A draft settlement between states and mortgage companies that would let the nation’s biggest banks pay out billions to compensate for a raft of foreclosures has public interest groups across the political spectrum hopping mad over a deal they say was forged behind closed doors and is being strong-armed by the Obama administration.
The draft proposal, which was sent to state officials Monday for approval, is supposed to overhaul the mortgage industry and help homeowners. In it, the country’s five largest mortgage lenders offer to pay out as much as $25 billion to cover new terms for homeowners driven out by foreclosure. But people who lost their homes are unlikely to get them back or see much financial benefit from the deal.
Advocates and watchdogs on both sides of the political aisle are fighting the deal, although for very different reasons.