Michigan has joined with the 49 other states in announcing a $26 billion settlement with the federal government and the five largest banks with respect to mortgage lending—Ally Financial (formerly GMAC Bank), Bank of America, Wells Fargo, JP Morgan and Citigroup.
While all the details have not yet been revealed, the settlement will consist of $1.5 billion in payments to homeowners who were illegally or wrongly foreclosed upon between September 2008 and December 2011. While the exact settlement amount will depend on the number of borrowers who file claims, the settlement is expected to be up to $2,000 per homeowner.
In addition, the banks will receive $20 billion in “credits” that they will have discretion to apply to struggling homeowners. The banks can use these “credits” to write down the principal amount owing on the mortgage and for other aid to homeowners who are at risk of defaulting on their mortgage. $3 billion of the “credits” are earmarked for refinancing mortgages that are currently underwater.
Homeowners that have a home worth less than their current mortgage and those who are struggling to meet their mortgage obligations should be aware of the settlement and monitor it as more details emerge.
Further questions regarding business and tax law should be directed to Fraser Trebilcock attorney Mark E. Kellogg at mkellogg@fraserlawfirm.com or 517.377.0890. Mark chairs Fraser Trebilcock’s Business and Tax Law practice, and has devoted his nearly 30 years of practice to the needs of family and closely-held businesses and enterprises, business succession, and estate planning.