Foreclosure Deal Lets Banks Get Paid For Demolition Not Saving People From Foreclosure

Wouldn’t you like to get paid more for something that you already do? In this case, the banks will get that opportunity to recoup some of their $25 billion foreclosure abuse settlement by doing things that they already do but worse will not stop people from being foreclosed upon.

Consider that the banks can eliminate more than $2 billion of their obligation by donating or demolishing abandoned houses. So now the banks may move into the demolition business. Moreover, almost $1 billion can be used to help families who have already defaulted move out.

Upon closer inspection of the settlement, it turns out that only 60 percent of the $17 billion designated for borrowers, or $10.2 billion, must be used to reduce principal for borrowers who have homes that sit underwater.

Even for homeowners who do receive principle reduction, the average amount that a homeowner could receive would total about $30,000 which would not go very far to help a homeowner cure a default situation here in the Bay Area.

The more we look at the settlement deal the more it looks like a small dog – all bark and no bite.

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Filed under Banks, Foreclosure, Mortgages

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