By now, you have probably heard of the two new mortgage foreclosure settlements with federal regulators, one in which 10 banks have settled for $8.5 billion. (In the other settlement, mega-lender Bank of America will pay Fannie Mae almost $10.4 billion. mostly to buy back bad mortgages it had earlier sold to Fannie.)
$3.3 billion of the $8.5 billion settlement is earmarked for direct distribution to consumers whose mortgages went underwater or who lost their homes in the financial meltdown. Are the settlements fair? David Lazarus says "no" in this column, where he notes that "[t]he average compensation for each homeowner who faced foreclosure in 2009 and 2010 will run about $2,000. That's a couple thousand bucks for having been deceived and pushed around — and possibly thrown out onto the street — by a bank that was knowingly breaking regulatory procedures in handling distressed properties."
In a statement released by several consumer advocacy groups, Alys Cohen of the National Consumer Law Center called the cash payments for consumers "wholly inadequate in light of the scale of the harm."