Details of a draft of the foreclosure settlement agreement between government officials and the nation's five leading financial institutions have emerged, following a round of negotiations held yesterday in Chicago.
The Associated Press, citing anonymous sources who were briefed on the settlement talks, reports that the settlement draft involves five banks – Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo – agreeing to pay as much as $25 billion. The settlement would only apply to foreclosures on privately held mortgages issued between 2008 and 2011; mortgages held by the government-sponsored enterprises would not be covered under the settlement.
As part of the settlement, approximately 750,000 homeowners would receive compensation checks for $1,800 each and 1 million homeowners would get the principal amount of their mortgages written down by an average of $20,000. However, homes that were lost to foreclosure during this period would not be eligible for recovery by their former homeowners.
Although the draft of the settlement agreement does not require the banks to formally acknowledge any wrongdoing, it does not fully release the banks from future criminal lawsuits filed by attorneys general of the individual states. Several state attorneys general have publicly balked at the prospect of a settlement that prevents their respective offices from seeking future prosecution against the financial institutions on foreclosure-related matters.
No date has been set regarding when the settlement will be officially announced. Iowa Attorney General Tom Miller, who is spearheading the talks on behalf of government agencies, declined to comment on the status of the settlement.