Nationwide foreclosure settlement near
The nation’s attorneys general appeared close to reaching a massive multistate settlement with major banks over faulty foreclosure proceedings Wednesday night, though California and New York remained in negotiations.
Government officials were making arrangements late into the evening for a flurry of briefings and announcements today, according to people with knowledge of the negotiations. Still, the deal could be postponed again, given the complicated nature of the settlement and the many parties involved, they said.
If reached, the proposed $25 billion deal would be the largest since a 1998 settlement with the tobacco industry. Much of the settlement is expected to go to people struggling to pay their mortgages.
The settlement negotiations follow revelations in 2010 that the nation’s largest banks allegedly foreclosed on borrowers using improper and potentially illegal means.
About $20 billion is expected to go toward helping struggling homeowners, including measures such as principal reduction, or the writing down of debt, a refinancing program, cash payments to borrowers and loan modifications.
An additional $5 billion would go toward a reserve account for state and federal programs and to individual homeowners harmed by the bank practices.
Gaining California’s approval would be significant because that would bring the total size of the deal to the expected $25 billion.
The Obama administration has been pushing hard for a settlement among the state attorneys general and the nation’s five largest mortgage servicers – Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. – and certain federal agencies.