Five banks were accused last year of using faulty documents for evicting homeowners. The banks settled the case by an agreement to provide $38.7 billion in relief to homeowners. Twenty-five billion of the funds was to be used to help homeowners that were in a housing crisis situation. The program appears to be going forward, even ahead of schedule. However, only about 80 percent of the funds have been used so far.
The banks listed in the settlement were Citigroup, Wells Fargo, Bank of America, JPMorgan Chase and Ally. The requirements of the settlement state 60 percent of the funds must be used for consumer relief. At the end of last year, they had already reached the 60 percent mark. Almost 650,000 borrowers had been assisted by June 30.
The type of help the banks provide determines how the percentages are calculated. Loan modifications appeared to be around 2 percent of the consumer relief activity since 2009. Short sales earn only 20 – 45 cents per dollar, and principal reductions earns the bank 55 cents per dollar.
The banks must reach $19 billion in debt relief by March of 2015. They are currently at $15.4 billion. The remaining portion of the $25 billion is supposed to go to cash payments of those who have already lost their homes to foreclosure.
Many people have been affected by the housing crisis, and it is no longer a stigma to find yourself in foreclosure. However, there are many options out there to assist homeowners and keep them from losing their homes. First, speak with your mortgage holder. Many of them are willing to work with you on a loan modification. If you are past that point and headed to foreclosure, you may still be able keep your home by contacting a bankruptcy attorney. They have many options available.
nytimes.com, “Settlement Report Finds Banks Giving Timely Mortgage Relief” Shaila Dewan, Oct. 16, 2013