The state attorneys general and the Department of Justice filed the settlement with the top five mortgage servicers Monday.
The deal announced in February totals $25 billion, of which $20 billion will be provided as relief to struggling homeowners. Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup each signed on.
Of the $5 billion in penalties, roughly $1.5 billion will be used as a “Borrower Payment Fund.” Borrowers foreclosed on between Jan. 1, 2008, and Dec. 31, 2011, who qualify for the payouts could receive up to $2,000.
New servicing standards are also detailed in the filing.
The settlement is still pending final approval from the U.S. District Court in the District of Columbia.
The documents can be found here.
While the filing ends more than one year of negotiations, the implementation process has just begun. Servicers are required to complete 75% of the principal reductions, modifications, forbearance and other relief within two years. All of it must be completed in three.
“The filing of this settlement is the first official step in the implementation process. This will be a long, complicated and expensive process for mortgage servicers with many pitfalls along the way,” said Robert Bostrom, a partner with the banking law firm SNR Denton.