This will make some people happy: There’s about to be more financial help for homeowners, and more financial punishment for big banks involved in the mortgage crisis.
The Wall Street Journal reports that ten large U.S. banks reached a settlement with regulators worth a total $8.5 billion, accepting blame for accusations of foreclosure improprieties brought by the Office of the Comptroller of the Currency (OCC) and Federal Reserve in 2011.
The banks were accused of using “robo-signers” to sign off on thousands of foreclosure cases without actually reviewing them as the signatures attested, pushing flawed paperwork through the process. To make amends, instead of reviewing each foreclosure to determine if it had been improperly approved–an expensive and onerous process that was originally set up by the OCC–the settlement will dole out money directly to consumers.
Bank of America, J.P. Morgan Chase & Co., Well Fargo, Citigroup, Aurora Loan Services, MetLife Bank, PNC Financial, Sovereign Bank, SunTrust Banks Inc. and U.S. Bancorp all signed on to the deal. Ally Financial, HSBC, PLC, OneWest Bank and Everbank did not sign the deal.
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In a post describing the deal before it went public, The New York Times said some of the money would go to consumers who lost their homes in foreclosure, and some would go to consumers who are struggling to make payments on their current mortgages. It was not reported how many consumers might be helped by the deal.
“It has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” Comptroller of the Currency said in a statement. “Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation’s housing markets.”
Meanwhile, in another settlement announced Monday morning, Bank of America took responsibility for overstating the value of mortgages it sold to Fannie Mae. It will pay Fannie Mae $3.6 billion, and will also buy back $6.75 billion’s worth of mortgages from the distressed government-backed lender. Bank of America already settled with Freddie Mac in 2011.