Big states set to make mortgage deal real
Some relief for more than a million beleaguered homeowners appears to be at hand, as New York and California will join just about all the other states in a $25 billion foreclosure settlement with the nation's largest banks, according to a person familiar with negotiations.
A few other states were still on the fence as of late Wednesday, the person said.
With those two big states, the deal could be worth as much as $25 billion when it is announced, either Thursday or Friday, another person familiar with the talks said.
Requests for comment to the New York Attorney General's Office were not returned. A spokesman from the California Attorney General's Office said the state was still in negotiations.
For more than a year, state attorneys general, regulators, federal officials and big banks have been in talks about a settlement of allegations of improper foreclosures based on "robosigning," seizures made without proper paperwork.
As of Wednesday night, at least 42 had signed on, which would yield as much as $25 billion available for qualified homeowners. The deal marks the largest housing relief available "underwater" homeowners whose principal exceeds their home's value, as well as those who have been foreclosed on, since the financial crisis began.
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Under an earlier draft of the deal, some 1 million U.S. homeowners who are underwater on their mortgages could be eligible for as much as $20,000 in relief of principal owed, according to Secretary of Housing and Urban Development Shaun Donovan.
But the relief would only be available to those homeowners whose mortgages haven't been sold to the government-sponsored mortgage guarantors Fannie Mae and Freddie Mac.
In return, mortgage servicers in states that agree to the deal would get immunity from future state servicing and originating claims -- although homeowners could pursue claims against banks and states could still pursue criminal investigations.
