Will the national foreclosure settlement help Western New Yorkers?

     The details of the national foreclosure settlement are still not fully public, but from what we can tell, it is unlikely that Western New York will benefit nearly as much as other areas of the Country. The largest sums are going to homeowners who are significantly underwater on their mortgages (meaning that they owe more on their homes than they are worth). Media reports indicate that the average mortgage reduction will be about $100,000. Very few homes in this area are that far underwater because home values here just aren’t high enough, and we didn’t see the type of declines in property values that were seen in Flordia, Nevada, Arizona, and California. It is my assumption that the banks are agreeing to these reductions because it was in their interest to do so. They already knew they were going to take losses on these properties, so why not try to look like the good guys by making these write downs appear voluntary?

     Frankly, I think that this settlement will actually speed up the pace of foreclosures. Many lenders placed foreclosures on hold due to the robo-signing scancal, and were subject to investigations on both the state and federal level. The legal fees that these banks would have paid just to defend these investigations would have cost billons over the next few years. With this settlement, the banks are now essentially going to be free to start foreclosures without having to worry about criminal probes (unless they do something really bad). In my opinion, this settlement was the price of reopening the foreclosure floodgates and protecting many bank officers and directors from criminal prosecution.

      Some of the settlement funds are supposed to be utilized to fund non-profit home retention programs. I only hope that the money works its way down to these organizations in time. As I understand it, the banks have three years to fund the entire settlement. A lot of homes will be lost by then if the the Government does not ensure that these non-profit programs are the first in line to receive the money.

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