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U.S. States and National Banks Reach $25 Billion Foreclosure-Abuse Settlement

Financial News Network
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February 10, 2012 AT 8:08 PM
U.S. States have finally reached a deal with the nation's biggest mortgage lenders over foreclosure abuses that occurred back in 2008. The $25 billion settlement would reduce loans for nearly 1 million households and would send checks of $2,000 to about a quarter of a million Americans who were improperly foreclosed upon. The five major banks involved in the settlement include Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and Ally Financial (NYSE:ALLY).The deal finally bookends the painful financial crisis that began back in 2008 when home values dropped and millions of homes were foreclosed upon, with many of the aforementioned companies processing the foreclosures without verifying documents. This was done through automated fake signatures known as robo-signing.Under the deal, all U.S. states but Oklahoma will receive money and will not pursue civil charges against the lenders. However, homeowners can still bring up their own lawsuits as well as federal and state authorities pursing criminal charges.