Jump to Navigation

Foreclosure settlement may not provide much relief

Many Americans are still struggling under the burden of foreclosure, unaware that a massive relief effort has just been approved to help those who lost their homes. The deal, which was announced on Jan. 7, will provide extra money for those who were forced out of their houses as a result of foreclosure, though critics posit that the banks may end up the real winners in the financial game.

About 3.8 million Americans are in line to receive cash settlements from banks in connection with inappropriate foreclosure proceedings. Those foreclosures, which happened between Jan. 1, 2009 and Dec. 31, 2010, could yield payments from a few hundred dollars up to $125,000, according to federal regulators. The settlement came after a revision to an existing policy that allowed independent reviews of foreclosures issued during that time period; just 500,000 borrowers had taken advantage of that opportunity by the end of 2012.

Still, critics of the measure say that the very banks that engaged in unscrupulous lending are also contributing to the foreclosure review process. This unethical situation could allow bank officials to reject valid foreclosure compensation claims, even as the same lender swindled that borrower out of money during the initial complaint. Congressional representatives will be overseeing the process, but homeowner advocates urge caution, saying that government regulation might not stop lenders from unscrupulous activities.

Borrowers who will be receiving the foreclosure compensation could see their claims checks as early as March, according to program representatives. Although few borrowers are expected to receive the full $125,000 maximum, most will at least see $1,000 in their bank accounts. Although this is largely seen as inadequate compensation for losing a home, government officials say the settlement is a rare success against a set of major corporations.

Borrowers who receive smaller compensation than expected may be able to sue the banks after the settlement money is distributed. Additional financial help may be available through state-sponsored foreclosure assistance initiatives.

Source: My Fox DC, "Foreclosure settlement may fall short for homeowners," Sherri Ly, Jan. 9, 2013.

No Comments

Leave a comment
Comment Information
Start Right Now

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our Bankruptcy Law Website Subscribe to This Blog's Feed
Office Locations

1115 Massachusetts Ave NW,
Washington, DC 20005
Phone: 202-559-1428

10512 Pohick Court,
Fairfax Station, VA 22039
Phone: 703-550-7030

6926 Seven Locks Road,
Cabin John, MD 20818
Phone: 301-890-4500

Toll-Free: 877-441-4076
Fax: 202-638-5858

Twitter link