Regulators and 13 Banks Complete $9.3 Billion Deal for Foreclosure Relief
BY JESSICA SILVER-GREENBERG
Under a deal formalized on Thursday, homeowners who faced foreclosure abuses can receive up to $125,000 in cash relief.
Federal banking regulators have reached a $9.3 billion pact with 13 major lenders to settle claims of foreclosure abuses like bungled loan modification and flawed paperwork.
The details the settlement, made up of $3.6 billion in cash relief and $5.7 billion in relief to avert foreclosures, were announced Thursday.
Under the deal, homeowners can receive up to $125,000 in cash relief. Despite the banner numbers in the settlement, consumer groups and a range of lawmakers have criticized it for not providing enough relief for aggrieved homeowners.
The agreement formalizes the tentative deals that were reached in January between the mortgage servicing companies and the regulators from the Office of the Comptroller of the Currency and the Federal Reserve.
Beyond the cash relief, the 13 mortgage lenders will provide $5.7 billion in other assistance like reducing mortgage balances and refinancing burdensome loans.
Three firms — GMAC Mortgage, Everbank and OneWest — didn’t sign the pact. The lenders will continue to review their mortgages, according to the regulator. Those three companies service more than 450,000 loans in foreclosure from 2009 to 2010.