$25 billion foreclosure settlement formally filed

The $25 billion foreclosure settlement was formally filed in U.S. District Court in Washington D.C. today, the Wall Street Journal reported.

The settlement, between the government and five major mortgage companies — Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — empowers Joseph Smith, formerly a financial regulator in North Carolina, to monitor banks’ compliance with the 42-page set of standards it creates. Smith will also have the power to levy fines against banks that do not comply with the new standards, the Journal said.

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The intricate requirements set out in the agreement mean that about 500,000 borrowers, or 5 percent of American homeowners who are underwater, may be eligible for help under the deal, according to estimates from Ted Gayer, co-director at the Brookings Institution, a Washington, D.C.-based public policy think tank. [WSJ]