Dayton Business Journal...
Details of $25B foreclosure settlement filed in federal court
Tuesday, March 13, 2012 

The U.S. Department of Justice, the U.S. Department of Housing and Urban Development and 49 state attorneys general, including Ohio Attorney General Mike DeWine, on Monday filed their landmark $25 billion agreement with the nation’s five largest mortgage servicers over alleged foreclosure abuses. 

It’s the largest industry settlement since the U.S. struck a deal with tobacco companies in 1998. The agreement includes Bank of America Corp. (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC), JPMorgan Chase & Co.    (NYSE: JPM), Ally Financial (NASDAQ: ALLY) and Citigroup (NYSE: C). 

All of those banks have operations in Dayton except Ally. JPMorgan Chase is the third-largest bank in Dayton with $2.1 billion in local deposits. 

The complaint alleged the five servicers’ misconduct “resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members’ and other homeowners’ rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds.” 

Most of the settlement amount, about $20 billion, is slated for home refinancing and principal reductions for struggling borrowers. About 1 million borrowers can expect their mortgage debt to be reduced by lenders or to refinance their homes at lower rates. 

Many bankers believe the settlement could flood the market with foreclosures. 

In addition to the $20 billion in financial relief for borrowers, the consent judgments require the servicers to pay $5 billion in cash to the federal and state governments. Around $1.5 billion of the payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008, and Dec. 31, 2011, and who meet other criteria. 

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