The US federal government along with five major banks yesterday reached a US$25 billion (S$31.48 billion) agreement, aimed at boosting the depressed housing market and addressing widespread mortgage abuses.
According to a report, the deal which was finalised through court filings requires banks to ease mortgage terms for troubled borrowers as well as compensate those who have suffered administrative abuse in foreclosures.
The judgement mandates the five banks, JPMorgan Chase, Wells Fargo, Ally Financial, Bank of America and Citibank, to commit US$20 billion (S$25.19 billion) to various forms of mortgage relief, including refinancing, writedowns of principal and other aid for those unable to fully pay their mortgages.
The banks also have to pay a group of 49 states US$5 billion (S$6.30 billion) in penalties and contributions to a fund, which will give cash payments to former borrowers whose houses were seized unfairly between 2008 and 2011, the worst years of the housing crisis.
The pay-out from Bank of America, which took over Countrywide, will be US$11.8 billion (S$14.86 billion), while Wells Fargo, JPMorgan Chase, Citigroup and Ally would provide US$5.4 billion (S$6.80 billion), US$5.3 billion (S$6.67 billion), US$2.2 billion (S$2.77 billion) and US$310 million (S$390.41 million) in pay-outs respectively. Related Stories:HKMA advises against low mortgage rates
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