Bank deal yields $287M to Texas homeowners, $141M to state

The state and federal governments’ $26 billion settlement with five large U.S. banks yielded $428 million for Texas, with $287 million targeting homeowners, Texas Attorney General Greg Abbott said Thursday.

Collin Eaton
Reporter – Houston Business Journal

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Texas Attorney General Greg Abbott said Thursday the state and federal governments’ $26 billion settlement with five large U.S. banks yielded $428 million for Texas — with $287 million targeting homeowners.

The settlement involved Ally Financial Inc. 
 

Ally Financial Inc.
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(NYSE: ALLY-PB), Bank of America Corp. 
 

Bank of America Corp.
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(NYSE: BAC), Citigroup Inc. 
 

Citigroup Inc.
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(NYSE: C), JPMorgan Chase Co. 
 

JPMorgan Chase Co.
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(NYSE: JPM) and Wells Fargo Co. 
 

Wells Fargo Co.
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(NYSE: WFC).

Texas was one of eight states that benefited from the settlement.

According to The Wall Street Journal, the $26 billion settlement is the largest deal between the government and the private sector since a 1998 agreement with the tobacco industry.

About $1.5 billion of the deal will go to borrowers who had foreclosed properties between September 2008 and December 2011, and borrowers could receive between $1,500 to $2,000 each, the Journal reports.

Current and former Texas homeowners who either lost homes or got behind on their mortgages because of banks’ missteps are expected to get about $287 million for restructuring their mortgages or for aid.

The remaining $141 million coming to Texas from the settlement, due because of banks’ violation of the law, will be deposited to the state Treasury for later appropriation.

Bank of America will have to pay the most in the settlement at $11.8 billion, followed by Wells Fargo and JPMorgan at $5.4 billion and $5.3 billion, respectively. Citigroup will pay $2.2 billion and Ally will pay $310 million.

Abbott said in a statement that the settlement will stop banks’ past misconduct “such as ‘robo-signing,’ inadequate documentation and improper record-keeping. Because of the banks’ misconduct, homeowners have faced unnecessary hardship.”

According to the Journal, between 4.01 percent and 8 percent of Texas loans through the third quarter are 90 days past due or in foreclosure — that’s about average for other U.S. states.

Wells Fargo, Bank of America and JPMorgan Chase were the top three banks in Austin in 2011 by total local deposits, according to the Austin Business Journal.

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Collin Eaton covers banking, finance and securities.

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