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
Bank of America Agrees to $10B Fannie Mae Settlement
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)

(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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