Ten banks to pay $8.5 billion to end foreclosure reviews

WASHINGTON, Mon Jan 7, 2013 — A group of 10 mortgage servicers agreed on Monday to pay a total of $8.5 billion to end a U.S. government-mandated case-by-case review of housing crisis foreclosures in an acknowledgement the program had proven too cumbersome and expensive.

Roughly 3.8 million borrowers who were foreclosed on within the time frame of the review will receive cash compensation ranging from hundreds of dollars up to $125,000, depending on the type of errors they experienced, the U.S. Office of the Comptroller of the Currency said.

The reviews followed the “robo-signing” scandal that emerged in 2010 involving allegations banks pursued faulty foreclosures by using defective or fraudulent documents.

Bank of America Corp., Citigroup Inc., JPMorgan Case & Co., Wells Fargo & Co. , MetLife Bank and five others will pay $3.3 billion directly to eligible borrowers, and $5.2 billion in loan modifications and forgiveness, regulators said.