Hawaii will receive an estimated $71 million as part of a $25 billion joint federal-state settlement with the nation’s five largest mortgage servicers over foreclosure abuses and fraud, and unacceptable nationwide mortgage servicing practices, the Hawaii Attorney General’s Office said today.
The banks involved in the agreement are: Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup, Inc. and Ally Financial, Inc. (Ally is the parent of GMAC Mortgage).
"This agreement is a very good deal for Hawaii’s homeowners. It provides real relief and real money to help struggling homeowners in our state," Hawaii Attorney General David M. Louie said in a news release. "Importantly, this puts a stop to the bad practices of many banks, and puts into place a comprehensive set of reforms for how banks must treat homeowners with mortgages."
Thousands of Hawaii homeowners will benefit from the agreement, which provides an estimated more than $8.2 million in direct relief to Hawaii homeowners and addresses future mortgage loan servicing practices, the state said.
Forty-nine states and the District of Columbia are part of the agreement. Oklahoma struck a separate deal with the five banks. Government officials are still negotiating with 14 other lenders to join.
The bulk of the money will go to California and Florida, two of the states hardest hit by the housing crisis and the ones with the most underwater homeowners. The two states stand to receive roughly 75 percent of the settlement funds.
Of the five major lenders, Bank of America will pay the most to borrowers: nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion, Citigroup about $1.8 billion and Ally Financial $200 million. The banks will also pay state and federal governments about $5.5 billion.
The settlement ends a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — a practice known as robo-signing.