Photo: Kevin Bauman
Negotiators will announce that the deal is officially complete at 10:00 this morning.UPDATE: CNBC is reporting that the deal could go up to $40 billion if more banks join the lawuit. If that’s the case, $18 billion of which would go to California 1/4 of the underwater mortgages in the country are in that state.
For the banks — Bank of America is going to pay more than JP Morgan Chase, Wells, Citi or Ally Financial. That’s something to think about even though, as the NYT reports, banks have likely priced this in already.
Also worth keeping in mind is that homeowners have a collective negative equity of about $700 billion and are underwater by about $50,000 each.
As for what homeowners will get, this is what we’ve heard about how a $25 billion deal would break down (remember: this could definitely change and we’ll keep you up to date). Also, there’s a formula to it, but all anyone seems to say about it is that it’s complicated, and awards varying degrees of credit depending on how much help a homeowner needs.
— $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages (that should be an average of about $20,000 each)
— $5 billion would be placed in a reserve account for various state and federal programs; a portion of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.
— $3 billion would to help homeowners refinance at 5.25 per cent.
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