When the financial industry nearly collapsed in late 2008 following a trend of declining home prices, the situation looked bleak, if not hopeless.
Many observers were disappointed when the administration missed, in their minds, a golden opportunity to make banks accountable for their lending practices and to help Americans with bad mortgages.
Over three years later, however, some relief may have finally arrived.
A multi-state agreement with major banks has secured around $25 billion of aid for homeowners, about half of which will be directed at helping Californians.
The aid will take several forms, including principal reductions in the mortgage loan amounts, refinancing of mortgages at lower rates, and settlement checks for people who fell victim to robo-signing seizures made without proper paperwork.
In addition, the agreement will help homeowners in a few other important ways. For one, banks will be barred from foreclosing on anyone under consideration for a loan modification. Perhaps most importantly, consumers will have the right to appeal denials.
To simplify the communication process between homeowners and their mortgage companies, a single point of contact will be created for borrowers inquiring about their loans.
While no one believes this agreement will immediately and magically end the nation’s economic woes, many are hopeful that it will be just what the housing sector needs.
“This is a historic amount of relief for California homeowners,” said California Attorney General Kamala Harris. “California families will finally see substantial relief after experiencing so much pain from the mortgage crisis.”