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Detailed breakdown of the $25 billion mortgage settlement

As details of the historic $25 billion mortgage settlement have become public, there is a great deal of information to digest, so AGBeat has explained the settlement graphically and through text to give you grasp on where billions of bank dollars are going.

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Multi-billion dollar mortgage settlement

In Februay, the historic $25 billion mortgage settlement was finalized between 49 states’ attorneys general, the federal government and America’s largest mortgage servicers Bank of America, JPMorgan Chase, Wells Fargo, Cigitroup and Ally Financial for illegal foreclosure practices.

Settlement details were not made completely public immediately, but the the U.S. Department of Justice has filed agreements with all five servicers separately, each consisting of over 300 pages in which relief measures were outlined in detail that will go toward helping underwater borrowers and victims of illegal foreclosures. Relief measures and details on how foreclosures would be handled in the future were formerly only made public by statements to the press by officials and single page summaries.

The settlement that stalled repeatedly for over a year is still pending final judicial approval, but is expected to be approved.

Full breakdown of the settlement

Click the image below to enlarge:

  • $3 billion: total amount banks can be credited for offering refinancing to homeowners that are underwater
  • $17 billion: total amount banks can be credited for offering loan modifications ($10 billion) and other forms of relief for underwater borrowers, separate from the refinancing incentives above ($7 billion)
  • $1.5 billion: direct payments to homeowners who were wrongfully foreclosed upon between 2008 and 2011
  • $2.75 billion: amount paid directly to the 49 states that negotiated the settlement, varying by state and going toward foreclosure prevention
  • $750 million: amount that will go toward the resolution of federal claims

Alternative overview:

  • $17 billion: to fund the national commitment to foreclosure relief efforts
  • $3 billion: to fund the national commitment to underwater mortgage refinance program
  • $5 billion: to fund payments to 49 states and federal government

Additional details:

  • 750,000: expected to qualify for direct payments in the $1.5 billion payment fund
  • $2,000: estimated average payout
  • 11.1 million: homes underwater in America
  • 3 million: distressed sales since January 2009
  • 1.4 million: homes currently in the foreclosure process

Note that the $17 billion portion of the mortgage settlement is not only the largest, but may be expanded up to $32 billion in coming years to support direct borrower relief through principle reduction, short sales, anti-blight measures, borrower transition efforts, etc.

Also of note, this landmark settlement represents one of the largest in America, second only to the historic government settlement with the tobacco industry.

Additional data:

Settlement documents:

Additional information:

Settlement parties:

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38 Comments

38 Comments

  1. Baltimore Real Estate

    March 24, 2012 at 4:50 pm

    It would have been better if the federal government did not get involved. Basically the larger banks are receiving incentives for executing bad loans and the borrowers who could not afford to make the payments are getting a free pass to reduce their mortgage or get out of debt via a short sale.

    While this does benefit banks, consumers and the national real estate recovery, the cycle will most likely repeat itself in the future.

  2. Attorney Wendy Alison Nora

    March 24, 2012 at 5:59 pm

    The 5 banks have only agreed to stop breaking the law! And, they have not stopped breaking the law. Bank of America is producing forged original notes in Wisconsin courts.
    Furthermore, this agreement to stop breaking the law only applies to the 5 banks involved. Fannie Mae is still using robo-signers and is failing to prove its standing in Wisconsin state courts and bankruptcy courts. To me, the most chilling part of the settlement is in Exhibit F, in which the US Trustees for bankruptcy courts have to stop all discovery of false claims filed in bankruptcy courts by the 5 banks prior to February 8, 2012. I do not believe that the false claims will be corrected by the law firms for the 5 banks and the termination of US Trustee investigations for false claims prior to February 8, 2012 essentially exonerates the 5 banks from bankruptcy crimes. Crimes cannot be prosecuted where there is no investigation.
    The United States District Court for the District of Columbia should not approve this settlement.

  3. bficker

    March 24, 2012 at 7:14 pm

    What I love is how there is all this money, but no one seems to know how to access it. The website they set up for Oregon says that it could take three years before they sort out who gets what. Doesn’t do much to help those who need it now.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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