Landmark settlement announced against banks for robo signing foreclosures: $12 Billion for California mortgage principal reductions
After months of negotiations, 5 major banks settled charges of fraudulently signing foreclosure documents by agreeing to pay $25 Billion dollars out to homeowners and people who lost their homes to foreclosure over the next 3 years. Further lawsuits and actions from investors and the federal government still loom against many lenders.
Under this agreement, $12 Billion is guaranteed to go to California.
Nationwide, $17 Billion is allocated towards homeowners who are currently behind on their payments in the form of loan modifications and principal reductions.
Another $3 Billion is allocated to homeowners who are underwater and have been unable to refinance their homes,
Sadly, only $1.5 Billion has been allocated to help the people who lost their homes to foreclosure between 2008 and 2011. $2,000 is expected to be paid out to some 750,000 borrowers. In my opinion this is a pittance and poorly addresses the point of the charges made against the banks. The banks admitted there were situations where uninformed people signed hundreds of thousands of false documents to accomplish foreclosure when the original loan documents had been lost.
Read the original article at Reuters: http://www.reuters.com/article/2012/02/09/us-usa-economy-idUSTRE7BM0AB20120209?feedType=nl&feedName=ustopnewsearly
Although there are financial incentives for them to accomplish more during the 1st year, the actual terms of the settlement allow the banks 3 years to pay out the money.