s agreement resolves certain civil claims based on mortgage loan servicing activities, it does not — it does not — prevent state and federal authorities from pursuing criminal enforcement actions.”
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