CLEVELAND,Ohio-More than 14,000 Ohioans in Cuyahoga County who were illegally foreclosed on may be eligible for relief after this month’s deal requiring banks to pay $8.5 billion to 3.8 million homeowners nationwide who were hurt by the mortgage crisis, U.S. Sen. Sherrod Brown for Ohio has announced.
Cuyahoga County is the largest of 88 counties statewide and includes the majority Black city of Cleveland and its eastern suburbs.
The aforementioned settlement differs from a 1.5 billion settlement that also impacts Cuyahoga County homeowners undermined by illegal foreclosure activities and was negotiated by the attorneys general for 49 states, including Ohio. It involves the affiliated states as plaintiffs and the five top banks that issue mortgages as the defendants. Those banks are Bank of America and Ally/GMAC, Citi, Wells Fargo and J.P. Chase Morgan bank.
The Office of the Controller of the Currency (OCC) and the Federal Reserve Board brokered the $8.5 billion deal that includes 10 big banks including Bank of America and U.S. Bank, and J.P, Morgan Chase, Aurora, Wells Fargo and PNC banks.
A Democrat, Brown visited Cleveland last week to discuss the settlement and additional steps to address problems in the mortgage servicing industry. He was joined at Community Housing Solutions by Carla Martin, a Cuyahoga County homeowner whose home was in unlawful foreclosure.
The husband of popular Cleveland Plain Dealer Reporter Connie Schultz, a Pulitzer prize winning journalist, Sen. Brown also sent a letter to the federal banking regulators and the U.S. Department of Justice urging them to prevent financial companies from taking tax deductions as part of their legal settlements.
Under current law, companies are able to take advantage of tax rules to deduct from their federal taxes the full value of any settlement payouts.
“While the settlement reached can in no way make up for reckless actions taken by mortgage servicers that harmed families and our economic recovery, it is one step forward,” Brown said. “But it’s simply unacceptable that these Wall Street banks can write off these mortgage settlements, shifting the cost to taxpayers. Banks that take a family’s home because of errors or fraud should not get a tax deduction and a slap on the wrist. Breaking the law should not be a business expense.”
Foreclosures—which drag down housing prices and hurt borrowers, even ones who are current on their mortgages—have been responsible for the slow housing market recovery.
Two weeks ago, federal regulators and the 10 lenders at issue reached an agreement to address the large number of unlawful foreclosures that occurred when banks used illegal practices—such as “robo-signing”—to initiate foreclosure proceedings or failed to offer mortgage modifications or other measures that could keep Americans in their homes.
Nearly 96,000 Ohioans, including more than 14,000 people in Cuyahoga County, are eligible for payments and loan modifications averaging $2,125 per homeowner under the deal.