Largest U.S. Banks to Pay $8.5 Billion in Mortgage Settlement
Nearly 4 million Americans stand to benefit from the latest mortgage-abuse settlement.
Ten U.S. banks have agreed to pay $8.5 billion to settle charges that they wrongfully foreclosed on millions of homeowners in the wake of the 2008 financial crisis. Abuses included "robo-signing," when banks automatically signed off on foreclosures without properly reviewing documents.
But the agreement will also help eliminate huge potential liabilities for the banks.
Consumer advocates have complained that regulators settled for too low a price by letting banks avoid full responsibility for foreclosures that victimized families and fueled an exodus from neighborhoods across the country.
The settlement ends an independent review of loan files required under a 2011 action by regulators.
The banks involved in the settlement, which include JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank and Aurora, will pay about $3.3 billion to homeowners to end the review of foreclosures.
The 2011 action also included GMAC Mortgage, HSBC Finance Corp. and EMC Mortgage Corp.
The rest of the money, $5.2 billion, will be used to reduce mortgage bills and forgive outstanding principal on home sales that generated less than borrowers owed on their mortgages.
A total of 3.8 million people are eligible for payments under the deal. Those payments could range from a few hundred dollars to as much as $125,000. People whose homes were unfairly seized and sold will be eligible for the largest payments.