The Wall Street Journal recently reported that the federal government finalized an agreement worth as much as $26 billion with Ally Financial, Wells Fargo, Bank of America, Citigroup, and J.P. Morgan Chase and Co. The purpose of this agreement is to settle alleged foreclosure abuses by these lenders. On the surface, this appears to be a fairly good show by the federal prosecutors.
How Will This Show Play Out For Georgia Consumers?
Personally, I think it is going to be a lot like a circus. We will see some good juggling by the mortgage companies as to why some specific consumer does not qualify under the terms of the settlement.
I’m sure we will see some clown politicians who will claim that they have made the mortgage industry pay for their dirty deeds against consumers. I can just hear it now.
“Step right up folks and see how the mighty federal government has tamed those big bad lion mortgage companies.”
I can hear Rocky Balboa singing the circus song as he exits the ring.
I predict that this settlement will have about as much impact on consumers as the federal loan modification program did on ending the foreclosure crisis.
The Wall Street Journal reports that borrowers could receive somewhere between $1,500 and $2,000 each. The final settlement number will depend on how many people file claims.
I suspect that the number of potential claimants has been greatly underestimated.
The agreement anticipates that these five major banks will provide $20 billion to
- (1) cut loan balances and
- (2) provide refinancing to thousands of homeowners who are current on their payments but owe more than their homes are worth.
I hope that we will not see the same con artists come out of the woodwork like we did when the loan modification process started. Many Georgia consumers were victimized by scam artists who guaranteed that you would get a loan modification as long as you agreed to mail them a check for $1,000.00.
The Federal Trade Commission went after those scam artists and I’m afraid they will need to do so again when crooks see this new settlement with the banks as another opportunity to con people out of their money.
I’m sure that this settlement may work out for a small few. However, I have a gut feeling that it will only lead to more frustration by people who are struggling to save their homes.
For more in depth detail of this settlement, you can go to www.nationalmortgagesettlement.com.
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