UNDATED- Ten major banks announced Monday they will pay $8.5 billion, putting to rest charges they wrongfully foreclosed on homeowners. It is all a consequence of the housing meltdown.
The deal covers borrowers whose homes were in foreclosure in 2009 and 2010. This gives $3 billion in direct payments to wronged borrowers, and more than $5 billion in mortgage assistance. Hundreds of thousands of people could be compensated, which could mean up to $125,000 for those affected.
One bank in particular is shelling out even more settlement money on top of that. Bank of America is one of those ten financial institutions attempting to "right the wrong," and will also pay out more than $10 billion to settle mortgage claims.
Robin Short of Roxana, Del. has already seen the benefits of banks giving back to homeowners. Short thought she was on the verge of losing her home, after going through a divorce and taking out a second mortgage. But that quickly changed.
"I received a letter from the bank because of foreclosure status," Short explained. "And when I received the letter, I called right away and they said it wasn't there anymore, that it was paid in full and I'm like, somebody's made a mistake."
Turns out, it was no mistake.
"They had mentioned something about this is something that the bank is doing for different people," Short said.
Short is one of hundreds of Delawareans who benefited from a national foreclosure settlement last year, with the five largest mortgage banks, including Bank of America.
In response, Delaware Attorney General Beau Biden released the following statement: "There is a lot more that needs to be done, but these benefits can make a critical difference in a homeowner's financial life. Our housing market only works when everyone plays by the rules."
And with "more" now being done, people like Short are rejoicing.
"It's a blessing," she remarked. "I mean, it's a blessing that they've done this for us. It couldn't come at a better time."
Some argue the settlement announced by the ten big banks, including Bank of America, Wells Fargo and Citibank, is too low, at the expense of the consumer.
Separate from that settlement, Bank of America announced it will pay $10.3 billion to Fannie Mae, essentially buying back those so-called bad mortgages.