Hoodwinked homebuyers who fell victim to questionable lending practices have a lot to celebrate with the recent $25B federal settlement in their favor. The U.S. Justice Department filing sought redress against the five biggest mortgage servicers -- Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial -- for alleged violations of state and federal laws. There are numerous parties to this settlement, including every state except Oklahoma and several federal agencies. The main allegations of wrongdoing that were lodged against the banks in the filing are as follows:
- “Robo-signing” loan approvals without adequate review
- Charging borrowers excessive or unnecessary fees
- Failing to apply loan payments, or applying them incorrectly
- Unfairly denying loan modifications to eligible borrowers
- Falsifying foreclosure and bankruptcy documents
- Filing fraudulent reimbursement claims with the Federal Housing Finance Agency (FHFA)
Doesn’t that just make your blood boil?!
Georgia’s share of the landmark $25B award is a mere $815M, about 3% of the total damages. Of that, over $700M will be administered through banks and government agencies to refinance loans, write down principal, and make payouts to victimized mortgage holders. The remaining $104M (just under 13% of the total amount awarded to Georgia) will go into state coffers to be used at Gov. Nathan Deal’s discretion, the Atlanta-Journal Constitution reports.
But while most taxpayers would reasonably expect that these funds would be allocated to state programs to help defrauded homeowners, Gov. Deal actually has other plans for the money. He wants it to go into the state’s “rainy day” fund, to be used for various projects and emergency expenditures as needed. Given that Georgia is one of the leading states in terms of the total number of foreclosures, and that Atlanta home sales prices are now at their lowest point in 14 years, Deal’s intentions seem misguided at best, and callous at worst.
What do you think about Gov. Deal’s plans to allocate Georgia’s $104M settlement? Shouldn’t this money go to defrauded homeowners instead? How would you like to see the money spent?