Ten US banks to pay $10.4b to end foreclosure reviews

WASHINGTON (REUTERS) - A group of 10 mortgage servicers agreed on Monday to pay a total of US$8.5 billion (S$10.4 billion) to end a United States (US) government-mandated case-by-case review of housing crisis foreclosures in an acknowledgement the programme had proven too cumbersome and expensive.

Roughly 3.8 million borrowers whose homes were in foreclosure within the time frame of the review will receive cash compensation ranging from hundreds of dollars up to US$125,000, depending on the type of errors they experienced, the US Office of the Comptroller of the Currency (OCC) said.

The reviews followed the "robo-signing" scandal that emerged in 2010 involving allegations banks pursued faulty foreclosures by using defective or fraudulent documents.

Bank of America Corp, Citigroup Inc, JPMorgan Case & Co, Wells Fargo & Co, MetLife Bank, and five others will pay US$3.3 billion directly to eligible borrowers, and US$5.2 billion in loan modifications and forgiveness, regulators said.