It is anticipated that Congressional Democrats will keep putting pressure on the FHFA (Federal Housing Finance Agency) to reduce mortgage principal balances for federally-backed home loans in the event that a settlement with America’s banks fails to provide struggling homeowners with sufficient assistance.
The federal government is reportedly on the verge of an agreement with banks that could equate to assistance for approximately 1 million American homeowners. The settlement, which also includes states’ attorneys general, necessitates the country’s 5 biggest banks paying in the region of $25 billion for the purpose of helping homeowners who were the victims of robo-signing tactics involving banks processing foreclosures without assessing the relevant documentation adequately. The banks involved are Wells Fargo, Bank of America, JP Morgan Chase, Ally Financial and Citigroup.
This settlement would mean that the 1 million homeowners across the country would each receive an average deduction of $20,000 in the principal balance on their mortgages. It is however not clear at this stage who exactly would be eligible. Democratic lawmakers are particularly interested in seeing this benefit go towards homeowners who are saddled with underwater mortgages, referring to cases where homes are valued at less than the amount that is owed on them. Principal reductions are one of the methods employed by banks when implementing a home loan modification.
At this stage, house Democratic aides are unable to provide specifics regarding their next move, due to the fact that they lack clarity regarding who the 1 million homeowners is representative of. The White House is hopeful that all 50 states will sign on to a final deal as a show of support, but this looks unlikely at present.
A few states’ attorney generals have disassociated themselves from the settlement given the fact that it could provide the banks involved with sweeping immunity against any future investigations into fraudulent, exploitative and unethical conduct during the years leading up to the bursting of the housing market bubble, and beyond. In the grand scheme of things, those who express this kind of criticism of this settlement can easily be empathized with. After all, $25 billion shouldered by the largest banks in America is a very modest amount, given the kinds of money that these institutions have made and have been given in recent years.
In fact, there are some who regard a deal of this nature to be nothing more than an elaborate case of buying one’s way beyond the reach of the law. If this deal is finalized in the next few weeks as is expected, it may not equate to a ‘get out of jail free card’ for the big banks involved, but it certainly would mean getting out of jail at a fantastically great price. Meanwhile, homeowners in America continue to buckle under the pressure that has been brought about by excessive greed, indulged in at the highest levels of American business and commerce.
There may have been a time when it could be said with a relatively significant amount of conviction that crime does not pay (although that statement is highly debatable). If those days ever existed, it would appear they are now well and truly a thing of the past. What do you make of this? We welcome your thoughts on Twitter, Facebook, or Mycaal.com.
About Carla Ghosn
|CEO and Founder of Caal (mycaal.com) keen on helping American homeowners save their home. If you need help with your loan modification, visit www.mycaal.com to get help on pre-qualifying your loan for approval, as well as preparing and printing your loan modification package online.|