Banks Agree to $8.5B Settlement Over Foreclosure Errors
Ten major banks have agreed to pay more than $8.5 billion in a settlement with federal regulators over lenders’ past mistakes in processing foreclosures.
About $3.3 billion of the settlement is to help 3.8 million eligible home owners who were foreclosed upon in 2009 and 2010. About $5.2 billion of the settlement will then be provided in assistance to home owners struggling financially, such as through mortgage modifications. Eligible borrowers will be contacted by the end of March.
Banks have been accused of filing faulty paperwork, foreclosing on mortgages they didn’t own, failing to provide proper notice of default, and foreclosing while a borrower was under a loan modification plan.
Originally, the banks had agreed to conduct an Independent Foreclosure Review program, which allowed eligible home owners who were foreclosed upon to have their cases reviewed for possible compensation. But the program has only attracted a small portion of eligible home owners who’ve taken advantage of the free reviews. The latest settlement would end those case-by-case reviews of foreclosures by the 10 banks.
The settlement is separate from a $25 billion mortgage settlement last year between five of the nation’s largest banks and attorneys general from 49 states.
The 10 mortgage companies involved in the latest settlement include:
- Bank of America
- JPMorgan Chase
- MetLife Bank
- U.S. Bank
- Wells Fargo