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Florida to get at least $8 billion in settlement with mortgage lenders, officials say - Sun-Sentinel

News   •   Mar 13, 2012 10:29 EDT

Florida to get at least $8 billion in settlement with mortgage lenders, officials say

By Doreen Hemlock, Sun Sentinel

4:00 a.m. EDTMarch 13, 2012

State and federal authorities finalized a $25 billion settlement with banks Monday over mishandling of mortgages, with Florida to receive at least $8 billion in payments and credits, officials said.

But critics say relief is disappointing: up to $2,000 for borrowers who lost their homes in foreclosure abuses and an average $20,000 cut in principal on mishandled loans worth more than the value of the homes.

Florida has a guarantee from Wells FargoJPMorgan Chaseand Bank of America for at least $4 billion in relief from the settlement first unveiled Feb. 9, State Attorney General Pam Bondi said in a statement.

The guarantee for Florida includes a minimum $3.1 billion to cut principal and modify loans for financially troubled consumers. And it involves at least $309 million in refinancing for borrowers who are current on mortgage payments but stuck in higher-interest loans that exceed home values.

If the banks fail to meet that guarantee with Florida, they face stiff penalties, Bondi said.

"We are one of the states on the monitoring committee, and we will ensure that banks comply with this agreement and that they are held accountable," she said.

Nearly half of Florida's take could reach Palm Beach, Broward and Miami-Dade counties, mostly as loan modifications, according to foreclosure defense lawyer Roy Oppenheim of Weston.

Other details in Florida's share of the largest state-federal settlement ever, according to Bondi:

About $171 million in payments to borrowers who already have lost their homes, as partial compensation for improper servicing.

About $334 million in payments to help fund housing-related and foreclosure prevention programs within the state and provide for civil penalties.

Overall, the settlement with the nation's five largest lenders — Bank  of  America, JPMorgan  Chase, Wells Fargo, Citigroup and  Ally  Financial — requires at least $20 billion in help to borrowers by trimming principal and other means.

The companies also agreed to pay $4.25 billion to 49 states and the District of Columbia, plus $750 million to the U.S. government.

Staff reporter Paul Owers and SunSentinel news wires contributed to this report.