The Latest Foreclosure Settlement

Written by Larry on April 10, 2012 – 3:44 am -

What the foreclosure settlement does…

The $26 billion foreclosure settlement has finally been given the
green light, making it possible for roughly two million of the
nation’s hardest hit borrowers to see a significant reduction in
their mortgage payments.  Agreed to between the nation’s five
largest banks and attorneys general from 49 states and the
District of Columbia, the deal settles charges of foreclosure
processing abuses dating back to 2008.  The settlement, the
details of which were first announced in early February, has been
in the works for more than a year. Here’s what the banks agreed
to and what borrowers can expect in the days ahead.

The banks and servicers have committed at least $17 billion to
reduce principal for borrowers who 1) owe far more than their
homes are worth 2) are behind on payments.  The amount of
principal reduction will average about $20,000 per borrower in
the cases of four of the banks. The Bank of America reductions
will be even steeper, averaging $100,000 or more, according to
spokesman Rick Simon.  Another $3.7 billion will go toward
refinancing mortgages for borrowers who are current on their
payments. This will enable them to take advantage of the
historically low interest rates that are currently available.
The banks will pay $5 billion to the states and the federal
government, the only hard money involved in the deal. Out of that
fund will come payments of $1,500 to $2,000 to homeowners who
lost their homes to foreclosure.

Other funds will be paid to legal aid and homeowner advocacy
organizations to help individuals facing foreclosure or
experiencing servicer abuses.  Another $1 billion will be paid
directly by Bank of America to the Federal Housing Administration
to settle charges that its subsidiary, Countrywide Financial,
defrauded the housing agency.  In addition, the banks agreed to
eliminate robo-signing altogether and to use proper and legal
procedures when putting homeowners through the foreclosure
process. They also agreed to end servicer abuses, like harassing
delinquent borrowers for payments, and to include principal
reductions more often in their mortgage modifications programs.

Iran sanctions to cost 25 cents a gallon
Twenty-five cents a gallon — that’s about how much some
international energy experts say the tough US sanctions on
Iran’s oil industry are costing Americans at the pump.  As US
consumers cope with gas prices that are approaching an average of
$4 a gallon, some international trade experts say the cost of the
sanctions the US imposes — as in the case of the Iran measures
— is something political leaders should discuss more openly.
Instead, they say, most politicians act as if sanctions affect
only the country targeted — something these experts say isn’t
true.  Energy experts say it’s difficult to pinpoint precisely
how much sanctions on Iran are costing consumers as they filter
down to the gas pump. But Lucian Pugliaresi, president of the
Energy Policy Research Foundation, a Washington nonprofit
organization that studies energy economics, says it’s possible
to make an estimate.  The sanctions the US and other countries
have slapped on Iran’s energy sector and on its central bank
(aimed at curtailing its oil exports) are costing Iran about
300,000 barrels a day in exports, Mr. Pugliaresi estimates. When
added to other factors affecting the international oil market,
that decrease in exports may have added about $10 to the current
price of a barrel for crude, he says.  And that $10 increase
translates roughly to about a 25-cent increase in the cost of a
gallon of gas in the US, Pugliaresi says

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