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Mortgage Crisis: Settlement for Distressed Homeowners

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Inked this morning: a $25B federal-state mortgage settlement with five banks alleged to have engaged in unsavory foreclosure practices. The Tribune reports that the largest joint state-fed settlement in history, a year in the making, will allocate roughly $1B of the payout to distressed Illinois homeowners. Not everyone will revel in the spoils, as Fannie & Freddie-held mortgages are exempt. Furthermore, no mechanism will help people to reclaim homes already lost through weaselly practices like robo-signing. They may see a small reward from the settlement, but not enough to make much difference. The other recipients will be homeowners caught underwater. [Trib]