In early February, 5 of the nation’s largest commercial banks agreed to a settlement with the federal government in which they will:
1. provide relief to homeowners who are struggling to make payments on underwater mortgages;
2. compensate others who have already been evicted without due process.
The total value of the settlement may reach as much as $39 billion, depending on how the banks respond to certain incentives built into the agreement. But the base amount is $26 billion.
With a nod to the Harpers Index, here are the numbers that create context around the settlement...
Is this deal going to make an impact on people who have been hurt in the mortgage crisis? Will it speed up recovery of the moribund housing market? Will it restore once-thriving neighborhoods emptied by mortgage scams that arose to feed the big banks’ insatiable demand for bundled mortgages in the early 2000′s? Is it a meaningful punishment for the sometimes criminal behavior of banks, such as forgery of documents needed to hasten foreclosures?
Here are some numbers for perspective:
• 75,000,000: Number of homeowners in the United States, according to the U.S. Census.
• $9,000,000,000,000: Total decline in value of U.S. homes, 2007-2010.
• $700,000,000,000: Approximate negative equity in U.S. homes (the amount all people owe in excess of their home value).
• 15,000,000: Approximate number (1 in 5) of homeowners who owe more than their house is worth.
• $50,000: Average amount by which each of these homes is underwater.
• 289,000: Total number of homes sold across U.S. in 2011.
• 36: Percent of those sold at a loss.
• ½: Homeowners who are automatically excluded from the settlement because their mortgage is held by Fannie Mae or Freddie Mac.
• 4,000,000: Number of families foreclosed upon, 2007-2011.
• 3,317,308: Total population in the 2010 Census of the Minneapolis/St. Paul/Bloomington region – the nation’s 16th-largest metro area.
• $26,000,000,000: Negotiated amount to be paid by 5 large banks for abuses and potentially illegal acts in the foreclosure crisis.
• $8,600,000,000: Average combined amount per year to be paid by the 5 banks.
• $47,400,000,000: Combined 2011 profit of the 5 banks.
• 1 in 5: Share of the 4 million foreclosed-upon (750,000) that will likely receive payment under the agreement because they were kicked out even though the bank failed to follow legally proscribed processes.
• $2,000: Approximate amount each of them will receive over 3 years.
• $666: What that equates to in a year.
• $707 per month: Average rent for a 1-bedroom apartment in Las Vegas – the nation’s worst city for foreclosures (1 in 9 homes) in 2010.
• $0.06: For every dollar of the total settlement, the approximate amount dedicated to people who were improperly removed from their homes.
• 1,000,000: Number of underwater homeowners who will see their mortgage debt reduced.
• $20,000: Estimated average amount of relief they will receive.
Bank of America
• $11.8 billion: Amount Bank of America will pay in the settlement.
• $1.4 billion: Amount of profit Bank of America recorded in 2011.
• $8.2 billion: Amount of profit Bank of America recorded in the last 6 months of 2011.
• $21 billion: Amount of profit Bank of America recorded in 2006 – the real estate peak and the year before mass foreclosures began.
Wells Fargo
• $5.4 billion: Amount Wells Fargo will pay in the settlement.
• $15.9 billion: Amount of profit Wells Fargo recorded in 2011.
JPMorgan Chase
• $5.3 billion: Amount JPMorgan Chase will pay in the settlement.
• $19 billion: Amount of profit JPMorgan Chase recorded in 2011.
Citigroup
• $2.2 billion: Amount Citigroup will pay in the settlement.
• $11.3 billion: Amount of profit Citigroup recorded in 2011.
Ally Financial
• $0.31 billion: Amount Ally Financial will pay in the settlement.
• $.21 billion: Amount Ally Financial lost in 2011.
• $1.3 billion: Amount of profit Ally Financial would have recorded in 2011 without the charge it took to pay for this settlement.
Sources:
This involved enough synthesis that it was too disruptive to put the source links inline. I had intended to provide all of them at the bottom, but the Daily Kos system reads the list like spam.
So here are the names of the sources without links. Please forgive the inconvenience.
New York Times, 2/9/12, States negotiate $25 billion deal for homeowners
Forbes, 1/26/11: The worst cities for foreclosures in 2010
www.census.gov/hhes/www/housing/hvs/qtr208/q208tab4.html
Rentvine.com: Average rent tool
Motley Fool, 2/9/12, Housing settlement signals capital-gain opporunity
Bank of America, Citigroup, JP Morgan Chase, Ally, Wells Fargo media rooms, various earnings releases
Huffington Post, 1/13/12, JPMorgan Chase earnings 4q
New Haven Register, 4/22/11
Wikipedia, Table of US Metropolitan Statistical Areas
World Property Channel, "real-estate-news-home-value-declines-home-value-destruction-zillow-report-lost-home-equity-values-home-foreclosures-bulk-condo-sales-worst-real-estate-markets"
Zillow.com