Banking Law

$26B Foreclosure Settlement Announced After Holdout AGs Join Pact

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Updated: State and federal officials have announced a $26 billion foreclosure settlement with five of the nation’s largest banks that was reached after two holdout attorneys general supported the deal.

The pact announced today is the largest since a multistate tobacco settlement was reached in 1998, the Washington Post reports.

New York Attorney General Eric Schneiderman and California Attorney General Kamala Harris initially indicated they were reluctant to support a settlement, but they are now on board, according to the Post and the New York Times. The settlement applies to five banks: Wells Fargo, Bank of America, JPMorgan Chase, Ally Financial and Citigroup.

The banks were targeted after disclosures of flawed foreclosure paperwork, including documents “robosigned” by individuals without the proper authority.

The deal earmarks about $17 billion for foreclosure prevention, including lowered loan balances and interest rates for underwater borrowers. About 750,000 borrowers who already lost their homes to foreclosure would be paid about $2,000 each.

Updated at 9:20 a.m. to include news of announcement today.

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