Mortgage deal could bring billions in relief
and state officials announced a $26 billion foreclosure settlement with five of
the largest home lenders. California is expected to receive approximately
$12 billion in principal write-downs, including through short sales, over the
next three years, according to the state attorney general's office.
Making sense of the
- The deal settles potential
state charges about allegations of improper foreclosures based on
robo-signing, seizures made without proper paperwork.
- The settlement sets up a
federal monitor to oversee the process and try to prevent the challenges
that tripped up many homeowners seeking help in earlier programs designed
to address the housing crisis.
- Most of the relief will go
to those who are underwater on their homes. That relief will come
over the course of the next three years, with banks having incentives to
provide most of the relief in the next 12 months.
- At least $17 billion will go
to reducing the principal owed by homeowners who are underwater and behind
on their mortgages.
- Up to 750,000 other
underwater homeowners who are current on their mortgages will be able to
refinance their current loans at lower rates. They will not receive
a reduction in principal, but with mortgage rates near record lows, they
could receive substantial savings on their monthly payments.
- Approximately $1.5 billion
will go to homeowners who had their homes foreclosed upon between Jan. 1,
2008 and Dec. 31, 2011, and who meet other criteria. They will
receive up to $2,000 each.
- The five mortgage servicers that are parties
to the settlement include Bank of America, JPMorgan Chase, Citigroup,
Wells Fargo, and Ally Financial (formerly GMAC).
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