Federal judges granted approval to the $26 billion settlement over foreclosure processing errors. This clears the way for the nation’s five largest lenders to begin untyping the tape to aid to homeowners. The settlement includes guidelines for banks to compensate home owners who have been wrongfully foreclosed upon.  This settlement ruling includes news about mortgage modifications — including principal write-downs — of up to 1 million home owners.

The settlement was first announced more than a month ago but awaited a judge’s final approval. The settlement is between the nation’s five largest mortgage lenders and the attorneys general of 49 states and the District of Columbia. The five lenders part of the settlement are Bank of America, Citibank, JPMorgan Chase, Wells Fargo, and Ally Financial.
Here’s a breakdown of how the settlement money will be allocated:

The banks agree to adopt stricter standards when processing foreclosures to errors in the future.As long as the banks abide by the settlement terms, they have immunity from claims by the state governments for wrongdoings!!

Oklahoma is the only state that did not participate in the settlement agreement. In early February, the state reached a separate agreement with the nation’s five largest lenders for an $18.6 million settlement.

Watch this video to get more info on the mortgage settlement.

Source: “Court Approves $26 Billion Foreclosure Settlement,” CNNMoney (April 6, 2012)