Jury is still WAAAYYYY OUT on if this settlement will actually help anyone. I have two initial thoughts:
1. The most important part of this is the money that will be used, in conjunction with federal incentives, to write down the principal balance of mortgages. This will allow homeowners to actually refinance or sell their homes creating market turnover that is desperately needed to get the housing market going.
2. I hope that you don't need to be in foreclosure in order to get these benefits. There are lots of homeowners that are completely upside-down on their mortgage, but still make their payments on time. Otherwise, there is an incentive NOT to pay your mortgage in order to get these benefits!
Ohio will receive $335 million in benefits as part of a landmark $25 billion settlement with the nation’s five biggest mortgage companies announced today.
The settlement will be used to help keep struggling Ohioans in their homes, to demolish thousands of blighted properties, and to compensate some of those who lost their homes to foreclosure.
“Although this settlement is of historic proportion, we know it does not solve the mortgage crisis,” said Ohio Attorney General Mike DeWine in announcing the settlement. “It is a start. It is a first step.”
The deal is the biggest settlement involving a single industry since a 1998 multistate tobacco deal.
Under the agreement, five lenders — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — will reduce loans for nearly 1 million households. They will also send checks to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.
Ohio’s share of the settlement will be divided approximately this way:
--$102 million will come in the form of loan modifications to homeowners who are delinquent or in the foreclosure process, possibly allowing them to remain in their home or sell the home in a short-sale.
-- $90 million will benefit homeowners who are "under water" on their mortgages, that is, owe more on their home than the property is worth.
-- $44 million will compensate former homeowners who were foreclosed upon between Jan. 1, 2008, and Jan. 31, 2011. The amount of payment will depend on the numbers who apply, but is expected to be about $2,000 per home.
-- $97 million will come as a direct payment to the state, most of which the attorney general’s office will use to demolish abandoned properties around the state.
“The time has come to shout, ‘Tear down these houses, tear down these buildings,” DeWine said.
