A judge for the US District Court for the District of Columbia [official website] has approved a $25 billion settlement agreement to address mortgage loan servicing and foreclosure abuses. The settlement [Reuters report] was between US Attorney General Eric Holder, along with Department of Housing and Urban Development Secretary Shaun Donovan [official websites] and 49 state attorneys general and the nation's five largest mortgage servicers. The settlement was approved on Wednesday, and Judge Rosemary Collyer announced the approval on Thursday. The agreement was reached [JURIST report] in February, but required court approval to proceed. This agreement is the largest joint federal-state settlement ever obtained and includes mortgage servicers Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) [corporate websites].
The investigation began [JURIST report] in October 2010 with the forming of a bipartisan group called the Mortgage Foreclosure Multistate Group (MFMG). In June 2010, Countrywide Home Loans, Inc., a subsidiary of Bank of America, reached a $108 million settlement agreement [JURIST report] with the Federal Trade Commission (FTC) [official website] to resolve charges that the subsidiary collected excessive fees from homeowners facing foreclosure. In September 2010, a federal judge refused to dismiss a suit [JURIST report] against American International Group (AIG) [corporate website], and in August, a federal judge rejected a $75 million settlement [JURIST report] between Citigroup and the US Securities Exchange Commission (SEC) [official website] because the two companies misled investors. In 2009, the US Senate [official website] rejected a bill [S 896 materials] that would have aided homeowners in foreclosure [JURIST report] by allowing bankruptcy judges to modify mortgages from lenders that had not already offered better terms to their borrowers.