And Who Will Get A Piece Of The Robo-Signing Settlement Pie?
I’m sure that by now you’re heard enough about the settlement between the government and 5 major banks. The lenders did a naughty thing trying to speed up the foreclosures. Technically a bank can initiate such process by filing a lis pendens on someone who is 90 days behind on their mortgage payment. They do have to have documents to support their claim. But, some clerks forged signatures on loans they didn’t even own anymore… anyway, big mess. (watch our video below)
I can understand them, somewhat, but “the end result justifies the means” thing just doesn’t work very well in the U.S. You have to follow the due process, which for some home owners proved to be rather lengthy. I know people who’ve lived in their homes for 2-3 years without making a payment and the lender still hasn’t foreclosed. The reasons could be many:
- home owner hired a very good attorney who found something wrong with the mortgage papers.
- the bank sold the mortgage to an investor and simply services the loan but have no right to foreclose. There are no foreclosure instructions from an investor.
- The mortgage could’ve been sold 5 times and they can’t track down the end user.
- The bank is waiting. You are way upside down and they’d rather have you live there and take care of the house. When the market shows signs of recovery, then they’ll get on it.
- etc, etc, etc.
Well, now because they misbehaved Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America will have to front $25 billion to help and ease the crisis of underwater mortgages.
Will it be enough? Not really, only 1 million mortgage holders will have their debt reduced or be able to refinance at lower interest rates. And around 750,000 borrowers who lost their homes to foreclosure between Jan 1, 2008, and Dec. 31, 2011, will receive compensation checks for about $2,000. Oh, and of course if your loan is with Freddie Mac or Fannie Mae, which is about 50% chance, you won’t qualify for any of the settlement funds or programs.
From what I hear the States will receive direct payments to fund the settlement programs. It is also rumored that it will take up to 12 months to develop a program and decide who and how will get the benefits. So the allocated funds may be sitting in some account collecting interest. Just saying… There’s rarely a program without a benefiting side besides the consumer.
What are your thoughts on this? Let us know in the comments.
