Feds Announce $25B Settlement Over Foreclosure Abuse

49 states won’t pursue civil charges. Homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges.

Palm Coast, FL – February 9, 2012

Federal officials announced a $25 billion settlement Thursday with the five largest mortgage lenders over foreclosure abuses — a deal that requires the banks to reduce some loans, send out checks to foreclosed Americans and refinance mortgages for underwater borrowers. 

Attorney General Eric Holder said the deal would "hold mortgage servicers accountable for abusive practices." 

It is the biggest settlement involving a single industry since a 1998 multistate tobacco deal. Under the agreement, five major banks — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — will reduce loans for nearly 1 million households. They will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.