The United States and 49 state Attorneys General (no Oklahoma) reached a settlement with five banks over mortgage loan servicing and foreclosure abuses and fraud. A press release states, "The settlement addresses past mortgage loan servicing and foreclosure abuses and fraud, provides substantial financial relief to borrowers harmed by bank fraud, and establishes significant new homeowner protections for the future. This is the largest joint state-federal settlement in history and it is the result of a massive civil law enforcement investigation and initiative by state attorneys general, state banking regulators, and nearly a dozen federal agencies."
The NY Times reports, "Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected. Still, the agreement is the broadest effort yet to help borrowers owing more than their houses are worth, with roughly one million expected to have their mortgage debt reduced by lenders or able to refinance their homes at lower rates. Another 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000. The aid is to be distributed over three years."
However, it'll take months for homeowners to figure out whether they are eligible. One Florida couple, who lost more than $100,000 in mortgage payments after a suspiciously timed loan, said of the deal, "I try to be a grateful person, really I do. But it's almost a slap in the face when you consider everything we've been through." The National Association of Consumer Advocates executive director Ira Rheingold said, "The bottom line about this settlement, is it's okay, it's a step forward, it's a step in the right direction. But let's not kid ourselves, there's a hell of a lot more that needs to be done."
NY Attorney General Schneiderman outlined the $136 million settlement for New York "the most per 'underwater' borrower of any state in the nation, and the fourth highest dollar amount nationwide as part of the federal-state settlement. In addition to penalties for past abuses, the settlement includes direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs."
