Bank of America Corp., JPMorgan Chase & Co. and 3 other U.S. banks reached a $26 billion settlement with 49 states and the federal government to end a probe of abusive foreclosure practices. In the largest federal-state civil settlement in the nation’s history, the banks have committed $20 billion in various forms of mortgage relief plus payments of $5 billion to state and federal governments. The settlement also stipulates that individual borrowers will receive restitution amounts somewhere in the range of $1,500 – $2,500, depending on how many people make claims.
The agreement has been in the making for over 16 months, when states moved to investigate bank foreclosure practices in 2010. The deal will “begin to turn the page on an era of recklessness” that led to the housing bubble, President Barack Obama said Thursday in Washington. Lynn Turner, the former chief accounting officer at the Securities and Exchange Commission, told Bloomberg News that, “There are something like 10 million-plus homes under water to the tune of half a trillion dollars. I don’t think this settlement, which lets all the bank executives off the hook for filing false documents with courts, is going to make much of a dent.”
Nonetheless, the amounts are still substantial. The nation’s five largest mortgage servicers — Bank of America, JPMorgan, Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. – negotiated the settlement with federal agencies, including the Justice Department, and state attorneys general. Bank of America has committed as much as $11.8 billion, including a cash payment of $3.24 billion, according to a government fact sheet. The balance will be applied toward mortgage modifications and other benefits for borrowers. Wells Fargo has committed as much as $5.35 billion; JPMorgan $5.29 billion; Citigroup $2.2 billion; and Ally $310 million.
Our New York City corporate and real estate lawyers know that a devastating financial crisis caused by corporate fraud can be just as devastating as a personal injury. If you have had to foreclose on your home due to negligent and fraudulent banking practices or insurance disputes, contact our offices to see if we can help you reach a settlement in your case.