Banks, Gov’t Near Deal on Foreclosure Settlement
Up to 1 million at-risk, underwater borrowers may be eligible for a reduction on their mortgage principal, if a settlement between big banks and government officials gets the final approval.
The mortgage aid is reportedly on the table as big banks and federal and state government officials are nearing an end to months of settlement talks stemming from foreclosure abuses allegedly made by banks that caused many home owners to lose their home.
“We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Shaun Donovan, U.S. Housing and Urban Development Secretary, said during a recent forum at the Winter Meeting of the U.S. Conference of Mayors in Washington.
Under the proposed settlement, major lenders J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, and Ally Financial would pay between $20 billion to $25 billion to settle alleged foreclosure abuses.
Donovan also said banks also would reduce the mortgage principal of up to 1 million borrowers by about $20,000 each. Furthermore, he noted that some families who were wrongly foreclosed upon may get compensated as a result of the settlement.