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Banks Settle Home Mortgage Claims
The National Law Journal
Bank of America Corp. has agreed to pay $10.3 billion to Fannie Mae to resolve claims related to the sale of home mortgages. Separately, 10 lenders agreed to an $8.5 billion settlement with federal regulators to resolve claims of abuse related to foreclosure processing and mortgage loan servicing.
Under the terms of the Fannie settlement, announced on Monday, the bank will pay the government-sponsored enterprise $3.55 billion and repurchase 30,000 loans valued at an additional $6.75 billion.
The loans were made through Countrywide Financial Corp. from January 2000 through December 2008 and totaled $11.2 billion in unpaid principal balance as of September 30.
"As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward," Bank of America CEO Brian Moynihan said in a written statement. "Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time."
The second settlement involved Aurora Financial, Bank of America, Citibank, JPMorgan Chase & Co., MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo & Co. As part of the agreement, the banks will make$3.3 billion in direct payments to borrowers plus $5.2 billion in additional assistance in the form of loan modifications and the forgiveness of deficiency judgements. The settlement will aid some 3.8 million borrowers whose homes were foreclosed upon from 2009 to 2010. The Office of the Comptroller of the Currency and the Federal Reserve Board negotiated the settlement.
"When we began the Independent Foreclosure Review, the OCC pledged to fix what was broken, identify who was harmed, and compensate them for that injury," comptroller Thomas Curry said in a written statement. "While today's announcement represents a significant change in direction, it meets those original objectives by ensuring that consumers are the ones who will benefit, and that they will benefit more quickly and in a more direct manner."
This article originally appeared in The National Law Journal.