Five U.S banks agreed to a $ 25 billion government settlement. This deal between the government and the banks accused of abusive mortgage practice may help a million borrowers. The result is a record state-federal settlement that will deliver wide, but not deep, relief to U.S. homeowners.
This deal requires the banks to cut mortgage debt amounts and extend $2,000 payments to borrowers who lost their homes to foreclosure. This deal is to be spread out over three years.
The deal in discussion will also release the banks – Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc – from civil government claims over faulty foreclosures and the mishandling of requests for loan modifications.
But the banks still face a host of other potential government enforcement actions and investor lawsuits related to their packaging of home loans into securities, and other mortgage-related activities.
Ira Rheingold, executive director of the National Association of Consumer Advocates, 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.”
The housing settlement gives President Barack Obama, as he seeks re-election in November, a chance to show his administration is willing to get tough with big banks to help ordinary Americans survive the pain of the nation’s foreclosure crisis.
The settlement is one piece of a larger package of relief efforts the administration hopes will boost the housing market, after prior programs to modify loans fell short of expectations.
Source – reuters.com