California has secured up to $18 billion in a settlement with national banks, part of which will directly help homeowners in the state hardest hit by the mortgage crisis. The state has more than 2 million underwater borrowers, whose homes are worth less than their mortgages.
Five major banks — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — will pay roughly $26 billion nationwide to reimburse American homeowners and overhaul their industry.
The banks and U.S. state attorneys general agreed to the deal late Wednesday after 16 months of contentious negotiations. California and New York agreed to the deal late Wednesday, according to a source the AP did not name, but described as being close to the negotiations.
The numbers for California as described by California's Attorney General Kamala Harris in a release:
• More than $12 billion to reduce the principal on loans or offer short sales to about 250,000 California homeowners who are underwater on their loans, and behind on their payments.
• About $849 million for refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.
• $279 million for restitution to about 140,000 California homeowners who were foreclosed on between 2008 and 2011.
• About $1.1 billion for homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation.
• $3.5 billion for 32,000 homeowners to help with unpaid balances remaining when their homes are foreclosed.
• $430 million in costs, fees and penalty payments.
More on this deal later.