US Attorney General Eric Holder, HUD Secretary Shaun Donovan, and 49 state Attorney Generals announced an historic mortgage foreclosure deal with five of the nation's biggest lenders. The deal with the states included all the states except Oklahoma. It also included Illinois, led by Attorney General Lisa Madigan. The state of Illinois will receive $1B of the settlement amount.
(MoneyWatch) Government officials have struck a $25 billion settlement with five of the nation's largest lenders to address mortgage-servicing and foreclosure abuses committed by the companies.
The agreement, which the U.S. Justice Department announced Thursday after more than 16 months of negotiations involving all 50 U.S. states, federal authorities and the banks, provides financial relief for homeowners and toughens standards for how financial firms service mortgage loans. Joining the deal are the country's largest mortgage servicers: Ally Financial, Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC).
Under the terms of the deal, mortgage servicers must allocate $20 billion to various types of mortgage relief for borrowers. At least $10 billion of that total will go toward reducing the principal for borrowers who are behind, or at risk of defaulting on, their loans at the time of the settlement and who owe more on their mortgages that their homes are worth. A minimum of $3 billion will go toward helping homeowners who also are "underwater," but current on their loans, refinance at lower interest rates. Up to $7 billion will be allocated toward offering other forms of aid, including forbearance of principal for unemployed borrowers, "short sales," and financial assistance for homeowners whose homes are foreclosed. In addition, loan servicers must pay $4.25 billion to the states and $750 million to the federal government.
What this deal means for the state of Illinois was stated by Attorney General Lisa Madigan in a press release,
"While the settlement is a big step forward in our efforts, it is not the end. In Illinois, we will continue to take strong legal action against lenders, banks, servicers and others who contributed to the housing and economic collapse," she said in a statement.
Madigan's office said the money will be used to help Illinois residents who've lost their homes, are at risk of defaulting on their mortgages or owe more than their homes are worth.
Last month, Madigan filed a lawsuit accusing Standard & Poor's of misleading investors by assigning its highest ratings to risky mortgage-backed investments during the years leading up to the crash of the housing market. The lawsuit alleged that the agency compromised its independence by issuing high ratings for unworthy or risky investments as part of a strategy to boost revenue and market share.
The housing market is considered the missing piece of the economy, that will lead America to a full recovery and full employment.
Send John Presta an email and your story ideas or suggestions, johnpresta@att.net.
John is the author of an award-winning book, the 2010 Winner of the USA National Best Book award for African-American studies, published by The Elevator Group Mr. and Mrs. Grassroots: How Barack Obama, Two Bookstore Owners, and 300 Volunteers did it. Also available an eBook on Amazon. John is also a member of the Society of Midland Authors and is a book reviewer of political books for the New York Journal of Books
Comments