The nation’s five largest mortgage lenders have agreed to overhaul their industry after deceptive foreclosure practices unfairly evicted homeowners, government officials said Monday.
A draft settlement between the banks and U.S. states has been sent to state officials for review. It would be the biggest settlement with a single industry since the 1998 multistate tobacco deal.
Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, even though the banks may have to pay as much as $25 billion in total to settle with the government.
About 750,000 Americans – about half the households who might be eligible for assistance under the deal – would likely receive checks for about $1,800 each.
The agreement also could reshape longstanding mortgage-lending guidelines and make it easier for those at risk of foreclosure to restructure their loans. Roughly 1 million homeowners could see the size of their mortgages reduced.
Five major banks – Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial – and U.S. state attorneys general could adopt the agreement within weeks, according to two officials briefed on the discussions. They spoke on condition of anonymity because they are not authorized to discuss the agreement publicly.
The settlement would only apply to privately held mortgages issued from 2008 to 2011, not those held by government-controlled Fannie Mae or Freddie Mac. They own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.
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