Ten Big Banks to Pay $8.5 billion In New Foreclosure Settlement Deal With Feds

Ten major mortgage servicing banks agreed Monday to pay $8.5 billion to settle charges that they wrongfully foreclosed on millions of homeowners in the wake of the 2008 financial crisis, particularly through "robo-signing" practices, when banks automatically signed off on foreclosures without properly reviewing documents, according to a statement released jointly by the Office of the Comptroller of the Currency and the Federal Reserve.

Mortgage Forgiveness Debt Relief Act Nearing End Date

By Monday of next week, unless something drastic happens fast in Congress, the United States will drop off the so-called fiscal cliff. About $600 billion in simultaneous tax hikes and spending cuts will take effect in January 1. Aggravating matters for the many homeowners who are still underwater, the Mortgage Forgiveness Debt Relief Act will also expire come December 31.

HOAs Foreclosing on Banks

A December 26 CNN Money report says hundreds of homeowners and condo associations are foreclosing on banks that have failed to pay dues and other expenses on the properties they've repossessed.

Ben Solomon, a Miami-based attorney, according to the report, has so far filed more than 1,100 liens against banks on behalf of homeowners associations (HOAs), has pursued 131 foreclosures, and in more than 90% of the cases, has the banks agree to a settlement by paying the bills. Only in very rare cases do HOAs end up pushing the foreclosure all the way through to the auction sale of the properties. This has happened only once for Solomon. In early November, Keys Gate Community Association in Homestead, Fla., brought a foreclosure on a property owned by mortgage servicer, NovaStar, which owed $22,890 in back dues and fees. By mid-November, the association foreclosed on NovaStar and the home was sold at auction to a third party for $62,000, fully paying off the debts to the association.