Ten of the biggest mortgage companies in the U.S. have reached an $8.5 billion deal to settle allegations that they wrongfully foreclosed on thousands of homeowners in 2009 and 2010, USA Today reports.
Federal regulators say $3.3 billion of the settlement will be "direct payments to eligible borrowers" and $5.2 billion will go toward "other assistance, such as loan modifications and forgiveness of deficiency judgments," National Public Radio reports. Under the agreement, nearly four million eligible borrowers could receive a few hundred dollars up to $125,000.
The firms in the settlement include Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo, according to the news release.
CNBC notes the settlement resolves an order by the Office of the Comptroller of the Currency that required banks to review 2009 and 2010 loans and look for foreclosure abuses, such as "robo-signing."
U.S. Bancorp has long been committed to sound modification and foreclosure practices. We have always regarded foreclosure as a last resort, and have helped thousands of borrowers over the past several years to stay in their homes through a variety of modification programs.
U.S. Bancorp’s share of the settlement will include a cash payment of $80 million (pretax), which is expected to reduce fourth-quarter 2012 earnings per share by approximately 3 cents. In addition, the settlement includes a commitment to provide approximately $128 million of other mortgage assistance, such as loan modifications, which is covered by existing loan loss reserves.