PNC Financial Services and nine other mortgage-servicing companies reached an agreement to pay more than $8.5 billion in cash and assistance to borrowers whose homes were wrongly foreclosed.
The settlement was announced this morning by the Federal Reserve and Office of the Comptroller of the Currency (OCC).
The lenders, which include Bank of America, JPMorgan Chase, and Citibank agreed to the payment in order to close a review process ordered under a 2011 enforcement action because of banks mishandling foreclosure paperwork and skipping foreclosure steps.
OCC spokesman Bryan Hubbard said he wouldn’t describe the agreement as “sudden.” He said talks were going on for weeks.
“The decision was made to seek alternatives to insure that more borrowers can receive money, that the total amount would end up being higher, and it would accelerate the process of paying borrowers as quickly as possible.”
Hubbard said $3.3 billion in cash will go directly to borrowers with $5.2 billion designated for other assistance such as loan modifications and forgiveness of deficiency judgments.
He said the banks will deposit their share of the sum into an account which a paying agent will use to distribute to borrowers.
PNC chose not to be interviewed on the matter but issued a statement:
“We believe today’s agreement provides a benefit to eligible borrowers on a shorter timetable than the original review.”
Hubbard said the settlement does benefit borrowers.
“The reviews could have taken another two years to complete,” said Hubbard. “This way borrowers will be contacted by the end of March”
Hubbard said they already know which borrowers need to be contacted.
He said amounts people will receive will be determined by the OCC and Federal Reserve, but details haven’t been finalized yet.