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Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. agreed to a $25 billion settlement with 49 state attorneys general and federal officials in February. Most of the settlement is earmarked for reducing loans for about 1 million U.S. households that owe more on their mortgages than their homes are worth. About 11 million American households are "underwater" on their mortgages, meaning they owe more than their homes are worth. The broader settlement is expected reduce loans for only about 1 million of those Americans and send checks to others who were improperly foreclosed upon. Of the five major lenders, Bank of America's penalties were the highest: $11.8 billion. The settlement ended a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Lender abuses exacerbated the crisis. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures, a practice known as robo-signing. In the fall of 2010, Bank of America along with other large lenders temporarily halted foreclosures after a furor over robo-signed documents.
[Associated
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