Big Banks Agree to $8.5B in Mortgage Settlement

A group of 10 major lenders has agreed to pay federal regulators $8.4 billion to settle claims of foreclosure "robo-signings" and other abuses, the New York Times reports. Among the lenders onboard are JPMorgan Chase, Citibank, and Bank of America. About $3.3 billion of that will go to help Americans who were foreclosed on between 2009 and 2010, who could see payouts of between $1,000 and $125,000. The other $5.2 billion will go modify loans and reduce principal balances for troubled homeowners.

It was the second biggest settlement of the day for Bank of America, which separately agreed to a $10 billion package to settle its various disputes with Fannie Mae over mortgages—most from BofA's Countrywide unit—that went sour after the housing agency bought them. BofA will pay Fannie Mae a $3.6 billion penalty, and another $6.75 billion to buy back some of those mortgages at a discount. BofA predicted that the deal would put a $2.5 billion dent in its fourth-quarter results. (More Bank of America stories.)