DOJ, HUD, state AGs file foreclosure settlement in federal court News
DOJ, HUD, state AGs file foreclosure settlement in federal court
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[JURIST] The US Department of Justice (DOJ), the Department of Housing and Urban Development (HUD) [official websites] and 49 state attorneys general on Monday filed in federal court a proposed $25 billion settlement agreement [official website] with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. Five consent judgments were filed in the US District Court for the District of Columbia [official website], detailing settlement agreements reached with Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) [consent judgments, PDFs]. The servicers must fulfill their obligations within three-and-a-half years, and the agreement does not prevent civil suits by individual homeowners or criminal charges pursued by federal or state authorities. Last month, US Attorney General Eric Holder, HUD Secretary Shaun Donovan [official websites] and 49 state attorneys general announced the agreement [JURIST report], which is the largest joint federal-state settlement ever obtained.

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.

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