By Amie Parnes and Vicki Needham - 02/09/12 01:27 PM ET
President Obama hailed a landmark deal struck Thursday with the
nation's largest banks over alleged foreclosure abuses, arguing it
would relieve millions of people dealt a blow by the sagging housing
market.
Under the agreement reached on Thursday, large banks—including JP
Morgan Chase, Bank of America and Citigroup—are expected to pay
approximately $26 billion to cover refinancing costs for homeowners
and reimburse homeowners for shoddy foreclosure practices.
The investigation began in late 2010 over "robo-signing," a practice
where lenders signed off on foreclosures without thoroughly examining
the contents and verifying the information. Negotiations lasted 16
months until a deal was reached Wednesday night, with New York and
California agreeing to join in the settlement. Other states that had
waivered, including Massachusetts also are signing off on the
agreement.
"These practices were plainly irresponsible and we refused to let them
go unanswered," Obama said at the White House, standing before
Attorney General Eric Holder and Housing Secretary Shaun Donovan, who
helped guide the settlement. "This settlement is a start. We're going
to make sure that the banks live up to their end of the bargain."
Under the settlement, on the heels of what Obama called "the worst
economic crisis of our lifetimes," the banks "will right these wrongs"
and attempt to turn the page "on an era of recklessness that left so
much damage in its wake."
The settlement could be a political boon to Obama, who is hoping an
improving economy will help him roll to reelection. The president
received more good news on Thursday when weekly unemployment claims
dropped to 358,000, lower than had been expected.
Housing has been a sore point for Obama, who had come under criticism
from House Democrats for doing too little to help beleaguered home
owners struggling with mortgages higher than the value of their homes.
But the new settlement could help him win voters over, as it is
intended to allow millions of home owners to recoup losses and
refinance their mortgages.
In his comments, Obama—who put forth his own housing plan last
week—sought to put the onus on Congress to take action on housing.
He said Congress needs to build on the settlement and help more
Americans "get back on their feet."
In the nine-minute speech, the president said the economy will only
get better if Congress "musters the will to act" and he urged
lawmakers to broaden the economic impact building off this settlement.
"Now is not the time to pull back," Obama said. "Send me the bill I proposed."
"There really is no excuse for inaction," the president added.
"There's no excuse for doing nothing to help more families avoid
foreclosure. That's not who we are. We are Americans and we look out
for one another. We get each other's backs. That's not a Democratic
issue. That's not a Republican issue. That's who we are as Americans."
Earlier on Thursday, Housing Secretary Shaun Donovan emphasized that
the settlement isn't limited to $26 billion and that consumers could
receive at least $35 billion in mortgage principal reductions.
The agreement could continue to expand, possibly to upward of $45
billion if another batch of banks joins the agreement, Donovan said.
At least $3 billion will go toward refinancing the loans for
homeowners who are current on their mortgage payments but who are
underwater and at least $10 billion will be used to reduce mortgage
amounts. About $1.5 billion will go toward direct payouts, with about
750,000 homeowners receiving checks between $1,500 and $2,000 for
improper foreclosures.
Another $3.5 billion will go directly to states and about $7 billion
is headed for other state homeowner programs.
In addition to the payments and mortgage reductions, the deal promises
to reshape long-standing mortgage lending guidelines. It will make it
easier for those at risk of foreclosure to make their payments and
keep their homes.
Donovan and Iowa Attorney General Tom Miller, who headed up the
investigation, stood by the strength of the deal despite criticism
that it doesn't go far enough.
"This is a strong creative agreement to help homeowners in significant
ways," Donovan said. "This is far more than anybody else has in the
past in this context and I predict far more than anyone in the
future."
He said he expects the deal to make widespread principal reduction
"commonplace."
Miller said that the agreement has "teeth" and provides homeowners
with a fast avenue to show how they were wronged by lenders. He said
it would ensure that banks provide timely and cost-effective loan
modifications for any homeowner who is eligible.
For example, if homeowners are charged improper fees they can file a
claim with a "monitor" that will recoup them without the need for
lawsuits, Donovan said.
Congressional Democrats have been pressing for government-controlled
Fannie Mae and Freddie Mac to reduce principal loan balances for those
underwater on their mortgages but current on their payments.
The settlement applies to private loans — no government-held loans are
included.
Lenders could face millions in penalties for violating the deal.
"Going forward, the Consumer Bureau will be examining servicers
throughout the industry to make sure they are following the law," said
Richard Cordray, director of the Consumer Financial Protection Bureau
in a statement.
"We will also be issuing rules to bring greater fairness and
transparency to the mortgage servicing marketplace," he said. "And
where we find unlawful practices, we will not hesitate to use our full
authority to protect consumers and hold all servicers accountable."
On Capitol Hill, Speaker John Boehner (R-Ohio) told reporters on
Thursday that "clearly if there was wrongdoing done by some of these
mortgage lenders, they should be held accountable."
--------------------------------------------------------------------------------
More:
http://thehill.com/homenews/administration/209771-obama-says-landmark-deal-will-help-millions-of-homeowners
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
Thanks for being part of "PoliticalForum" at Google Groups.
For options & help see http://groups.google.com/group/PoliticalForum
* Visit our other community at http://www.PoliticalForum.com/
* It's active and moderated. Register and vote in our polls.
* Read the latest breaking news, and more.
No comments:
Post a Comment