Owners of wrongfully repossessed houses could now get up to $125,000 as ten major US banks agree to settle federal complaints. This will end a foreclosure review process begun by a 2011 enforcement action.

Under the new agreement, those people who had their homes seized and then sold would get the biggest pay offs, while banks who failed to modify people’s loans in light of a change of income would get off more lightly. The settled compensation is anywhere between $1000 and $125,000.

Image:(Reuters / Jonathan Ernst)

The initial 2011 enforcement review was ordered because banks and mortgage companies had bypassed steps in the foreclosure process and had mishandled people’s paperwork.

The banks involved include the Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, MetLife Bank, PNC Financial Services and Sovereign.

Monday’s settlement was announced by the Office for the Comptroller of the Currency (OCC) and the Federal Reserve and covers up to 3.8 million people who had their homes repossessed in 2009 and 2010.

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