The $25 billion mortgage settlement between the government and the banks over alleged fraudulent mortgage practices is finally here, but some claim the deal has emerged from the oven a little undercooked.
Yes, this is the most significant settlement state and federal governments have reached with the banks to shake money loose for homeowners who are "underwater," meaning their owed-mortgage is worth more than their home. But this is not some mortgage bazooka that will rescue millions of homeowners at the expense of the banks. In fact, it'll barely cover moving costs for those who have already lost, or will soon lose, their home, according to some critics.
A huge mortgage relief settlement between state and federal governments and mortgage providers will pay just a few thousand dollars to those that lost their homes to foreclosure since 2008. The settlement announced Thursday with Bank of America, JP Morgan Chase, Ally Financial, Citigroup, and Wells Fargo, valued at $26 billion overall, provides $17 billion in mortgage relief for people who are underwater on their homes. But 750,000 people who actually lost homes to foreclosure between 2008 and the end of 2011 get a one-time payout of $1,500 to $2,000, which for many will barely cover the cost of moving.
One helpful proviso, however: Those who receive payouts don't forego the right to sue, as they often do in class-action settlements.
Read the full story at The Atlantic Wire.