The US government and the country's top mortgage lenders reached a landmark $25 billion deal today to help struggling homeowners get back on their feet.
Under the deal, the biggest US banks will provide $25 billion to help homeowners reduce the amount they owe on their mortgages and provide compensation for unfair home repossessions.
Officials hold the banks responsible for taking illegal shortcuts during repossessions and other mortgage paperwork.
The banks involved in the deal are Bank of America, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and Ally Financial.
The settlement announced today seals more than a year of negotiations after evidence emerged late in 2010 that banks signed thousands of repossession documents without properly reviewing paperwork.
The Obama administration hopes the settlement will open a new avenue for housing relief because it will force the banks to write down mortgages at a time when roughly one in four borrowers owe more on their mortgage than their home is worth.
Although the deal with 49 states is the largest joint federal-state settlement ever obtained, the amount is miniscule compared to the declines in home values and the banks still face a host of other mortgage-related lawsuits.
