Banks settle on mortgages
FIVE US banks accused of abusive mortgage practices have agreed to a $25bn government settlement that may help one million borrowers.
The record state-federal settlement will spread relief in the form of mortgage relief and $2,000 payments to borrowers who lost their homes to foreclosure.
It will also release the banks – Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial – from civil government claims over faulty foreclosures and mishandling of requests for loan modifications.
But the banks still face a host of other potential government enforcement actions and investor lawsuits related to their packaging of home loans into securities, and other mortgage-related activities.
“We have reached a landmark settlement with the nation’s largest banks that will speed relief to the hardest hit homeowners in some of the most abusive practices of the mortgage industry and begin to turn the page on an era of recklessness that has left so much damage in its wake,” President Barack Obama said in a press conference.
It follows more than one year of negotiations after evidence emerged late in 2010 that banks robo-signed thousands of foreclosure documents without properly reviewing them.