Five major U.S. banks and legal officials from all 50 states have reached a tentative $25 billion settlement in a case alleging that mortgage lenders engaged in deceptive practices when they took control of houses because homeowners could no longer afford to make loan payments.
Millions of Americans have lost their homes to bank foreclosures in the aftermath of country’s severe 2007 to 2009 recession, the worst in seven decades. In late 2010, consumer watchdogs accused lenders of working to speed the foreclosures by authorizing the paperwork with automatic signing machines rather than individually reviewing each homeowner’s loan.
On Monday, five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citibank and Ally Financial — reached a draft settlement of the dispute with the states’ top legal officials.
The agreement still must be reviewed by the individual states. Under it, those who lost their homes are unlikely to get them back, but about 750,000 former homeowners could get about $1,800 apiece. In addition, loans to about one million homeowners may be reduced by an average of $20,000 and interest rates on other loans could be cut to make them more affordable.