Gov't files $25B mortgage settlement in court

Legal News Center

The government filed in federal court Monday a $25 billion settlement with the five largest mortgage lenders, putting an official stamp on the landmark agreement over alleged foreclosure abuses.

The court papers offered few new details on the deal between the federal government, 49 states and Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. The deal was first announced last month.

Banks will pay roughly $20 billion to help borrowers avoid foreclosure. Most of that will go toward reducing loans for about 1 million of the 11 million U.S. households that owe more on their mortgages than their homes are worth.

The banks will also pay $5 billion in cash to the federal and state governments. About a third of that money will go into a fund to be used for sending $2,000 checks to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011.

The banks will have to complete 75 percent of their loan relief requirements within two years and 100 percent within three years.

The banks did not admit wrongdoing as part of the settlement. Federal and state law-enforcement authorities could still pursue criminal action against them, the government says.

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