As many as one million underwater borrowers deemed to be “at risk” of losing their homes could be set for a reprieve through a reduction on their mortgage principle, following reports that the government and America’s biggest banks have nearly reached a deal on mortgage aid.
Reuters reported that officials from federal and state governments are nearing the end of settlement talks with bank chiefs, following months of negotiations that stemmed from bank’s alleged foreclosure abuses back in 2010, which caused numerous homeowners to lose possession of their homes.
According to Shaun Donovan, the secretary of the US Housing and Urban Development department, the government is very close to reaching a settlement that could help more than one million families in the US to remain in their homes through the proposed mortgage assistance.
The proposed settlement on the table would see major lenders such as the Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Ally Financial pay around $20 to $25 billion compensation for their alleged foreclosure abuses.
During questioning at a Winter Meeting of the U.S. Conference of Mayors in Washington, Donovan stated that banks would also agree to reduce the mortgage principle of as many as one million borrowers, to the tune of $20,000 each. Further, Donovan said that families whose homes had been wrongly foreclosed upon may also be entitled to compensation as part of the settlement, Reuters reported.