U.S. Regulators Will Require Banks To Pay Up To $125,000 To Foreclosure Fraud Victims

The Federal Reserve and the Office of the Comptroller of the Currency released a plan today that will attempt to compensate consumers for banks’ reckless behavior during the foreclosure fraud scandal that broke in 2010. The new system will review complaints from homeowners about predatory banking practices such as “starting a foreclosure for a borrower who wasn’t in default, denying loan assistance in error, a mistake on a loan modification, and wrongfully foreclosing on a member of the military,” potentially forcing banks to pay up to $125,000 per borrower. This policy is in addition to the $25 billion national foreclosure settlement with Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, and Ally Financial reached earlier this year.