Deutsche Bank Reverses Pledge to Help Distressed Homeowners
-
$4.1 billion in settlement funds to be spent on new loans
-
Monitor says needy may be miffed; bank says consumers benefit
Deutsche Bank AG has decided that none of the more than $4 billion it promised to spend on consumer relief after the global mortgage crisis will go to distressed U.S. homeowners, according to a report by the monitor of the 2017 settlement.
Instead, the consumer-relief money will be spent on originating new loans, according to the Feb. 13 report by the bank’s monitor, Michael Bresnick.
The decision reverses pronouncements by the bank and the U.S. Justice Department that some of the funds — part of an overall $7.2 billion settlement over bad mortgage bonds sold before the 2008 crisis — would go to aiding people who were in imminent risk of defaulting on their mortgage payments, have especially high interest rates or owe more on their mortgage than in the value of their home.
The change in plans “may disappoint distressed homeowners and others, including the many individuals who have reached out to the monitor over the past two years, hoping to receive different types of consumer relief from the bank,” Bresnick wrote in the report, which was posted online.
Bresnick, a partner at the law firm Venable LLC and a former U.S. prosecutor, declined to comment for this article. The Justice Department didn’t have a comment.
The bank has already received consumer-relief credit for more than $1.5 billion spent on originating loans, the report said. Bresnick wrote that he plans to provide a more detailed analysis of the loans that Deutsche Bank has submitted for consumer relief-credit, such as “where they were made and how the loans are similar to or different from those in the overall market.”
The bank said in a written statement that its consumer-relief program has provided financing to more than 190,000 homeowners, specifically to low- and moderate-income homeowners or homeowners in areas hit hard by the financial crisis. “As reported by the monitor, we have decided to focus our efforts on helping people purchase homes as the most efficient and effective way of delivering consumer relief given current market conditions and our financing expertise,” the bank said.
More here…
~
No Comment