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Archive for Friday, February 10, 2012

$25B foreclosure abuse settlement reached

February 10, 2012

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Kansas to receive $50M from deal

Topeka — Attorney General Derek Schmidt says Kansas residents will share about $50 million of a $25 billion settlement reached between the federal government, states and several mortgage lenders.

The deal announced Thursday is the largest industry settlement since the 1998 multistate tobacco settlement.

Schmidt said the state’s share of the settlement would be direct payments to some homeowners who lost their homes to foreclosure.

Under the agreement, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will reduce loans for about 1 million households. They will also send checks of $2,000 to about 750,000 Americans, including about 4,000 Kansas residents, who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

— A landmark $25 billion settlement with the nation’s top mortgage lenders was hailed by government officials Thursday as long-overdue relief for victims of foreclosure abuses. But consumer advocates countered that far too few people will benefit.

The deal will reduce loans for only a fraction of those Americans who owe more than their homes are worth. It will also send checks to others who were improperly foreclosed upon. But the amounts are modest.

It’s unclear how much the deal will help struggling homeowners keep their homes or benefit those who have already lost theirs.

About 11 million households are underwater, meaning they owe more than their homes are worth. The settlement would help 1 million of them.

“The total number of dollars is still small compared to the value of the mortgages that are underwater,” said Richard Green, director of the University of Southern California’s Lusk Center for Real Estate.

Federal and state officials announced that 49 states joined the settlement with five of the nation’s biggest lenders. Oklahoma struck a separate deal with the five banks. Government officials are still negotiating with 14 other lenders to join.

The bulk of the money will go to California and Florida, two of the states hardest hit by the housing crisis and the ones with the most underwater homeowners. The two states stand to receive roughly 75 percent of the settlement funds.

Of the five major lenders, Bank of America will pay the most to borrowers: nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion, Citigroup about $1.8 billion and Ally Financial $200 million. The banks will also pay state and federal governments about $5.5 billion.

The settlement ends a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — an action known as robo-signing.

President Barack Obama praised the settlement, saying it will “speed relief to the hardest-hit homeowners, end some of the most abusive practices of the mortgage industry and begin to turn the page on an era of recklessness that has left so much damage in its wake.”

The deal requires the banks to reduce loans for about 1 million households that are at risk of foreclosure. The lenders will also send $2,000 each to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011. The banks will have three years to fulfill terms of the deal.

Comments

jhawkinsf 2 years, 5 months ago

I recall during the heyday of the refi industry. I'd get calls three times a day, every day. Even got some on Christmas Day. I knew it was a scam, too good to be true. Not all my neighbors knew. They took some equity, bought boats and took vacations. Not me. I just worked hard and paid off my mortgage. Free and clear with a sense of relief. Done. Some of my neighbors are now underwater in their mortgages. They had their fun on the boats and look back at the good old days when they took lavish vacations. Now they're being bailed out by the banks who acted illegally and by the taxpayers who acted responsibly. It just seems like poor behavior is being rewarded at the expense of those who behaved responsibly.

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jafs 2 years, 5 months ago

That's certainly part of what happened, both on an individual, and corporate level.

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just_another_bozo_on_this_bus 2 years, 5 months ago

"It just seems like poor behavior is being rewarded at the expense of those who behaved responsibly."

Actually, it really seems that you're overgeneralizing, as usual.

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Richard Heckler 2 years, 5 months ago

10 reasons NOT to bank with Bank of America http://www.truth-out.org/ten-reasons-not-bank-or-bank-america/131

$25 billon hardly covers the cost of the massive unemployment numbers:

ENTITLEMENT Where did the Bailout Money Go? Not much is known http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

ENTITLEMENT - Home Loan Wall Street Bank Fraud cost consumers $ trillions, millions of jobs, loss of retirement plans and loss of medical insurance. http://www.dollarsandsense.org/archives/2009/0709macewan.html

Move Your Money - To local institutions and do your community a large favor.

A database to assist those wishing to move their money out of big banks that took taxpayer money and used it to pay themselves large bonuses:

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Flap Doodle 2 years, 5 months ago

Isn't the Mope going to receive the coronation of the Democratic Party at Bank of American Stadium this summer? LOLZ!

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gr 2 years, 5 months ago

Rather than bailout, isn't this just another support for entitlements? Once everyone think they are entitled to something, they will vote for those who give them the most. You can also control people better.

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gr 2 years, 5 months ago

vertigo, they expected to make a certain amount of profit. That money is now not there. What do you think is going to happen? Close, or raise rates/fees/etc.?

But, it doesn't matter where the money is coming from regarding my point. People feeling entitled don't care where their entitlement is coming from as long as they get gimmes. Especially if they make a mistake and think someone else should bail them out. As in, 'it's not my fault, someone else needs to pay.'

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deec 2 years, 5 months ago

It must be nice to be able to steal hundreds of billions of dollars in houses and then have to pay back pennies on the dollar, with no criminal prosecutions for fraud.

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Richard Heckler 2 years, 5 months ago

$25 billion settlement = crime pays off handsomely. This $25 billion has proved to be smart investment.

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