In the largest settlement to date between the government and any one company, JPMorgan Chase is in the spotlight again for their misdoings in the early 2000’s.
After waiting weeks for specifics, a $13billion dollar settlement is what JPMorgan and the Department of Justice are enumerating for the banks’ involvement in bad loans that that turned sour. For that, the bank gets a resolve to the investigations being conducted on them in 5 different states, by both federal and state organizations.
So where is the money going to go? $4 Billion has been set aside to go towards helping homeowners that are still struggling with their loan payments. Even years after the collapse, there are still remarkable damages and effects still being cleaned up and played out. The funds are supposed to be targeted towards hard hit cities like Detroit, where looting and vandalism has been so bad in some cases the houses are being bulldozed instead of purchased and renovated.
As well, the bank is also supposed to reduce interest rates on loans that are in struggling areas, taking down abandoned homes to prevent further neighborhood decay, as well as reduce balances on mortgages. The last item, in particular, may hit a nerve of many homeowners.
Until this settlement, a short sale was the only way to effectively eliminate principal balance, but included the homeowner successfully selling and vacating the house. If JPMorgan keeps its promise to simply make principal vanish, it will be the first time that solution will be used to any major consequence. Principal reductions have been rare, difficult, and not without their own sub-set of conditions for the …read more