The $26 billion settlement reached between the states and the Obama administration and five major U.S. mortgage lenders was filed with the Federal Court for approval today. The exact terms were not previously known. A review of the agreement filed with the Court turned out largely to be what was expected with a couple of exceptions.
The terms that apply to each bank are basically the same except that Bank of America has additionally agreed to grant underwater borrowers principal write-downs. As many as 200,000 homeowners could be given principal reductions of $100,000.00 on average. These write-downs could be applied to reduce Bank of America’s $850 million in fines.
As expected the relief required under the agreement to be provided to owners includes principal write-downs, interest reductions, and compensation to homeowners who lost their home due to fraudulent actions by the banks. The banks are required to complete providing relief to homeowners within 3 years, and incentives are provided for completion within 12 months.
For more details on the terms of the settlement see the following article from the Washington Post:
Also, see the following article from the Wall Street Journal introducing Joseph A. Smith, official settlement monitor.