The Federal government and 49 states have reached an agreement with five large mortgage lenders that will provide underwater homeowners with a modicum of relief and a second chance – and the national (and Philadelphia) real estate market a much-needed boost.


The agreement brings to end a massive investigation into foreclosure abuse launched by all 50 state attorneys general in 2010..

As reported by Bloomberg News, the $25 billion deal includes three main components. One is a $1.5 billion payment to some 750,000 borrowers who lost their homes to foreclosure – an amount that works out to about $2,000 per borrower. A second is a $17 billion fund that will cover debt forgiveness, forbearance, short sales and other forms of assistance for struggling homeowners. The third is a commitment to provide $3 billion towards refinancing of mortgages to lower interest rates.

The five lenders involved are the five largest in the country: Bank of America, JPMorgan, Wells Fargo, Citigroup and Ally Financial. Negotiations continue with several other lenders; if all of those agree to the settlement, the total value of the deal to homeowners could go as high as $40 to $45 billion.

Oklahoma’s attorney general entered into a separate, $18.6 million settlement with the banks.

It could be argued that some form of loan forgiveness would be necessary in order to clear up the foreclosure mess and give the housing market a real forward push. This agreement provides just that while preserving homeowners’ rights to seek legal redress for past abuses. Sounds like a win-win to us. Now let’s see how the market performs in the wake of the settlement.

-By Sandy Smith for PhiladelphiaRealEstate.com

For additional information on the current Philadelphia Real Estate Market or should you want to view available homes for sale even if you want to find the value of your current home; visit www.ThePhillyKind.com