Last week’s big mortgage settlement between states, the federal government and America’s five biggest banks was the largest of its kind in history, amounting to some $25 or $26 billion, depending on who you listen to.
The main reason for the settlement is to compensate homeowners for the large number of perceived foreclosure abuses committed by banks over the years, and it’s hoped that the deal will be able to save thousands from losing their homes.
So the question on everybody’s lips then, unsurprisingly, is who will benefit from this deal?
A recent article, first published in MSNBC, attempted to answer that most pressing of questions. The article explained that homeowners who are already underwater on their mortgages (meaning they owe more than its current market value), those who are struggling to meet their mortgage payments, and those who have already had their homes foreclosed on may be able to benefit from the settlement. Those who qualify for a principal write down or a compensation payment can expect to be notified sometime in the next nine months.
The banks, which include Bank of America, JP Morgan Chase, CitiBank, Ally Financial and Wells Fargo, have agreed to the following:
Select homeowners that qualify under the mortgage settlement’s rules will see a large chunk of their mortgage principal written off, after which they will be able to seek refinancing on their mortgage and benefit from reduced monthly payments. Certain underwater homeowners will also receive the same deal, if they qualify.
The deal will also provide for compensation to approximately 750,000 eligible borrowers who have already lost their homes to foreclosure. Those who qualify can expect to receive around $2,000 in compensation.
To learn more about the mortgage settlement and find out if you qualify for compensation or a reduction in mortgage principal, a newly launched National Mortgage Settlement website provides a detailed explanation of the deal and should be able to answer many homeowner’s questions.