Last year it was discovered that most of the big banks were illegally signing and executing home foreclosures – i.e., having a single unauthorized employee “robo-sign” home foreclosures: faking signatures, executing foreclosures before verifying that the foreclosure was warranted, and in tens of thousands of cases, not even reading the documents before proceeding to throw people out of their homes.
Today the Secretary Shaun Donovan of HUD announced a $26 billion settlement with the nation’s five largest mortgage servicers - Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and Ally Financial - for their abuses.
While the settlement could provide relief to nearly two million current and former homeowners, it falls short of addressing the $700 billion in underwater mortgage debt.
Nationally 4 million families have lost their homes in the foreclosure crisis. 20 percent or nearly 15 million home mortgages are under water, resulting in a loss of an estimated $700 billion in home values. Another 1 million more families may lose their homes in 2012– a crisis of stunning proportions brought on by the abuses in the banking industry.
President Obama said that the $26 billion foreclosure settlement is the largest joint state/federal settlement in history. The settlement requires banks to:
1. Reduce principal mortgage balances on 1,000,000 underwater homes
2. Provide homeowners a “single point of contact” with the bank when negotiating foreclosure relief
3. Pay $2,000 to each of 750,000 persons who lost their homes to foreclosure
4. Refinance some underwater mortgages at lower interest rates
5. Make foreclosure the last resort and delay foreclosure while negotiating foreclosure relief
People who lost their homes between Jan. 1, 2008, and Dec. 31, 2011 must file for claims in their states.
The foreclosure settlement is a positive step forward in addressing the abusive foreclosure practices and the harm done to millions of American families. But much more must be done.
“The $26 billion settlement is a major civil penalty against banks who recklessly foreclosed on our families. But what they did was illegal, blatantly unlawful. Those responsible should face criminal charges and go to jail for their crimes,” said Rev. Jackson.
The new settlement, however, will not provide immunity to the banks for future claims.
Just last month, President Obama announced a Mortgage Fraud Task Force that is investigating the possible illegal packaging and issuing of mortgages by the banking industry. Congress must also move swiftly to approve legislation proposed by the President last week to expand the range of homeowners eligible to refinance their homes at historically low interest rates.
The housing crisis in America continues to harm millions of families and neighborhoods. And it remains a major drag on the US and global economy.
Rev. Jackson concluded, “While the size of the settlement is unprecedented, and many provisions will benefit a segment of homeowners, the deal does not provide a comprehensive, systematic solution for residential mortgage foreclosure. Despite the fact that lenders adamantly opposed bankruptcy reform and politicians have been squeamish in forcing the issue, the best solution for homeowners, lenders and investors would be an overhaul of the nation’s bankruptcy laws permitting modification of mortgage loans based on current fair market value of homes. Comprehensive solutions must match the enormity of the crisis. It’s time to act now. There is no time to waste.”
The Rainbow PUSH Coalition is a progressive organization devoted to protecting, defending and expanding civil rights to improve economic and educational opportunity. The organization is headquartered at 930 E. 50th St. in Chicago. To learn more, please visit http://www.rainbowpush.org or call (773) 373-3366.