AP reports that
— Ten major banks and mortgage companies agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.The most important part of this settlement is that some lessons were learned from previous settlements, and actions were taken so that money would actually reach homeowners.
The banks, which include JPMorgan Chase, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The review was ordered because banks mishandled people's paperwork and skipped required steps in the foreclosure process.
Under the new settlement, people who were wrongfully foreclosed on could receive from $1,000 up to $125,000. Failing to offer someone a loan modification would be considered a lighter offense; unfairly seizing and selling a person's home would entitle that person to the biggest payment, according to guidelines released last summer by the Office of the Comptroller of the Currency. Monday's settlement was announced jointly by the OCC and the Federal reserve.
The deal "represents a significant change in direction" from the original, 2011 agreements, Comptroller of the Currency Thomas Curry said in a statement.However, consumer advocates aren't completely happy:
Banks and consumer advocates had complained that the loan-by-loan reviews required under the 2011 order were time consuming and costly without reaching many homeowners
Some consumer advocates said that the agreement lets banks off the hook for payments that could have ended up being much higher.
"It's another get out of jail free card for the banks," said Diane Thompson, a lawyer with the National Consumer Law Center. "It caps their liability at a total number that's less than they thought they were going to pay going in."