Business

Banks pay $8.5B for ‘robo-signing’

The nation’s biggest banks, including Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, agreed to pony up $8.5 billion to settle charges that they improperly kicked folks out of their homes.

The settlement is part of an earlier order by the Federal Reserve and the Office of the Comptroller of the Currency forcing the banks to fix deficient mortgage practices that have robbed some 4.4 million homeowners as the 2007 housing bubbled imploded.

The pact yesterday differs from an earlier 49-state settlement forged by the Department of Justice and state attorneys general to help address faulty mortgage foreclosure practices such as “robo-signing” — in which bank executives’ signatures were forged in order to streamline the foreclosure process — and mortgage registration to help banks mint money faster for mortgage lenders.

The agreement struck yesterday, which would see banks like BofA fork over $1 billion to address wrongful foreclosures, is being instituted in place of a lengthy process that bank officials argued was costly and didn’t result in home-owners receiving any direct relief.

Banks also said that very few borrowers ended up submitting applications to have their mortgage process reviewed for possible wrongful foreclosures.

Although the process by which borrowers are expected to get checks is still murky, officials said that homeowners will be contacted by the end of March and could receive compensation of as much as $125,000, depending on how badly their bank screwed up.

The settlement includes $3.3 billion in direct payments and $5.2 billion loan modifications and other loan forgiveness.