The Deal
Twenty-five billion dollars used to sound like a lot of money. But next to the trillions we’ve seen thrown around in bank bailouts, tarp funds, and mortgage scandals, it’s no surprise we barely lifted an eyebrow and had to stifle a yawn at the new National Mortgage Settlement. The government has settled with the five biggest banks for a collective fine of $25 billion as compensation for mortgage and foreclosure fraud. The money is supposed to go to homeowners who were wrongly foreclosed upon or wrongly denied loan modifications.
Depending on which politician, consumer advocate, or analyst you listen to, the deal is either a boon or a bust.
Version one, boon:
The government has finally gotten somewhere with their commitment to justice by nailing the banks for their fraudulent loan practices. This is the biggest money settlement in our nation’s history, and it’s just the beginning. The banks are also obligated to open up loan modifications in the form of principal reductions for hard-working people who are “underwater” in their homes, whose loans are more than their homes are worth. If the banks don’t play this right, they will be whacked for more fines. This will break the back of the foreclosure crisis, our economy will straighten up, and home values will rise.
Version two, bust:
The big bank boys are slapping each other on the back, lighting big cigars, and clinking their drinks together in celebration of being let off the hook once again. For the equivalent of a parking ticket in their big-buck world, they are absolved of high crimes against the people of our country. No banker has been brought to justice in this scandal, and they have just been given a new “Get Out of Jail-Free” card. Now with no fear of lawsuits they will drop the hammer on foreclosures they’ve been stalling, which will further depress home values.
Twenty-five billion is a big number. Get out the calculator and start dividing. Please, let’s figure out who gets how much, and if it will make a difference.
No yawning.
