The Federal Housing Administration is set to stabilize its role in the tumultuous foreclosure market by recouping roughly $1Billion to offset damages incurred during the last few years of the Great Recession real estate crisis - and they're doing it all without the aid of the U.S. Government!
Bloomberg reported Monday that the FHA and HUD (Housing and Urban Development) came to agreements with five of the nation's largest banks that will "inject about $1 billion into the agency’s capital reserve fund to settle fraud and foreclosure claims". This would limit the Federal Government's negative foreclosure investigative practices and potentially help restore consumer confidence in the real estate market. Ultimately, this deal will create a safety net for refinance and borrower assistance programs to be reinstated.
Who are these programs designed to help? The roughly 11million homeowners who are currently underwater in their mortgages, contributing a total of 700million in negative equity. Relief for such homeowners is expected to be available immediately, while the long-term effects on the housing market are unpredictable. Some experts remain weary that the deal sounds too good to be true, but only time will tell if this is the beginning of the turnaround we've been hoping for.