Banks approve big foreclosure settlement
CHARLOTTE, NC (WBTV) - A new deal backed by big banks may help struggling homeowners prevent foreclosure, and infuse the housing market with much needed life.
It also helps those who already lost their homes.
The $25 billion dollar deal was reached with five top banks, including Bank of America and Wells Fargo.
The settlement came about because of allegations that banks foreclosed on homes with incomplete, even wrong, documentation - paperwork fraught with mistakes.
For the millions that already lost their homes, it isn't going to help a lot.
But this settlement also include measures that could lift the housing market out of its major slump, and that's where it could make a big difference.
750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for $2,000…not a big sum.
But borrowers who are still underwater will also get relief.
"That will make a huge difference, so hopefully we never get into this situation again," say real estate expert Kelley Ireland.
In fact, this settlement reflects the most concerted effort yet to homeowners who owe more than their houses are worth.
Banks will reduce the mortgage debt of about a million people, and Ireland says the market will improve dramatically because of it.
"Less short sales, less foreclosures," Ireland says. "It's going to make us have a stronger housing market."
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