Payments to borrowers to begin in foreclosure settlement
Federal Officials have released information that they will begin distributing payments to borrowers who were wronged by the nation’s 13 largest banks during the housing crisis. Payments will being in April of this year and will be distributed among those who qualify under 11 different categories.
Among the borrowers who will be eligible for relief are service members, people who were denied loan modifications, and borrowers who were not in default when banks instituted a foreclosure action. Eligibility will be determined on a case-by-case basis and the process is expected to be time consuming as consultants review and analyze large amounts of information provided by the banks as a part of the settlement.
Ultimately, payouts will include cash to borrowers who were wrongfully foreclosed on, as well as loan modifications and forgiveness to buyers in distress. It is still unclear how many borrowers will qualify for assistance under the settlement.
As many Georgia readers are aware, misconduct by the banks during the foreclosure crisis caused significant hardship and much more damage that will likely be undone by this settlement. While the government does have a $3.6 billion fund to draw from for the payments, many thousands of borrowers could end up being eligible. At the same time, some of the other harms caused by foreclosures, such as the costs of moving and the harm to an individual’s credit rating cannot be remedied.
Under the terms of the settlement banks are also required to do more to help borrowers who are currently in distress say in their homes.
Source: Reuters, “Regulators move forward on foreclosure relief,” Aruna Wiswantha, Feb. 28, 2013.
More information on what homeowners can do if they are facing foreclosure can be found on our website.