Kevin McCoy, USA TODAY
Ten major U.S. banks and mortgage companies agreed Monday to an $8.5 billion settlement with federal regulators over complaints that they improperly foreclosed on thousands of owners who should have been allowed to stay in their homes.
The settlement package includes $3.3 billion in direct payments to eligible owners and $5.2 billion in loan modifications, forgiveness of deficiency judgments and other assistance, according to announcements by the Federal Reserve System Board of Governors and the Office of the Comptroller of the Currency.
Eligible homeowners will receive compensation ranging from hundreds of dollars to as high as $125,000, depending on the type of possible mortgage servicing error.
The banks paying the settlement include Bank of America, Citigroup, Wells Fargo, JP Morgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank and Aurora. The institutions have been operating under enforcement actions federal regulators issued in April 2011.
The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosures in 2009 and 2010 will be paid compensation in a timely manner, the regulators said.
Comptroller of the Currency Thomas Curry acknowledged in an official statement that the settlement represents a shift in the regulators' original enforcement strategy. But he said "it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers."
"Our new course of action will get more money to more people more quickly, and it will speed recovery in the nation's housing markets," added Curry.