Banks reach $8.5B foreclosure deal
Ten of the country’s largest mortgage servicers agreed to pay a combined $8.5 billion over mortgage loan servicing and foreclosure processing abuse claims, the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) announced today.
Separately, Bank of America Corp. today announced it had reached a $10 billion settlement with Fannie Mae to settle claims over troubled mortgages issued primarily by the bank’s Countrywide Financial unit.
Under the settlement reached with the Fed and the OCC, Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo will pay a combined $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments.
The settlement stems from enforcement actions taken in April 2011 by the Fed, the OCC and the Office of Thrift Supervision, and applies to borrowers whose homes were in foreclosure in 2009 and 2010. Eligible borrowers are expected to receive compensation ranging from hundreds of dollars to $125,000, depending on the type of possible servicer error, according to a statement released by the Fed.
In the separate settlement agreement reached by Bank of America and Fannie Mae, the Charlotte-based bank will pay Fannie Mae $3.6 billion and will spend an additional $6.75 billion to buy back mortgages from Fannie Mae at a discounted rate compared to their original value.