Billions to go Toward Reducing Principal Balances on Mortgages
The federal government recently released details of the $25 billion settlement it has reached with the nation’s five biggest mortgage servicing companies concerning improprieties with their business activities. The money is earmarked for three main purposes:
–Reducing the principal balances of mortgage loans to bring them in line with current home values
and compensating people who lost a home to foreclosure
According to a factsheet released by the U.S. Department of Housing and Urban Development, homeowners eligible to have their mortgage balances reduced will be notified within the next nine months by the government administrator who will monitor the settlement.
The five mortgage companies who are part of the settlement are Bank of America, Wells Fargo, Chase, GMAC/Ally Financial, and Citibank.
While HUD estimates that 2 million homeowners could see their mortgage balances reduced, it will be up to the five banks to determine which homeowners will be included in the program.
In addition, payments of between $1500 and $2000 will be paid to people who lost a home to foreclosure between 2008 and 2011, so long as certain criteria are met. The factsheet does not explain the criteria necessary for those people to qualify.
As with the government’s current housing program, Making Home Affordable, it will remain the choice of the mortgage companies as to which mortgages they choose to reduce the balances of.