Settlement Reached With Banks On Relief For Some Homeowners
"After negotiating through the night," NPR's Yuki Noguchi reports, states attorneys general, federal officials and five major banks have agreed on a plan that will provide about $26 billion in mortgage relief and aid to homeowners who got crushed when the housing bubble burst.
The Justice Department, NPR's Carrie Johnson tells us, just announced that "Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and other federal and state officials" will unveil details of the much-anticipated plan at 10 a.m ET.
According to Yuki, California was the last state to sign on to the deal. Now, she tells our Newscast Desk, "in exchange for a kind of immunity from many types of mortgage-related lawsuits, the banks will have to pay about $5 billion in cash" and write down, refinance or reduce the principal on more than $20 billion worth of home loans. "Some estimates say as many as 1 million homeowners who owe more than their home is worth, could be eligible for some sort of payment reduction."
As Yuki has also previously explained, the bulk of the money:
"Would go toward writing down principal payments for homeowners who were not foreclosed upon, but who are struggling now. ... The way it would work is that the banks would have targets they have to meet, in terms of what kinds of loans they would have to modify. But the banks would still have a lot of discretion in who gets what.
"And there's another $5 billion in cash, part of which would go to the states to help fund homeowner assistance programs. Some of the rest would go to homeowners who may have been wrongfully foreclosed upon. For them, it's up to $2,000 each, which is not much if you lost your home."
The five banks are Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
Yuki reports that the settlement "would cover them against any suits regarding that robo-signing issue, where mortgage companies signed false affidavits in order to speed up the foreclosure process, which was what started this whole process in the first place."
Update at 12:45 p.m. ET. Obama Sees End Of "Era Of Recklessness":
"We have reached a landmark settlement with the nation's largest banks" which will "begin to turn the page on an era of recklessness," the president just said at the White House.
Update at 11:05 a.m. ET. More Details:
-- The Department of Justice's statement on the settlement.
Update at 10:45 a.m. ET. Holder Hails "Landmark" Agreement:
After calling it a "landmark agreement," Attorney Gen. Eric Holder said at the news conference a short time ago that it "reflects our commitment at both the federal and state levels to ensure justice and to recover losses for victims of reckless and abusive mortgage practices."
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