Federal and state governments and big banks are working on a proposal where up to 1 million at-risk, underwater homeowners may be eligible for a reduction on their mortgage principal.

Awaiting final approval, the settlement stems from foreclosure abuses allegedly made by banks and have caused many home owners to lose their homes.

"We're very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help," Shaun Donovan, U.S. Housing and Urban Development Secretary, said during a recent forum at the Winter Meeting of the U.S. Conference of Mayors in Washington.

REALTOR® Magazine reports that major lenders J.P Morgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Finanacial would pay between $20 billion to $25 billion to settle the alleged foreclosure abuses.

"Donovan also said banks also would reduce the mortgage principal of up to 1 million borrowers by about $20,000 each." Stated the article, "Furthermore, he noted that some families who were wrongly foreclosed upon may get compensated as a result of the settlement."

Read the full article at REALTOR® Magazine.

photo credit: dgrinbergs

Posted in Real Estate Market Conditions, Headlines

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