Likely many of you have heard about the deal reached last week between the Governement and the five largest banks. President Barack Obama made a speech last Thursday where he spoke about the housing crisis and his new settlement that will “speed relief to the hardest hit homeowners and some of the most abusive practices of the mortgage industry.”

Many of the companies that handled foreclosures, didn’t give people a chance to hold onto their homes and in many cases they did not even verify that these foreclosures were actually legit. People who should not have been foreclosed upon lost their homes anyways.

Under the terms of this new settlement, the banks are required to provide refinancing for borrowers who have high interest rates, they will reduce loans for families who owe more than their home is worth and deliver “justice” for families who have been victims of abusive practices. There is also a “monitor” set up who will check to make sure that the banks are doing what they have agreed to do and face penalties if they do not. Meanwhile, Obama continued to urge congress to send him a bill that allows homeowners who have kept current on their mortgages to refinance to lower rates.

There has been a lot of discussion regarding this deal and a lot of criticism that says that it is not enough. The $17 billion promised would be about 2.4 percent of the total negative equity weighing down borrowers across the nation now. Clearly that is a very small price for the banks to pay and perhaps that is why they so quickly and easily agreed to it.

Also many have pointed out that the banks have failed to keep their promises in previous deals so why should this be any different? An example is Bank of America “vowing” to provide $8.4 billion in loan modifications way back in 2008 and yet still failing to provide modifications to qualified owners.

Yes this deal is a good thing. Is it enough? No. Will it solve the problems of the housing market? No. But should we hope that this will bring about more legislation like Obama is asking congress for? Absolutely. I can only hope that Congress begins to feel the pressure and will deliver something that will make more of an impact than this deal will.

To read more about this, go here.

by Betsy Ballantyne (info provided by NYtimes.com)
betsy@betsyballantyne.com