In the largest deal to date aimed at addressing the housing meltdown, federal and state officials on Thursday announced a $26 billion foreclosure settlement with five of the largest home lenders.
The settlement settles potential state charges about allegations of improper foreclosures based on "robosigning," seizures made without proper paperwork.
Most of the relief will go to those who owe far more than their homes are worth, known as being underwater on the loans. That relief will come over the course of the next three years, with the banks having incentives to provide most of the relief in the next 12 months.
At least $17 billion of the settlement will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages. Depending on which loans have the amount owed cut, the amount of principal relief could reach as much as $34 billion.FULL STORY