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Top U.S. Banks May Settle Robo-Signing Scandal for $25 Billion

robo-signing settlement reached for $25 billion

Financial News Story of the Day – Robo-Signing Scandal May be Resolved with Settlement

When foreclosures reached epic proportions following the housing bubble burst in 2006, banks couldn’t work fast enough to clear out all the paperwork, giving birth to a process known as robo-signing. The definition of robo-signing is when a bank mortgage lender representative signs hundreds of documents foreclosing on a property without actually verifying the validity of the process. Top U.S. banks were taken to court by people who claim that they were robo-signing during the foreclosure crisis, sometimes wrongfully foreclosing on unsuspecting homeowners. In a growing number of cases, delinquent mortgage borrowers actually challenged a lender’s right to foreclose due to the original loan being sold so many times that no institution could track down the document without spending precious time and resources to produce the evidence. This led to a huge mess that was seemingly impossible to fix, until today when California and New York attorney generals both joined the push to take a $25 billion settlement from some of the largest banks in the country. The banks want a guarantee that future litigation against them be dropped for their roles in the robo-signing scandal.

Excerpt: “All 50 states announced in 2010 they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from states and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with five banks.” (source: Bloomberg.com)

Daily Finance Summary – Robo-Signing, Alibaba and Greece

  • The Robo-signing scandal may soon come to a close as California and New York agree to a settlement
  • Alibaba is close to buying a stake in internet company Yahoo
  • Greece is at center stage again as the world awaits the results of their austerity plans
  • Visa’s profit grows 16.4% in the last quarter

Update: A settlement deal worth $26 billion has been reached. It is predicted that over 1 million homeowners will now receive some type of mortgage assistance. (source: MarketWatch.com)


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