10 Banks Agree to $8.5 Billion Foreclosure Settlement
The Federal Reserve and the Office of the Comptroller announced Jan. 7 that they reached an $8.5 billion settlement with 10 banks and mortgage servicers over allegedly improper foreclosures, Reuters reported. Regulators alleged that the banks mishandled paperwork or improperly sped up foreclosures by bypassing required procedures.
The settlement included $3.3 billion in direct payments to eligible owners, as well as $5.2 billion in loan modifications, forgiveness of deficiency judgments and other assistance.
The direct payments will be the highest compensation to date for borrowers as a result of lender actions during the foreclosure crisis; as many as 3.8 million borrowers could receive anywhere from a few hundred dollars up to $125,000, depending on the type of mortgage servicing error. Regulators have identified 11 categories of error, with the highest being active-duty service members who were improperly foreclosed upon.
The banks participating in the settlement include Aurora, Bank of America, Citigroup, JPMorgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank and Wells Fargo. Four other banks still are in negotiations with the OCC, including Ally, EverBank, HSBC and One West.