Were You Foreclosed Upon in 2009 or 2010? Banks to Pay $8.5 Billion To Settle Foreclosure Abuse

This just in from CNBC, ten banks will pay a collective $8.5 billion to borrowers to settle foreclosure abuses. This all part of a deal with the Federal Reserve and the office of controller of the currency which began in 2011 after the so-called robo signing scandal came to light. Banks were required to do an independent review of foreclosures from 2009 and 2010, but they were taking too long and cost too this settlement puts an end to those reviews.

The banks will make $3.5 billion in direct payments to eligible borrowers and 5.2 billion in other assistance such as loan modifications and forgiveness of deficiency judgment. This settlement affects some 3.8 million borrowers. Eligible borrowers could receive somewhere from a few hundred dollars to several thousand.

The banks included are Aurora, Bank of America, Citibank, Chase, Metlife, PNC, Sovereign, Sun Trust and Wells Fargo. Four other banks, Allied, HSBC and One West were in the talks but did not sign on to this deal. Together, they service close to 500,000 loans.

This deal is separate from the $11.6 billion settlement announced just this morning between fannie mae and bank of america.

These settlements could pave the way for more normal foreclosure processing. We see a surge in foreclosures as banks move to clear the pipeline of defaulted mortgages now that most of the robo-signing charges are behind them.