State and federal authorities held a press conference Thursday to announce a $25 billion settlement with the five largest mortgage servicers, and provided key details on how the money was being distributed and the amounts each institution is expected to pay.

Overall, officials say the total package includes $10 billion for principal reductions; $3 billion to help underwater borrowers refinance into cheaper loans; $7 billion for other forms of relief such as payment forbearance for unemployed borrowers; and $5 billion in cash payments to both individual states and the federal government.

Bank of America Corp. is expected to pay the lion's share of the agreement: the bank has agreed to pay $3.2 billion in cash to state and federal agencies and provide $8.58 billion in borrower relief. JPMorgan Chase will pay $1.08 billion in cash, while providing $4.2 billion in borrower relief; Wells Fargo & Co. will pay $1.01 billion in cash and provide $4.34 billion in relief; Citigroup Inc. will pay $415 million in cash and provide $1.79 billion for borrower relief; while Ally Financial will pay $110 million in cash and provide $200 million in relief.

During the press conference, state and federal officials lauded the agreement.

"This agreement reflects our commitment — at both the federal and state levels — to ensure justice, and to recover losses, for victims of reckless and abusive mortgage practices," said U.S. Attorney General Eric Holder.

He noted that the agreement also includes a new code of conduct for mortgage servicers — one they hope to make the new standard industry-wide.

"In addition to addressing many of the most egregious mortgage loan servicing abuses that our investigations have uncovered, this agreement establishes significant new homeowner protections to help prevent future misconduct," Holder said.

Those servicing standards include efforts to end robosigning; required notices to borrowers 14 days before a delinquent loan is referred to a foreclosure attorney; proper documentation of a servicer's authority to bring a foreclosure action; enhanced loss-mitigation efforts for borrowers; restrictions on servicing fees; and further steps to prevent negative effects of a foreclosure on a home's local community.

Holder noted that the agreement is" the largest joint federal-state civil settlement in history."
Department of Housing and Urban Development Secretary Shaun Donovan said the benefits of the agreement would extend beyond the $25 billion settlement, saying homeowners would receive roughly $40 billion worth of relief.

Indeed, California Attorney General Kamala Harris released figures showing that homeowners in her state could receive a commitment of up to $12 billion in principal reductions. If that target is not met, Harris's office said in a press release, the banks will have to make up to $800 million in cash payments to the state.

Separately, the Office of the Comptroller of the Currency (OCC) said four large servicers had agreed in principle to $394 million in penalties for unsafe and unsound practices, and a new Web site with various pieces of information about the detail — including details on new servicing standards — was launched.

According to Harris's press release, the package for California also includes: an estimated $849 million to refinance loans of 28,000 borrowers who are underwater but current on their payments; $279 million in restitution to about 140,000 homeowners in the state who were foreclosed upon from 2008 through 2011; $1.1 billion to go toward both payment forbearance and transition assistance for unemployed borrowers, and improve communities blighted by foreclosure; $3.5 billion to waive unpaid balances for foreclosed homeowners; and $430 million in other fees and penalties.

"This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here," Harris said in the press release, of the total awards to her state. "We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending."

The large awards going to the state in some ways reflect how important Harris's participation in the broader national settlement turned out to be. She had previously balked at an earlier version of the multistate deal under which, according to the state's press release, California would have received just $4 billion in commitments. Harris's office said her agreement to the deal not only resulted in more relief for her state, but also $6 billion more in relief for other states.

As for the OCC penalties, the federal agency said four servicers — Bank of America, Citibank, JPMorgan Chase and Wells Fargo — had agreed not contest the OCC's ability to levy the fines. The penalties, announced in accordance with both the Federal Reserve Board and the multistate settlement, are for poor foreclosure and loan servicing practices that the agency had criticized in cease-and-desist orders issued against the institutions in April.

"The actions announced today mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves," said acting Comptroller of the Currency John Walsh in a press release.

The OCC fines include penalties of $164 million from B of A, $34 million from Citibank, $113 million from JPMorgan Chase and $83 million from Wells Fargo.

The agencies and banks involved also launched a new Web site at: www.nationalmortgagesettlement.com. It includes details about the deal, links to specific information for each of the participating servicers, and a rundown of new servicing standards agreed to under the pact.

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