Az to get $1.6B in foreclosure settlement
State also reaches deal with BofA over previous suit
Arizona will receive $1.6 billion of a $25-billion multistate settlement with five banks over mortgage lending practices and foreclosures, giving many borrowers some relief, the state Attorney General's Office announced Thursday.
Attorney General Tom Horne said an agreement was reached late Wednesday night to join the lawsuit against the country's five largest mortgage lenders: Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co., and Ally Financial Inc. Together, the banks control about 55 percent of outstanding home loan payments nationwide, according to the Wall Street Journal.
“This agreement includes significant relief for homeowners. And even more importantly, it puts in place new protections for homeowners in the form of improvements to mortgage servicing standards,” Horne said in a press release.
State and federal officials announced the settlement Thursday, making it the largest industry settlement since the $206 billion deal with the tobacco industry in 1998, The Los Angeles Times reported.
The Department of Housing and Urban Development said more than 1 million homeowners across the country could receive aid through the deal.
Arizona had a separate lawsuit against Bank of America, which was included in the settlement, said Amy Rezzonico, spokeswoman for the Attorney General's office.
BofA will pay $10 million to prevent foreclosures, cushion the effects of the foreclosure crisis in the state, and prevent mortgage fraud, she said.
The agreement also prevents the bank from denying applications from homeowners who were previously denied or or had defaulted on a loan and requires BofA to provide specific information on loan modifications, Rezzonico said.
The larger settlement will go toward compensating homeowners and holding banks accountable for abuse and fraudulant foreclosure practices.
“Arizona has been hit particularly hard by the mortgage crisis, and this agreement is very significant in how it addresses the fraud that these banks committed against homeowners across the state,” Horne said in the press release.
“The agreement not only provides much needed relief to Arizona borrowers, but it also puts a stop to many of the bad behaviors that contributed to the devastating effect the mortgage crisis has had in Arizona and across the country,” he said.
This story contains information from Global Post.