President Obama on Thursday applauded the $25 billion settlement between federal and state officials and the nation’s largest mortgage servicers, a much-needed boost to his administration's dismal housing record.
“We have reached a landmark settlement with the nation's largest banks that will speed relief to the hardest hit homeowners and some of the most abusive practices of the mortgage industry, and begin to turn the page on an era of recklessness that left so much damage in its wake,” Obama said.
Under what he called "the largest joint federal-state settlement in our nation’s history,” more than a million homeowners could benefit from the settlement with Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and Ally Financial in the form of cash payments, principal reductions, loan modifications, and short sales, among other options.
The settlement, reached late Wednesday night, culminates more than a year-long effort to clean up the mortgage servicing and foreclosure processing system. State attorneys general led by Iowa’s Tom Miller launched an investigation in the fall of 2010 and worked with the lenders, and the Departments of Justice and Housing and Urban Development to strike the deal.
After being beat up repeatedly for poor performance in addressing housing-market woes, in which Obama himself has acknowledged failure, the administration can now show it helped secure billions of dollars for struggling homeowners, and from lenders rather than the federal government. The White House can also tout the settlement as evidence it is holding lenders accountable for cleaning up the foreclosure processing system going forward.
"These practices were plainly irresponsible and we refused to let them go unanswered," Obama said.