Foreclosure settlement offers most aid to those deepest underwater
Homeowners more deeply underwater on mortgages handled by five major U.S. banking firms are prime candidates for getting help from a $25 billion nationwide settlement over alleged foreclosure abuses, The Los Angeles Times reports. That's because the settlement gives the nation's largest mortgage servicers more incentives to help those who owe 40% to 75% more than the value of their homes, according to details of the settlement filed Monday in U.S. District Court in Washington. In a complex series of formulas designed to maximize the effect of the deal reached last month, banks will get more than six times the credit for reducing loans for severely underwater borrowers than they would for helping those who owe 5% to 15% more than the value of their homes. The settlement—which still needs approval by a federal judge, and is expected to get it—would end nearly a year and a half of investigations by the Justice Department, the Housing and Urban Development Department, and attorneys general in 49 states into botched foreclosure paperwork and mortgage servicing problems. Many details about the settlement with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. were not available until the paperwork was submitted to the court Monday. The agreement includes close oversight of bank compliance by a special monitor, with penalties of up to $1 million for first violations and up to $5 million for second infractions stemming from widespread failure to comply with specific terms. Read the full story for additional details on the settlement and analysis here.
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The $50 billion boom
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