WASHINGTON (AP) — The nation's four biggest banks slashed billions of dollars from mortgages and other debts, enough to satisfy their obligations under a national mortgage settlement that stemmed from so-called robo-signing.
A report on Tuesday from the monitor overseeing the settlement says Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co. have provided some $50 billion in relief to more than 600,000 borrowers.
The settlement, reached in February 2012, was prompted by disclosures that some mortgage-servicing companies had processed foreclosures without verifying documents. The problem became especially severe after housing prices crashed around the time of the 2008 financial crisis and the number of foreclosures soared.
Because of the settlement, banks cut the size of mortgage balances, modified loans and allowed homeowners to sell their house for less than they owed. It also let some borrowers refinance even though they wouldn't usually qualify because they owed too much.
The settlement with the federal government and 49 states "resulted in an unprecedented amount of consumer relief," monitor Joseph Smith wrote. He said the deal gave banks an incentive to provide relief early, so borrowers who were in trouble got help within 18 months of the effective date of the settlement.