Housing officials announced Thursday the details of a historic, $25 billion mortgage servicing settlement with the five largest U.S. mortgage servicers: Bank of America, J.P Morgan Chase, Wells Fargo, Ally Financial and Citigroup. Forty-nine state attorneys general and the federal government signed the agreement.
The settlement comes after months of evidence gathered with regard to servicers foreclosing on homeowners without going through the legal process of measures to help those mortgage holders refinance their loans or become current on payments in order to stay in their homes.
“This is the largest joint federal state settlement in the history of this nation,” said Attorney General Eric Holder in a press conference following the announcement. Not only will the settlement help to right the wrongs that have been done, Holder said, but there will be new measures in place to prevent future wrongful foreclosures from occurring as well.
“More work must be done,” Holder said. “We have taken steps to ensure claims released through this settlement will not interfere with current investigations.”
Mortgage industry representatives began to react Thursday following the announcement.
“A final agreement can play an important role stabilizing and providing certainty and confidence to the housing and mortgage markets,” said Mortgage Bankers Association President David Stevens in a written statement. “With all the rumors and speculation surrounding these negotiations behind us, it is now imperative that policymakers, lenders, servicers and other stakeholders work together on policies and initiatives that will allow us to get the housing market on the road to recovery. I would caution, though, that, while a positive step, this will not be a panacea for all that ails housing.”
Part of the settlement will ensure that victims of the robo-signing process, numbered in the hundreds of thousands, will receive payouts of $2,000. Another portion of the settlement will go to writing down principal on loans held in the bank servicing portfolios and some will go toward refinancing borrowers who are currently underwater on their home loans.
Written by Elizabeth Ecker