States, Feds to announce mortgage settlement

WASHINGTON (AP) — Federal officials say a deal has been reached between states and the nation's biggest mortgage lenders over foreclosure abuses.

Five major banks - Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial - will pay roughly $26 billion to reimburse American homeowners and overhaul their industry.

The nationwide settlement stems from abuses that occurred after the housing bubble burst. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures - an action known as robo-signing.

The deal would be the biggest involving a single industry since a 1998 multistate tobacco deal. It would force the five largest mortgage lenders to reduce loans for about 1 million households. The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth.