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Big Banks Fulfil Part of Mortgage Agreement
United states largest four banks- JPMorgan Chase, Bank of America, Citigroup and Wells Fargo have join their responsibility to provide $25 billion relief loans to struggling homeowners under national government mortgage settlement and this milestone agreement is to clean up shoddy foreclosure practices.
According to the repots of monitor overseeing court, this settlement says Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) these four banks provided $50 billion in relief and it will be helpful to more than 600,000 borrowers and allowing borrowers to refinance or lowering the balance of their loan. The banks are also agreed to help who seeks help from the banks, part of the burden of mortgage terms, and certain level of customer service.
This settlement, reached in February 2012, and companies had process loans without verifying total documents of customers. But the problem is especially severe after housing prices crashed around the time of the 2008 financial crisis.
Because of this settlement, banks cuts loan amount size of mortgage balances, modified loans and homeowners to sell their house for less than they indebted. It will affect to the borrowers refinance even though they wouldn’t usually qualify because they indebted too much.
Joseph Smithsaid: Banks meet their goals and lively, because there is a financial incentive to provide relief loans before the end of February 2013. But some service standards – which require them. For example, give the loan to the borrower under a single event, for the loss of important documents. He said the deal gave banks an incentive to provide relief early, so borrowers who were in trouble got help within 18 months of the effective date of the settlement.
Housing advocates and watchdogscriticized: This settlement does not put enough benefits for the families to remain in their homes. Some of their criticisms are confirmed this reports: In the primary mortgage debt is given to 95,000 homeowners, and 73,000 were allowed to refinance at lower interest rates, Lenders got a bonus of 25 percent for mortgages reduced before Feb. 28, 2013, and penalties if they missed deadline. Other loan benefits also increased or decreased the amount they were credited with.
According to the reports of four largest US banks: Bank of America, provided $9.61 billion in relief, covering 317,028 loans; Wells Fargo provided $4.57 billion on 122,719 loans; Chase provided $4.46 billion on 125,553 loans, and Citi provided $1.79 billion, covering 58,822 loans.
Chase said finished its loan changes two years early and forgave an average of $121,000 in principal on first mortgages.