Lest they turn around act like the jerky big banks that they are, federal officials say they’re going to keep a watchful eye on five major banks as the final terms of a mortgage settlement were filed today in federal court. The $25 billion deal was announced in February and the government wants to make sure banks will offer wide housing relief to Americans like they promised.
The settlement is supposed to help struggling borrowers who said banks came after them with faulty foreclosures or misled them about their loan modifications. The banks involved never fessed up to dirty dealings, but the U.S. Department of Justice says the pact will “remediate harms allegedly resulting from the alleged unlawful conduct.”
An independent monitor will be in charge of making sure Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial are going along with the new mortgage payment processing standards through a “very specific” sampling process, test questions, and error thresholds, says Reuters. Those results will be publicly reported.
Banks will have to provide 30% of the relief by cutting mortgage debt for borrowers who currently owe more than their homes are worth, but each bank will get different amounts of credit for each separate scenario.