The $25 billion settlement between the U.S. government and state attorneys general and the country’s five biggest banks for foreclosure processing problems that came to light about 18 months ago gives lenders three years to provide financial relief to financially troubled home owners.
NAR doesn’t have a position on the settlement, but its leadership has said it hopes the resolution helps more struggling homeowners stay in their homes, and that the settlement provides lenders the certainty they need to proceed again with loan modifications, short sales, and foreclosures, which will help support the housing market recovery.
Here are some details on the settlement:
- The banks will dedicate $20 billion toward various forms of financial relief to borrowers.
- Of that amount, $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth.
- At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth.
- Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance.
Read details of the settlement from the U.S. Attorney General’s office.
Access the full video of President Obama’s remarks on the settlement.