Missouri residents going through foreclosure and looking for debt relief might find it interesting that a nationwide lawsuit against five banks recently reached a settlement over abusive foreclosure tactics. The 49 states in the complaint will split a $25 billion settlement paid by the five banks that allegedly took part in the abusive practices.

Under the settlement, Missouri could potentially receive more than $195 million. The five banks involved in the settlement are Bank of America, Ally Financial, Citigroup, Wells Fargo and JP Morgan Chase. In order for Missouri residents to qualify for funding under the settlement, they must have a home previously foreclosed upon by one of the five banks or carry a mortgage with one of the banks.

Those individuals with a home foreclosed upon between the dates of January 2008 and December 2011 will receive a check for $2,000. Although the foreclosure rate is lower in St. Louis than it is nationally, there are still 20,000 Missouri residents that will qualify to receive that check.

For borrowers current on their mortgage payments but owing more on the home than the assessed market value, it will be possible to refinance at a lower market interest rate. Borrowers behind on their payments and owing more on a mortgage than the assessed market value of the home can reduce their debt and receive additional assistance.

Although Missouri is receiving almost $200 million, Governor Jay Nixon is diverting $40 million toward the state's educational budget. According to the governor, the money will provide relief from "severe budget shortages."

While the diversion will leave less money for Missouri residents who fell victim to the cruelty of foreclosure, $2,000 will still provide some assistance to residents who are deep in a financial hole. For those experiencing severe financial problems or considering filing for bankruptcy, the available funds will be a welcome addition as Missouri residents struggle to get back on their feet.

Source: stltoday.com, "Mortgage deal provides limited relief to foreclosed homeowners," Jim Gallagher, Feb. 10, 2012

Source: thinkprogress.org, "Missouri Becomes Second State to Divert Foreclosure Funds Away From Homeowners To Balance Its Budget," Travis Waldron, Feb. 13, 2012