Breaking News: The Robo-Signers Mortgage Fraud Fiasco may be coming to a conclusion…
This may appear to be good news on the surface. After all, there
appears to be some sort of justice happening on behalf of owners.
However, what this settlement will also trigger is millions of
foreclosures. All the owners who are in default (6,000,000) will see
their foreclosures happening faster. We have already seen a dramatic
increase in NODs. The banks were clearly holding back the foreclosure
process until this issue was ‘resolved’.
Remember:
4,000,000 - have already lost their homes to foreclosure.
6,000,000 - are in default NOW.
11,000,000 - are underwater on their mortgages.
Officials from more than 40 states have signed onto a record $25
billion settlement with the five biggest banks related to foreclosure
abuses including “robo-signing” of documents.
The settlement would require banks to provide billions of dollars in
aid to homeowners who have lost their homes to foreclosure or who are
still at risk.The deal would set aside up to $17 billion specifically to
pay for principal reductions and other relief for up to one million
borrowers who are behind on their payments but owe more than their
houses are currently worth. The deal would also provide checks for about
$2,000 to roughly 750,000 who lost homes to foreclosure.
The banks — led by the five biggest mortgage servicers, Bank of
America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial —
want to settle an investigation into abuses set off in 2010 by evidence
that they foreclosed on borrowers with only a cursory examination of the
relevant documents, a practice known as robo-signing. Four million families have lost their homes to foreclosure since the beginning of 2007.
The deal with Bank of America, Wells
Fargo, Citigroup, JPMorgan Chase, andAlly Financial will reportedly
total $25 billion. Some $17 billion of that would go toward writing down
mortgage principal for an estimated 850,000 troubled borrowers, $3
billion could go toward restitution payments of $1,500-2,000 each to
borrowers who lost their homes to foreclosure, and the rest could go to
state funds for foreclosure relief
The biggest remaining holdout, California, has returned to the
negotiating table after a four-month absence, a change of heart that
could increase the pot for mortgage relief nationwide to $25 billion
from $19 billion.
If banks fall short of the multibillion-dollar benchmarks set out for
principal reduction and other benefits for homeowners, they will have
to pay the difference plus a penalty of up to 40 percent directly to the
federal government, according to Mr. Madigan.
The depressed housing market continues to pose a drag on the halting
economic recovery. Some 11 million families owe more on their houses
than they are worth.
The settlement, if all states participate, will also include $3
billion to lower the rates of mortgage holders who are current. Banks
will get more credit for reducing principal owed and helping families
keep their homes, and less for short sales or taking losses on loans
that were likely to go bad, like those that were severely delinquent.
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