That’s right $26 billion settlement, with a “B”!  For those of you that do not know there has been a big lawsuit with banks over “robo-signing”.  This is when An employee of a mortgage servicing company, like GMAC, Bank of America, Wells Fargo etc signs foreclosure documents without reviewing them first. Rather than actually reviewing the individual details of each case, robo-signers assume the paperwork to be correct and sign it automatically, like robots.

This $26 Billion deal is expected to provide relief to more than one million homeowners who are have a difficult time paying their mortgage and are at risk of foreclosure or those that have already lost their home to foreclosure.  This settlement is with the five largest mortgage servicing companies – Bank Of America, Chase, Citigroup, Wells Fargo and Ally Financial (formally GMAC).

So how is that $26 billion broken down and how is it really going to help homeowners you might ask.  The settlement says that $17 billion must be put towards some sort of relief to borrowers, this could be principle reductions for those underwater, loan modifications or other types of assistance.  $5 billion will be put in a reserve account for federal and state programs and possibly given to homeowners that were taken advantage of by banks and the robo-siging.  It is possible that as many as 750,000 homeowners could get checks for up to $2,000.

Finally, the remaining money will be put towards helping homeowners that are upside down on their mortgage.  They will be able to refinance into a loan with better rates and terms.

What do you think – Is this going to help, should it have been more money?