Government officials announced Monday the nation's five biggest lenders have agreed to overhaul the industry after deceptive foreclosure practices and robo-signing caused many homeowners to lose their homes. The proposed settlement applies to privately held mortgages issued between 2008 and 2011.
According to an Associated Press report, five major banks -- Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial -- and U.S. state attorneys general could adopt the agreement within weeks. It's expected President Barack Obama will mention new developments in the negotiations in his State of the Union address on Tuesday.
A settlement between the banks and the states doesn't mean homeowners who lost their homes to foreclosure will get them back. In fact, they're unlikely to benefit much at all financially, though the total financial settlement could be as high as $25 billion.
If the proposed settlement terms are accepted, roughly 1 million of these homeowners could see the principal amount of their mortgages reduced by an average of $20,000. That's good news for some, but bad news for the other 10 million homeowners who would like to claim a principal reduction but won't qualify. ..............(more)