The major banks’ Settlement Over Foreclosure Abuse with federal regulators over improper foreclosure tactics and failed mortgage modifications points to some relief for small-business owners.
The housing crisis has taken another baby step toward resolution with the announcement of a settlement agreement between 10 leading banks and the Office of the Comptroller of the Currency, which oversees banking in the U.S. The settlement agreement, valued at $8.5 billion, resolves complaints regarding improper foreclosure procedures and botched mortgage modifications affecting 3.8 million households. Many small-business owners who mortgaged their homes or took home equity loans against the value of their properties to support their businesses during the Great Recession may now receive some relief.
Under the settlement, banks will pay up to $125,000 to families that lost their homes. Those currently at risk of foreclosure will benefit from reduced principal balances and lower monthly payments. Qualifying homeowners will be contacted during the first quarter of 2013 with information about what benefits apply to them.
This settlement with federal regulators comes after a $25 billion dollar settlement was reached with state governments last year by 25 mortgage servicers. Four major banks—Ally Financial, HSBC, OneWest Bank and Everbank—did not agree to the terms of the federal settlement and will not participate.
