Landmark $25 billion settlement reached with nation’s 5 largest mortgage servicers

WTF mortgage settlement 2.9.12

 

The U.S. Department of Justice and Attorneys Generals from 49 states have reached a $25 billion settlement with the nation’s five largest mortgage servicers to resolve widespread loan servicing and foreclosure abuses.


The alleged abuses include the use of “robo-signed” documents in foreclosure proceedings and deceptive practices during the loan modification process.

Under terms of the settlement, Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) must provide within three years $20 billion in direct financial relief to borrowers. This includes:

  • $10 billion to reduce the principal on loans for borrowers that are currently delinquent on their payments, may default on their mortgages, or owe more than their homes are worth;
  • $3 billion to refinance underwater mortgages – or loans that exceed current value of the home – of borrowers who are making payments on time so they can take advantage of lower interest rates and monthly payments;
  • $7 billion for other forms of relief for military service members who were forced to sell their homes at a loss and unemployed borrowers

The companies are also required to pay federal and state governments $5 billion for losses incurred as a result of the mortgage and foreclosure violations. In addition, the companies will have to abide by new rules that protect homeowners during the loan modification and foreclosure process.

“This agreement reflects our commitment – at both the federal and state levels – to ensure justice, and to recover losses, for victims of reckless and abusive mortgage practices,” said Attorney General Eric Holder. “In addition to addressing many of the most egregious mortgage loan servicing abuses that our investigations have uncovered, this agreement establishes significant new homeowner protections to help prevent future misconduct.  It also provides substantial financial assistance to victim borrowers.”

For more information on the settlement, please visit NationalMortgageSettlement.com.

 

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2 Comments on “Landmark $25 billion settlement reached with nation’s 5 largest mortgage servicers

  1. Pingback: Wells Fargo settles discriminatory lending claims | What The Folly?!

  2. Pingback: U.S. files $25 billion mortgage settlement | What The Folly?!

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