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Ohio agrees to mortgage settlement deal

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Staff, wire reports Updated 9:26 AM Thursday, February 9, 2012

DAYTON — Ohio is one of 42 states that have agreed to sign a $26 billion proposed settlement with the nation’s biggest mortgage lenders over foreclosure abuses, according to the Ohio Attorney General’s office.

The federal government is expected to formally announce the proposed settlement at 10 a.m. Thursday. Ohio Attorney General Mike DeWine will follow that with a news conference at 1 p.m., a spokesman for DeWine’s office said.

The deal includes $2.7 billion in guaranteed cash payments altogether, and estimates of $1.5 billion for payments to victims of wrongful foreclosure, $3 billion from a refinance program and $32.3 billion in homeowner benefits from loan modifications.

Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial agreed to the settlement.

Most states had already backed the nationwide settlement stemming from abuses that occurred after the housing bubble burst. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — an action known as robo-signing.

The deal would be the biggest involving a single industry since a 1998 multistate tobacco deal. It would force the five largest mortgage lenders to reduce loans for about 1 million households. The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth.

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