Under the agreement, five major banks – Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial – will reduce loans for nearly 1 million households. The banks will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. They have three years to fulfill the terms of the settlement.
Which state did not join the settlement? Oklahoma held out and will not receive any money. Under the deal, 49 states said they won’t pursue civil charges related to these types of abuses. Homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges.
In addition to the payments and mortgage reductions, the agreement promises to reshape long-standing mortgage lending guidelines. It will make it easier for those at risk of foreclosure to make their payments and keep their homes.
The agreement applies only to privately held mortgages issued from 2008 through 2011. Those owned by mortgage giants Fannie Mae and Freddie Mac are not covered. Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement.
Many say the proposed deal doesn’t go far enough and had wished for a thorough investigation of potentially illegal foreclosure practices before a settlement was reached.
Under the agreement:
• Roughly $1.5 billion for direct payouts, in the form of $2,000 checks, for about 750,000 Americans who were unfairly or improperly foreclosed upon; another $3.5 billion will go directly to states.
• At least $10 billion for reducing mortgage amounts.
• Up to $7 billion for other state homeowner programs.
• At least $3 billion for refinancing loans for homeowners who are current on their mortgage payments but who are underwater.
Source: The Associated Press
