Thursday morning, during very contentious political times, a bi-partisan $26 Billion dollar deal was reached with five of the largest U.S. banks, as a result of the Obama Administration’s effort to reimburse homeowners for mortgage abuses.
By Wednesday afternoon, the controversial settlement was signed by over forty Republican and Democrat Attorney Generals across the county.
The investigation of the fraudulent robo-signing practice that resulted in revolving door mortgage documents being signed off, without verification of authenticity, began in 2010. The settlement reached on Thursday included mortgage servicers Bank of America, JPMorgan Chase, Wells Fargo and Ally Financial. All were previously bailed out by tax payer dollars.
“These practices were plainly irresponsible and we refused to let them go unanswered,” said President Obama said in his White House statement. “This settlement is a start. We’re going to make sure that the banks live up to their end of the bargain.”
Critics of the agreement said it would only succeed in giving immunity to banks that conducted such practices and would provide little relief to homeowners, who are upside down in their mortgages or have already lost their homes.
However, according to a report in The Hill:
At least $3 billion will go toward refinancing the loans for homeowners who are current on their mortgage payments but who are underwater and at least $10 billion will be used to reduce mortgage amounts. About $1.5 billion will go toward direct payouts, with about 750,000 homeowners receiving checks between $1,500 and $2,000 for improper foreclosures.
Under terms of the agreement, individual state Attorney Generals will still have the ability to bring banks up on criminal charges.
Republican AG, Rob McKenna, of Washington State was a key negotiator in the settlement terms.
“We will have a strong enforcement mechanism in place here,” said McKenna in a press conference Thursday. “Home owners will ultimately be the first ones to tell us if the policies aren’t being followed.”
Furthermore, two Washington Senators have sponsored bills that would make if more difficult for mortgage services to cheat homeowners in foreclosure proceedings.
Bill SB-6199 has been sponsored by Republican Pam Roach and co-sponsored by Democrat Adam Kline. It would make it easier to charge a mortgage servicer with a Class C felony. The second bill, introduced by Kline, SB-6070 would require all changes in ownership of property during the mortgage process be recorded in the county, where the property is located.
According to an ABC News report on Wednesday:
In January, the Federal Reserve's Federal Open Market Committee announced it expects to keep federal funds rate at zero to 1/4 percent at least through 2014, saying the housing sector remained depressed. The federal funds rate is the rate at which banks lend to each other overnight.
The move was designed to hold rates low in order to help the housing market recover, which could help stabilize the U.S. economy.
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