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

The Justice Department said today that the settlement will be announced at a news conference later today.

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.

In addition, another 750,000 Americans — about half of the households who might be eligible for assistance under the deal — would likely receive checks for about $1,800 each.

The banks and U. S. state attorneys general agreed to the deal late Wednesday.



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