Deal Reached for US Homeowners in Massive Foreclosure Case

Posted February 9th, 2012 at 11:50 am (UTC-5)
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Legal officials from the federal government and many states announced a $25 billion deal Thursday with five major U.S. banks over widespread complaints about the way lenders handled thousands of foreclosures growing out of the financial crisis.

U.S. Attorney General Eric Holder and top state legal officials have been haggling with the largest U.S. mortgage lenders for 16 months to resolve complaints about abusive practices and alleged fraud. He says the civil agreement puts new standards in place to prevent future bank misconduct.

The scandal erupted when it was learned that many companies that process foreclosures failed to verify documents, had employees sign vast numbers of documents they had not read, or used fake signatures to speed foreclosures.

Banks have agreed to cut the amount of money some homeowners owe, allow others to refinance their loans at lower interest rates, and compensate some people who suffered wrongful foreclosures.

The banks are: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial.