Money Minute: Mortgage settlement is a good deal [Video]
The pending deal with leading mortgage lenders isn’t the best possible outcome for homeowners, but it’s probably the best they can hope for.
Today’s the day for state attorneys general to put up or shut up when it comes to signing on for a settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, which are alleged to have played unfairly with customers.
The plan will probably have two key elements. On the one hand, as much as $25 billion could be allocated to benefit homeowners, possibly through lower interests rates or even debt reduction. On the other, banks could be largely off the hook for future litigation.
Details are still being hammered out, so nothing’s set in stone yet.
Like I say: It’s not perfect. If it were, lenders would be accountable for any and all trespasses when it came to playing fast and loose with mortgage rules. But $25 billion is a hefty sum, and it would be better to get this money to people now, rather than after many years of litigation.
The most important thing, though, is not to take banks’ word for it that they won’t mess around again. Strong regulatory oversight is required.
Like they say, fool me once ....
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