Categories: Debt Relief

Did Bank Settlement Give Florida Homeowners a Debt Relief Option?

A good portion of the results regarding the $25 billion bank settlement brokered last year have been compiled. Those results leave room for some doubt that the settlement provided homeowners with the debt relief option that many feel they deserved. Florida homeowners may or may not be surprised that the majority of the settlement funds went to second mortgages and short sales.

As a matter of fact, it appears that more than twice the amount of funds predicted went to cover losses on short sales. Representatives for the banks say that part of the reason for this is because many homeowners had already been denied a loan modification prior to the settlement. Still others may have decided on a short sale due to a life change such as a divorce or job change.

Still more billions of dollars went toward forgiving second mortgages. These are funds that banks would have lost in the foreclosure process since first mortgages take priority. Banks are saying that freeing up funds from second mortgages has given homeowners the opportunity to regain some equity in their homes and free up funds that may be used to pay a first mortgage. There are no numbers as of yet indicating if this is true or not.

As a debt relief option, many people believe that the money from the settlement should have been used on debt forgiveness on first mortgages. There was between 15 and 20 percent spent on first mortgages, but it is not clear how many homeowners in Florida benefited. Only time will tell whether the money from this settlement was spent wisely.

Source: Los Angeles Times, Mortgage relief didn’t help many keep their homes, critics say, E. Scott Reckard, Sept. 25, 2013

Published by
Law Offices of Robert M. Geller, P.A.
Tags: Debt Relief

Recent Posts

What Is Small Business Bankruptcy, and Do You Qualify?

Running a small business in Florida comes with financial risks. When debt becomes unmanageable, bankruptcy…

18 hours ago

Top 10 Bankruptcy Myths You Shouldn’t Believe

Filing for bankruptcy can feel overwhelming, especially with all the misinformation. Many people hesitate to…

1 week ago

Filing for Bankruptcy as a Sole Proprietor: What You Should Know

Running a business as a sole proprietor can be rewarding but comes with financial risks.…

1 week ago

Bankruptcy Doesn’t Define You: A Guide to Moving Forward

Filing for bankruptcy can feel overwhelming, but it doesn’t define who you are. Many people…

2 weeks ago

How to Choose the Best Bankruptcy Lawyer in Tampa

Filing for bankruptcy is a significant decision that can affect your financial future for years.…

3 weeks ago

Success Stories: How Clients Overcame Financial Struggles

Financial struggles can feel overwhelming. Many people face mounting debts, bills they can’t pay, and…

4 weeks ago