Foreclosure “relief” has been announced as coming for millions of American homeowners as state attorneys general, federal officials, and bankers finally agreed to the details of a long-awaited mortgage crisis settlement worth $26 billion dollars a few days ago. The agreement purports to help pay down the principal on homes and provide relief—albeit fairly small—for families who were victims of improper foreclosure practices. Despite these measures, many argue that the settlement lets banks off too easily. Other critics argue that the settlement is nothing more than extortion as banks shareholders will end up footing the bill for little more than “sloppy” paperwork. Senator Sherrod Brown claims the measure will pass the cost to “middle-class Americans” and is too small; attorneys general Eric Schneiderman of New York and Martha Coakley of Massachusetts fought for the ability to hold banks accountable for other and future claims; Representative Brad Miller thinks that the government still needs to investigate the ugly predatory practices engaged in by many banks including Countrywide and Citigroup.
As it stands, the deal could affect 1 million homeowners by providing them up to $20,000 in debt reduction on their homes. On one hand, the multi-billion relief looks favorable for some homeowners, though most would likely argue that they are underwater on their homes significantly more than $20k. On the other hand, the settlement “pales in comparison with the fallout from the housing bust.” The banks are seeking to settle claims that they engaged in abusive foreclosure practices, including robo-signing foreclosure documents or fraudulent attempts to foreclose without the required deeds or documents. The settlement has left both Wall Street apologists and consumer advocates unhappy.