US banks' multi-billion dollar payouts to settle housing bust claims

New York

American banks struck two multi-billion dollar settlements yesterday to end claims connected to the housing bust which triggered the financial crisis and plunged the US into recession.

In separate announcements, Bank of America said it would cough up more than $10bn (£6.2bn) to settle claims over housing loans sold to Fannie Mae, the US government-backed mortgage finance giant, while regulators said they had reached an $8.5bn deal with a group of 10 major lenders, including Bank of America, JP Morgan Chase, Citigroup and Wells Fargo, to resolve possible claims of foreclosure abuses.

The group of 10 will pay $3.3bn to eligible Americans who went through foreclosure, with the borrowers expected to receive compensation of up to $125,000 depending on the facts of their respective cases. A further $5.2bn will go towards other help, including loan modifications and forgiveness.

Regulators said they had reached the deal, which follows a foreclosure review process than began in April 2011, to ensure swift relief for borrowers who had been unlawfully caught up in foreclosures, or had suffered other harm because of errors.

"We have learned a great deal from the reviews that have been conducted to date," Thomas Curry, the US Comptroller of the Currency, said.

"However, it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners...

"Our new course of action will get more money to more people more quickly," he added.

Bank of America's settlement with Fannie Mae, which was separate from the regulatory deal over foreclosures, will see the North Carolina-based bank buy back $6.75bn worth of residential loans from the mortgage finance firm.

Bank of America will also pay Fannie Mae more than $3bn in cash, with the settlement set to the bank's fourth-quarter, pre-tax income by some $2.7bn.

Start your day with The Independent, sign up for daily news emails
Sport
wimbledonScot will face Ivo Karlovic next
Sport
football
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test