A $25 billion settlement by major banks and U.S. states over questionable foreclosure practices in the housing crisis is nearing completion.
Five big banks — Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citibank (C) and Ally Financial (formerly GMAC) — and U.S. states are “very close,” Housing and Urban Development Secretary Shaun Donovan said Wednesday.
Separately, two officials briefed on internal discussions say a proposed deal could be announced in weeks. Negotiators are finalizing a draft of the agreement, which must be reviewed by state attorneys general. Under the deal, banks would pay states and the federal government, which would fund programs to compensate homeowners.
Talks have dragged on more than a year between major U.S. banks and state attorneys general about foreclosures completed without all the paperwork done properly.
In October 2010, major banks temporarily suspended foreclosures following revelations of widespread deceptive foreclosure practices by banks. That has backlogged millions of foreclosures that must be cleared before the housing market can fully recover.
A settlement would be for privately held loans, not ones held by Fannie Mae (FNMA) or Freddie Mac (FMCC).