On Thursday, January 9th, 2012 – 49 State Attorneys General and the federal government reached a $25 billion settlement with the nation’s five biggest banks with regard to the Foreclosure crises that came to light late in 2010.
“First, the basic terms of the settlement: Under the deal, $20 billion will be allocated to principal reductions and mortgage refinance assistance, and $1.5 billion to homeowners who were improperly foreclosed upon — victims of the so-called robo-signing scandal. About 1 million homeowners will qualify for principal reductions of up to $20,000, and some 750,000 who were foreclosed upon between January 2008 and December 2011 will receive $1,500 to $2,000 checks. The rest of the settlement will be distributed to the states and federal government for foreclosure prevention programs.” www.moneyland.time.com
The settlement provides benefits to borrowers whose loans were foreclosed on, as well as home owners who still own their homes but are facing foreclosure. However, only loans serviced by Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial are eligible under this settlement.
Loans guaranteed by Fannie Mae and Freddie Mac, which account for more than half of US home mortgages – aren’t eligible. And, if your mortgage was funded by any other bank (then the big five), or is held by a private investor, you are not eligible under this settlement.
That being said, the architects of Thursday’s agreement feel that this settlement will make loan modifications more widely available to the distressed homeowners not eligible. And hopefully, homeowners seeking help though the short sale process will find the process easier.
John Melo, CEO for Century 21 M&M says, “The distressed housing market is beginning to clean itself up. Home sales are starting to pick up and I think we are beginning to see the end of the mortgage crisis.”