“Sweetheart” Foreclosure Deal Enables Banks to Knock Over Houses Instead of Keeping People In Them

http://wepartypatriots.com/wp/2012/03/30/foreclosure-deal-enables-banks-to-knock-over-houses/

The sweetheart foreclosure deal that is drawing the ire of onlookers is now being understood to give banks credit for things they already do, further deepening the worry that the deal will in no way prevent another foreclosure crisis or sufficiently reprimand those responsible for the last one.

The $25 billion foreclosure abuse settlement between the government and five major banks announced last month denotes $17 billion in assistance to borrowers who have the intent and ability to stay in their homes. However, language in the settlement will allow for spending in areas that will not stop foreclosures, some of which is already common practice:

'For example, the banks can wipe out more than $2 billion of their obligation by donating or demolishing abandoned houses. Almost $1 billion can be used to help families that have already defaulted move out.

“The $17 billion is supposed to be the teeth of this settlement,” said Neil M. Barofsky, the former inspector general for the Treasury’s bank bailout fund known as the Troubled Asset Relief Program. “And yet they are getting all this credit for practices that they do every day.”

Only 60 percent of the $17 billion designated for borrowers, or $10.2 billion, must be used to reduce principal for borrowers who owe more on their mortgages than their homes are worth — though banks can do more if they choose.'

In some cases that money can be used for bulldozing homes instead of saving them. In the interest of cutting down foreclosure’s frequent legal limbo and eliminating hazards that depress property values, some banks favor knocking over houses rather than helping people stay in them.