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US banks pay billions to settle mortgage mess

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Published on Jan 7, 2013

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A group of 10 mortgage providers have agreed to pay a total of $8.5bn as compensation to end a US government-mandated review of housing crisis foreclosures. Bank of America Corp, Citigroup Inc, JPMorgan Case & Co, Wells Fargo & Co, MetLife Bank, and five others will pay $3.3bn directly to eligible borrowers, and $5.2bn in loan modifications and forgiveness, regulators said. A total of 3.8 million people are eligible for payments under the deal announced by the Office of Comptroller of the Currency and the Federal Reserve. Those payments could range from a few hundred dollars to up to $125,000. Separately, Bank of America agreed to pay $11.6bn to government-backed mortgage financier Fannie Mae to settle claims related to mortgages that soured during the housing crash. The agreements come as US banks are showing renewed signs of financial health, extending their recovery from the 2008 crisis that was one of the key factors in the global financial meltdown. But critics say the deal allows the banks to escape responsibility for damages that could have cost them much more, perhaps hundreds of billions of dollars. Al Jazeera's Alan Fisher reports from Washington.

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