$25B foreclosure settlement filed in federal court
March 13, 2012
Department of Justice, the U.S. Department of Housing and Urban
49 state attorneys general, including Ohio Attorney General Mike
Monday filed their landmark $25 billion agreement with the nation’s
largest mortgage servicers over alleged foreclosure abuses.
largest industry settlement since the U.S. struck a deal with tobacco
in 1998. The agreement includes Bank of America Corp. (NYSE: BAC),
& Co. (NYSE: WFC), JPMorgan Chase & Co.
(NYSE: JPM), Ally Financial (NASDAQ:
and Citigroup (NYSE: C).
those banks have operations in Dayton except Ally. JPMorgan Chase is
third-largest bank in Dayton with $2.1 billion in local deposits.
complaint alleged the five servicers’ misconduct “resulted in the
improper mortgages, premature and unauthorized foreclosures, violation
service members’ and other homeowners’ rights and protections, the use
and deceptive affidavits and other documents, and the waste and abuse
Most of the
settlement amount, about $20 billion, is slated for home refinancing
principal reductions for struggling borrowers. About 1 million
expect their mortgage debt to be reduced by lenders or to refinance
at lower rates.
bankers believe the settlement could flood the market with foreclosures.
to the $20 billion in financial relief for borrowers, the consent
require the servicers to pay $5 billion in cash to the federal and
governments. Around $1.5 billion of the payment will be used to
Borrower Payment Fund to provide cash payments to borrowers whose homes
sold or taken in foreclosure between Jan. 1, 2008, and Dec. 31, 2011,
meet other criteria.
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