Big Banks Agree to $8.5B in Mortgage Settlement

Banks agree to $8.5B deal with regulators, as BofA gives Fannie $10B
By Kevin Spak,  Newser Staff
Posted Jan 7, 2013 8:55 AM CST
Updated Jan 7, 2013 10:57 AM CST
In this June 25, 2008 file photo, buildings and palm trees are reflected on the entrance of the Countrywide Financial Corp. office in Beverly Hills, Calif.   (AP Photo/Kevork Djansezian, file)
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(Newser) – A group of 10 major lenders has agreed to pay federal regulators $8.4 billion to settle claims of foreclosure "robo-signings" and other abuses, the New York Times reports. Among the lenders onboard are JPMorgan Chase, Citibank, and Bank of America. About $3.3 billion of that will go to help Americans who were foreclosed on between 2009 and 2010, who could see payouts of between $1,000 and $125,000. The other $5.2 billion will go modify loans and reduce principal balances for troubled homeowners.

It was the second biggest settlement of the day for Bank of America, which separately agreed to a $10 billion package to settle its various disputes with Fannie Mae over mortgages—most from BofA's Countrywide unit—that went sour after the housing agency bought them. BofA will pay Fannie Mae a $3.6 billion penalty, and another $6.75 billion to buy back some of those mortgages at a discount. BofA predicted that the deal would put a $2.5 billion dent in its fourth-quarter results. (Read more Bank of America stories.)

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