Dissecting the Mortgage Fraud Settlement Agreement

FT Alphaville gives us the Cliff note version of the national mortgage fraud bank settlement — available in easy to follow graphic or text form:



Here is the breakdown:

Under the agreement, the five servicers have agreed to a $25 billion penalty under a joint state-national settlement structure.


• Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief.

• Servicers commit $3 billion to an underwater mortgage refinancing program.

• Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).

• Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.

• An independent monitor will ensure mortgage servicer compliance.

• States can pursue civil claims outside of the agreement including securitization claims as well as criminal cases.

• Borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.

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