Friday, December 23, 2011

Mortgage Settlement Update: Some details, Deal to be announced in January "at the earliest"

by Calculated Risk on 12/23/2011 03:47:00 PM

There are a quite a few details in this article by Massimo Calabresi at TIME: Details of Mortgage Servicing Settlement Between Banks and AGs Begin to Emerge

... the banks will commit to three categories of the settlement: $5 billion in cash payments, mostly to the states, $3 billion in refinancing for underwater mortgages, and $17 billion in principal reduction.
...
Of the $5 billion, $1.5 billion will go to people who have been foreclosed on and were abused in some way during the process. The claims are nearly instantaneous ... the payments are also small: $1,500 to $2,000. ... no one taking the payment would be giving up any rights to bring cases against the banks for wrongful eviction or other claims they may have.
...
The bulk of the money—$17 billion—would go to principal reduction for homeowners and a menu of other elements ...

In return for the $5 billion in cash and the $20 billion in credits, the banks would be released from claims against them for servicing and foreclosure abuses that might be brought against them by the states and the federal government. The states also release the banks from origination claims ... The banks do not get immunity or a release of for individual claims by homeowners ... They also don’t get released for securitization abuses ...
There are many more details in the article.

According to the article, the details will be announced in January at the earliest.