States, Banks Close To Foreclosure Deal

Several states and major banks are said to be close to sealing a deal that would protect banks from civil suits over sketchy mortgage practices in exchange for $25 billion that would help underwater homeowners refinance their loans. The deal could help the weak housing market.

Reuters reports banks had been hesitant to follow through with the settlement because they wanted to be protected from liability for potential legal gaffes they made when originating loans, such as approving mortgages without verifying income. The protection, which the states now appear to be agreeing to, was originally only going to cover shortcuts the banks made in mortgage proceedings, including using robo-signers on foreclosures to evict homeowners.

States and the involved banks, which include Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, could close the deal by the end of the month.

US states near foreclosure deal with banks [Reuters]

Previously: Government May Hit Banks For $17 Billion Over Foreclosures