Five major banks in the United States have accepted a $25 billion government settlement over allegations of abusive mortgage practices. As a part of a remarkable state-federal settlement, this agreement aims to provide substantial, albeit not profound relief, potentially assisting a million home borrowers throughout the nation.
For their part in the agreement, the banks, including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc, are obligated to reduce the mortgage debt amounts and issue payments averaging $2,000 to borrowers who faced foreclosure. The settlement will be carried out over the span of three years.
In addition to relieving these big-name banks of civil government suits involving improper foreclosures and mismanagement of loan modification requests, the plan also retains the potential for further government actions and investor litigations regarding their packaging of home loans into securities and other related facets of mortgage operations.
Ira Rheingold, the executive director of the National Association of Consumer Advocates, spoke about the settlement stating, “It’s okay, it’s a step forward, it’s a step in the right direction. But let’s face facts, there’s significantly more work to be done.”
This housing settlement provides President Barack Obama, who is currently in the race for re-election in November, an opportunity to demonstrate that his administration is determined to take harsh measures against large banks in order to alleviate the distress of ordinary Americans caught in the country’s foreclosure crisis.
The settlement is one segment of a more extensive package of relief efforts that the administration hopes will facilitate the housing market’s recovery, especially after previous programs designed for loan modification did not meet expectations.
Source – reuters.com, smartasset.com
