It was newly announced in February and what this was, was a lawsuit settlement between the Justice Department, HUD and 49 States and their District Attorneys excluding Oklahoma. What they did in this lawsuit or settlement is they have set aside $26 billion from 5 of the largest banks for people who are underwater or have been foreclosed upon. The 5 banks or servicers are Bank of America, Chase, Citi Group, Wells Fargo and Ally or GMAC.
People are asking what’s going to happen to this money where is it going to go. For the time being they have basically $17 billion who will go to people who are underwater and behind on payments in the hopes of reducing their principal reductions. This would result in about a $17,000 per household in principal reduction for over 1 million homeowners that are upside down and struggling to make payments. Another 3 billion are going to people who want to refinance their home to lowest interest rates. People who are upside down but have high interest rates but want to do a traditional refinance a lot of that money is going to go towards subsidizing being able to buy down those rates. Another 1.5 billion will go people who have lost their homes and have already been foreclosed upon in a form of a $2,000 check settlement. And then lastly, there’s about $5 million in fines and fees that the banks are going to have to pay for. There are talks to expand this settlement to about $30 billion which may include 9 other banks but we are waiting to hear on this news.
What does this mean for people in San Diego? First you have to understand that the money is finite meaning it will run out. A lot of people in San Diego are further underwater than the $17,000 that most analysts have predicted that this would allocate to all of people out there in distress. But, I would be willing to talk with you a little bit further about how it may affect you or your particular situation if you want to set a consultation. I can also instruct you on how to go to the bank and ask your bank to find out if you are eligible for any of these programs. But it’s something I wanted to address and go over and highlight some of the bullet points for people who are asking me quite frequently about the government lawsuit with banks.
Thank You very much for listening to my presentation: What about the Government Lawsuit Settlement with the Banks.