Georgia and 48 other states have reached a $25 billion deal with major lenders who have agreed to reduce mortgage loans and reimburse customers who became victims of overzealous foreclosures.
The banks involved include Wells Fargo, Bank of America, JPMorgan Chase, Citigroup and Ally Financial.
The deal would mean loan reductions for nearly 1 million U.S. households and $2,000 checks to about 750,000 homeowners who were the victims of improper foreclosures.
Georgia's share of the settlement would be more than $814.7 million. The number of homeowners or former homeowners affected was not immediately available.
Georgia had the fourth highest rate of foreclosure filings in the U.S. last year -- one in every 37 homes, according to RealtyTrac.
"In Georgia, we continue to face skyrocketing rates of foreclosures and decreasing home values, which have an adverse impact on the housing market and our economic recovery," Georgia Attorney General Sam Olens said in a statement. "This agreement will bring stability to the housing market by instituting comprehensive mortgage servicing standards and offering immediate relief to many borrowers who have the intent and ability to stay in their homes."
The agreement also includes reforms banks must follow in servicing loans:
* Banks must take steps to avoid a foreclosure by trying to work out a recovery of the debt through "loss mitigation options" before it gets that far.
* Loan servicers must expedite short sales of distressed properties.
* Borrowers who are current on their mortgages but owe more than their homes are currently worth will be able to refinance at today's lower rates.
Georgia’s borrowers who lost their home to foreclosure from Jan 1, 2008, through Dec. 31, 2011, and suffered loan servicing abuse, will qualify for about $1,800 to $2,000 in cash payments without having to release private claims against the banks, the attorney general's office said. Georgia’s borrowers will receive an estimated $82.7 million in such benefits.
The banks would have three years to fulfill terms of the deal, whicht affects all states except one, Oklahoma, which opted out.
The attorneys general of the 50 states launched a joint investigation in late 2010 in the wake of the “robo-signing” controversy, in which some banks were using flawed documents to foreclose.
Here is more background on what led to the settlement from the Associated Press:
Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures — an action known as robo-signing.
Under the deal, 49 states said they won't pursue civil charges related to these types of abuses. Homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges.
The settlement would apply only to privately held mortgages issued from 2008 through 2011. Banks own about half of all U.S. mortgages — roughly 30 million loans. Those owned by mortgage giants Fannie Mae and Freddie Mac are not covered by the deal.
The deal also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America acquired Countrywide in 2008.
More information is available on the agreement at nationalmortgagesettlement.com.
The Associated Press contributed to this report.
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