On Thursday, government officials reached an agreement with five large U.S. banks over alleged home foreclosure abuses. The $25 billion settlement has raised hopes for the nation's economy, which is still reeling from the subprime mortgage crisis, according to the Wall Street Journal.
Under the pact, qualifying homeowners will be granted reductions in loan principal, while $17 billion is reserved for borrowers at risk of foreclosure. Also, borrowers who went through foreclosure during the past four years will be eligible to receive around $1,500 to $2,000. The banks involved in the pact are Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co., and Ally Financial Inc.
Banks looked to the deal as a means to stem the tide of mortgage-related litigation, including the alleged use of "robo-signing," where employees approved legal documents without properly reviewing them, the Wall Street Journal reported. Under the settlement, which is not yet finalized, banks will not be sued by 49 state attorneys general (excluding Oklahoma) over the alleged mortgage-related abuses.
