$10 Billion Settlement Foreclosure For Banks
The deal was reached with difficulty--a demand of an additional $300 million for the banks' role in the crisis fell through.
The settlement will be announced Monday.
The New York Times reports:
The settlement follows a sweeping deal in February between state attorneys general and five large mortgage lenders, and covers abuses like flawed paperwork and botched loan modifications, these people said.
An estimated $3.75 billion of the $10 billion will be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010. Another $6 billion will be directed toward homeowners who are in danger of losing their homes after falling behind on their monthly payments. The deal follows a week of feverish negotiations, and it almost fell apart over the weekend. Some officials at the Federal Reserve threatened to scuttle it unless the banks agreed to pay an additional $300 million for their role in the 2008 financial crisis that torpedoed the housing market and led to millions of foreclosuresy.
The Fed officials, the people said, argued for additional aid for homeowners ensnared in a flawed foreclosure process. The $300 million demand was to come on top of the $10 billion payout, but was met with resistance from the banks, especially because it was raised late in the day on Friday, according to the people with knowledge of the matter. Several banking officials balked at the additional demands, according to several current regulators.
Ultimately, the Federal Reserve officials backed down over the weekend, allowing the $10 billion pact to move forward ahead of bank earnings releases this month, according to the people.