WASHINGTON (AP) – Ten major banks agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.
The banks, which include SunTrust, Bank of America and Wells Fargo, will pay billions to homeowners to end a review process of foreclosure files that was required under a 2011 enforcement action. The review was ordered because banks mishandled people’s paperwork and skipped required steps in the foreclosure process.
The settlement was announced jointly by the Office of the Comptroller of the Currency and the Federal Reserve.
The agreements are the banks’ latest step toward eliminating hundreds of billions of dollars in potential liabilities related to the housing crisis that crested in 2008.
But advocates say the foreclosure deal allows banks to escape responsibility for damages that might have cost them much more. Regulators are settling at too low a price and possibly at the expense of the consumer, they say.
Under the settlement, people who were wrongfully foreclosed on could receive from $1,000 up to $125,000.
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