Bank settlement offers partial relief for some wronged borrowers
Federal regulators announced a deal worth approximately $8.5 billion in a settlement with ten different banks which promises justice for borrowers who were wronged by careless foreclosure practices. The deal may offer relief for many homeowners who were unfairly foreclosed upon by the banks, but some worry that the hasty conclusion of a partial review of the records by government regulators means that the sum will be insufficient to remedy the full scope of the damage.
Since the review was not fully completed the settlement will be spread out among a large number of borrowers who were victims of the unfair practices without consideration to the level of harm that they suffered as a result. This means that some people will be getting payments that overcompensate them for the harm while others may not receive enough to become whole again.
The case is just one more example of a system that is difficult for borrowers to navigate and that sometimes offers only partial justice for people who became victims of shady lending and collections practices.
Many Atlanta families have been harmed by confusing and misleading lending practices, balloon payments on their mortgages, and hasty foreclosure practices by the bank. While this settlement could end up helping some, it is also important for borrowers to figure out if they have other options such as debt restructuring, loan modifications, or a Chapter 7 or Chapter 13 bankruptcy filing, all of which are options that could alleviate some of the burden as well.
Source: New York Times, “Bank Deal Ends Flawed Reviews of Foreclosures,” Jessica Silver-Greenberg, Jan. 10, 2013.
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