Tags: mortgage | meltdown | fraud | penalty

JPMorgan Settlement Offers Little Help to Homeowners

By    |   Thursday, 21 November 2013 01:42 PM

The record-setting JPMorgan settlement offers little help to homeowners.

The $13 billion settlement includes $4 billion for consumers harmed by JPMorgan, and Bear Stearns and Washington Mutual, which the bank acquired.

"It's really important for those families and those neighborhoods that will benefit, but [the aid] is just a drop in the bucket," Kevin Stein, associate director of the California Reinvestment Coalition, told the Huffington Post.

The $4 billion compares with $1.4 trillion of mortgage debt JPMorgan holds, notes the Post. The settlement can provide only about 10,000 mortgage borrowers forgiveness of mortgage debt, even though that's the best way to prevent foreclosures.

The bank could get credit for granting forbearances, which temporarily reduce homeowners' monthly payments but not their loan balances, Stein states in a press release.

"In most cases, offering a forbearance to a homeowner is a band-aid solution that merely postpones dealing with the underlying problem in the loan. Instead, the bank should focus on offering permanent, sustainable modifications."

The independent monitor tasked with ensuring the bank fulfills the settlement's terms should require the bank to submit demographic information on homeowners facing foreclosure and if they're offered loan modifications.

The bank, he says, should stop foreclosure proceedings for borrowers who might be eligible for help from the settlement so they're not foreclosed on while waiting for a modification.

Some of the $2 billion in fines to the Justice Department should be earmarked for housing counselors and nonprofit attorneys who can help borrowers.

Stein also urges Congress to extend the Mortgage Debt Forgiveness Act so principal reductions don't hit borrowers with unintended tax consequences.

Much of the settlement, including a $2 billion Justice Department civil penalty, will resolve federal and state civil claims against the bank.

Saying the bank knowingly packaged and sold toxic mortgage-backed securities to unsuspecting investors, the Justice Department and state attorneys general say the "historic" settlement will hold the bank accountable.

"Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown," stated Attorney General Eric Holder. "The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability."

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The record-setting JPMorgan settlement offers little help to homeowners. The $13 billion settlement includes $4 billion for consumers harmed by JPMorgan, and Bear Stearns and Washington Mutual, which the bank acquired.
mortgage,meltdown,fraud,penalty
385
2013-42-21
Thursday, 21 November 2013 01:42 PM
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