US state authorities and five banks have agreed a settlement that will provide $26bn of relief to homeowners in an effort to curtail the number of homes being foreclosed. The settlement could help up to two million homeowners and will pressure banks that are abusing foreclosure rules.
The settlement is the result of an investigation carried out by all 50 state attorneys after claims that banks were foreclosing on homes in which residents submitted incomplete or false information were highlighted. Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and Ally International were flagged as being involved and will be required to make payments asd part of the settlement. One million of those the settlement will help are expected to benefit from more favourable repayment terms or a cut in the amount they owe their lender. 750,000 homes have been repossessed by banks since September 2008.
The effort is the broadest measure yet taken by Washington lawmakers to prevent homeowners owing more than their property is worth and becoming overcome by debt.
