The New York Times 02/06/12
“Deal is Closer for a US Plan on Mortgages”
With a deadline looming Monday for state officials to sign on the landmark multibillion dollar settlement to address foreclosure abuses, the Obama administration is close to winning support from crucial states that would significantly expand the breadth of the deal.
The biggest remaining holdout, California, has returned to the negotiating table after a four-month absence, a change of heart that could increase the pot for mortgage relief nationwide to $25 billion from $19 billion.
The Settlement would require banks to provide billions of dollars in aid to homeowners who have lost their homes to foreclosure or who are still at risk, after years of failed attempts by the White House and other government officials to alter the behavior of the biggest banks.
The banks – led by the five biggest mortgage servicers, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial – want to settle an investigation into abuses set off in 2010 by evidence that they foreclosed on borrowers with only cursory examination of the relevant documents, a practice known as robo-signing. Four million families have lost their homes to foreclosure since the beginning of 2007.
Shaun Donovan, The secretary of Housing and urban development, “This will be one of the most significant steps in the recovery of homeowners, neighborhoods and the broader housing market from the worst collapse since the Depression.”
The deal would set aside up to $17 billion specifically to pay for principal reductions and other relief fro up to one million borrowers who are behind on their payments but own more than their houses are currently worth. The deal would also provide checks for nearly $2,000 to roughly 750,000 who lost homes to foreclosure.
Those figures are contingent upon the number who responds to the offer, which is likely to go to people who lost their homes between Jan 2, 2008 and Dec 31, 2011. In addition said Patrick Madigan, the Iowa assistant attorney general, homeowners who participate in the settlement will still have the right to sue the bank for improper behavior in the foreclosure process.
If banks fall short of the multi-billion-dollar benchmarks set out for principal reduction and other benefits for homeowners, they will have to pay the difference plus a penalty of up to 40% directly to the federal government.
Common Sense Review
There are several issues here. The Federal govt is forcing banks who have received $145 billion dollar in TARP funds to now pay people who are missing payment or lost their home to foreclosure..
So your tax dollars to keep these banks afloat are now being direct to those who are not or have paid their mortgages. What?!?! Let’s put this whole “robo-signing” issue to the side.
Documentation management was created in a multi fold process. The lender, borrower, county clerk (register of deeds) and for a limited time the title company has a copy of documents signed by the borrower. Closer take so much time due to the Federal govt regulating consumer understand of their obligation and the detail of their loan so there is no fraud.
As a former sub-prime processor (and closer) of mortgages in the 1990s, I have sat and explained to the borrower what the documents said and followed up with “Do you understand” with a response of “Yes” before they sign them. Let’s not forget the federal govt requires, 3 day passing before funding the loan, to give the borrower time to review and turn down the loan if they want to.
Basically, borrowers have all the information at their disposal, the only reason for foreclosure is the lack of payment. If someone is unable or unwilling to make payment on their obligation then the asset needs to be reclaimed. So why these foreclosures are going to court based on fraudulent practices is beyond me.
It is my theories that in a campaign push to show the love understanding of the Obama administration. HUD is looking to give $17 billion to pay down the principle on mortgages for borrowers who have gotten behind in their payments and $1.5 billion ($2,000 per homeowner) to those who have lost their home to foreclosure.
I am not a cold heart person. There are several opportunities to keep your home out of foreclosure but it takes effort to seek out guidance and communicate with your lender.
Not in an Obama America, don’t worry if you have slacked on your payments we will force the banks to reduce your principle, and if you completely gave up, $2,000, which will not be applied to save your home because it was foreclosed.
Once again, ignorance and laziness is profitable…
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