U.S Reaches $26 Billion Mortgage Settlement With Top Banks
Jessica Menton | Feb 9, 2012 2:10pm EST | 2min:44sec
Forty-nine states and five major banks reached a $26 billion mortgage settlement that will aid about two million homeowners. The banks involved in the deal are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc, and Ally Financial Inc. California and New York's state attorney generals had resisted the deal, but eventually joined, boosting the settlement amount from around $19 billion to $26 billion.
The settlement grew out of a 16-month investigation into improperly foreclosure processing, which revealed that banks had signed documents with minimal reviews, known as robo-signing.
Payments from the banks would go towards principal reductions for borrowers who have mortgages that are greater than their homes' value, as well as those who have lost homes to foreclosure. If more banks join the deal, the total settlement could rise over $40 billion.
The banks remain targets for additional litigation related to mortgage and foreclosure claims, which may dampen relief that the settlement has been reached for investors.A lawsuit filed last week by New York State Attorney General Eric Schneiderman against Bank of America, JPMorgan Chase and Wells Fargo will also be allowed to continue. Oklahoma is the only U.S. state not participating in the deal. It is negotiating a separate settlement.
