Feds Announce Foreclosure Settlement
Top banks to pay $25 billion for foreclosure abuses in 49 states.
In one of the largest out of court settlements ever, five of the nation's biggest banks Thursday agreed to pay $25 billion dollars to victims of home foreclosure abuses in a deal brokered by the Obama administration.
The settlement will compensate families who lost their homes and help others avoid foreclosure.
Five banks made the $25 billion deal after revelations they falsified paperwork to speed evictions.
Over three years they'll reduce the principal and modify the mortgages of delinquent borrowers.
They'll also refinance, at today's low rates, homeowners who are underwater, owing more than their homes are worth, and they'll pay $2,000 in cash to three-quarters-of-a-million Americans who lost their homes.
"Does it hold the banks accountable for all damage that they've done to our economy and they've done to American homeowners and our communities? Not even close! But it's a good start," says Ira Rheingold of the National Association of Consumer Advocates.
It's a also an act of bipartisanship.
The Obama administration worked with 49 state attorneys general, half of whom are Republicans.
"We are using this opportunity to fix a broken system and to lay the groundwork for a better future," said US Attorney General Eric Holder.
New rules will also protect families facing foreclosure.
However, the settlement does not apply to and will not help roughly half of U.S. homeowners whose mortgages are held by Freddie Mac or Fannie Mae.