Part of a recent settlement, a $557 million offer of money and aid was made to homeowners alleging the big banks improperly foreclosed on their homes. The Federal Reserve probe into impropriety allegations should be quieted for the time being with the announcement of the $8.5 billion deal incorporated into a settlement among the Comptroller of Currency Office of the Fed and 10 of the largest U.S. banks such as Bank of America Corp., JPMorgan Chase & Co., and Citigroup, Inc.[i]
According to the footnoted Bloomberg article I read, “The sum includes $232 million in direct payments to 220,000 borrowers and $325 million in assistance such as loan modifications.” I want to know how this settlement will trickle down to the bank accounts of my friends and neighbors who qualify as borrowers entitled to take in this settlement.
Should we assume that this settlement serves justice and we should all move on?
I am curious. Who are the “borrowers?” Whose job is it to let them know about this settlement and how will the attorneys distribute the proceeds (after they take their attorneys fees).
How about this “other relief?” Cash assistance in the form of loan modifications sounds like something I’ve read about before. How did it work out with past bailouts and were homeowners satisfied with relief?
I will interview a few attorneys and experts in the upcoming weeks to really dig into the issue of big bank investigations, lawsuits, settlements, and efforts at appeasing aggrieved homeowners. Passing out suckers in the drive through isn’t likely to appease victims of egregious conduct despite all the finger pointing.
The main question I want to answer: Do lawsuits and settlements deter lenders from future bad acts?
A capitalist economy based on service not manufacturing, and largely dependent upon the housing industry, is ripe for nefarious moneymaking. Will this settlement send a message to the banks that prevents bad policy?
[i] Bloomberg: Goldman, Morgan Stanley Set $557 Million Fed Mortgage Accord. By Donnal Griffen and Jesse Hamilton – 01/16/2013