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| Banks pay $8.5bn to settle home foreclosure review | Banks pay $8.5bn to settle home foreclosure review |
| (35 minutes later) | |
| Ten of the biggest banks have agreed to pay $8.5bn (£5.2bn) to settle a review of home foreclosures by US regulators. | Ten of the biggest banks have agreed to pay $8.5bn (£5.2bn) to settle a review of home foreclosures by US regulators. |
| Banks and mortgage lenders including Bank of America, Citigroup and JP Morgan Chase will pay $3.3bn directly to eligible homeowners, regulators said. | Banks and mortgage lenders including Bank of America, Citigroup and JP Morgan Chase will pay $3.3bn directly to eligible homeowners, regulators said. |
| The lenders will also pay $5.2bn to modify and forgive loans. | The lenders will also pay $5.2bn to modify and forgive loans. |
| The investigation began in 2011, and looked into whether borrowers had unlawfully had their homes repossessed. | The investigation began in 2011, and looked into whether borrowers had unlawfully had their homes repossessed. |
| The regulators were the Office of the Comptroller of the Currency (OCC), which is an independent bureau of the Department of the Treasury, and the US central bank, the Federal Reserve. | |
| 'Receive compensation' | |
| The US mortgage market boomed in the middle of the last decade. Banks made huge profits by buying home loans and repackaging them as complex products. | |
| The housing bubble collapsed in 2008, making many of the homes worthless and causing the loans and their derivatives to become toxic. Many people lost their homes and all the major banks had to be bailed out. | |
| The banks involved in the settlement are Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, US Bank, and Wells Fargo. | |
| "Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error," the OCC said. | "Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error," the OCC said. |
| The regulators said that eligible homeowners whose homes were unlawfully foreclosed upon should expect to be contacted by the end of March with payment details. | |
| "Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment" as part of the review settlement, it added, leaving the door open for more legal action. | |
| Earlier, Bank of America agreed to pay US government mortgage agency Fannie Mae $3.6bn to settle claims relating to residential home loans. | Earlier, Bank of America agreed to pay US government mortgage agency Fannie Mae $3.6bn to settle claims relating to residential home loans. |
| Fannie Mae argued the bank sold it toxic debts and should be responsible for the losses it suffered as result. |