U.S. Attorney General Eric Holder has unveiled the long-awaited $25 billion agreement with the nation’s five largest mortgage servicers—the result of a 14-month investigation by all 50 state attorneys general following widespread instances of false or incomplete documentation used to execute foreclosure, a practice known as robosigning.
The final deal, reached between the Justice Department, HUD, 49 attorneys general (Oklahoma will reportedly ink a separate deal) and Bank of America, JPMorgan Chase & Co., Wells Fargo & Company, Citibank, and Ally Financial (formerly GMAC), was hailed as an opportunity to “fix a broken system, and to lay the groundwork for a better future,” Holder said in a news conference Thursday morning.
He added that while the settlement addresses civil claims based on mortgage loan servicing activities, “it does not prevent state and federal authorities from pursuing criminal enforcement actions.
“And it preserves extensive claims related to mortgage securitization activities, including the claims that will be the focus of the new Residential Mortgage-Backed Securities Working Group. Furthermore, the agreement does not prevent any claims by any individual borrowers who wish to bring their own lawsuits.”
The settlement breaks down as follows:
$5 billion will be cash penalties on the banks, with $1.5 distributed to about 750,000 homeowners wrongfully foreclosed on between September 2008 and December 2011.
$17 billion will be used for principal reduction and other loan modification relief.
Up to $3 billion in refinancing relief nationwide.
The agreement does not prevent individual borrowers from bringing up their own lawsuits. More, claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers remain.
Go to www.nationalmortgagesettlement.com for more information.
Four million homeowners have been foreclosed on since 2007.