5 banks agree to $25B nationwide mortgage settlement

Posted Jan. 23, 2012, at 9:16 p.m.

WASHINGTON — The nation’s five largest mortgage lenders have agreed to overhaul their industry after deceptive foreclosure practices drove homeowners out of their homes, government officials said Monday.

A draft settlement between the banks and U.S. states has been sent to state officials for review.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, which could be as high as $25 billion. About 750,000 Americans —about half of the households who might be eligible for assistance under the deal — will likely receive checks for about $1,800.

But the agreement could reshape long-standing mortgage lending guidelines and make it easier for those at risk of foreclosure to restructure their loans. And roughly 1 million homeowners could see the size of their mortgage reduced.

Five major banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial — and U.S. state attorneys general could adopt the agreement within weeks, according to two officials briefed on the discussions. They spoke on condition of anonymity because they are not authorized to discuss the agreement publicly.

The settlement would be the biggest of a single industry since the 1998 multistate tobacco deal. And it would end a painful chapter that grew out of the 2008 financial crisis.

Nearly 8 million Americans have faced foreclosure since the housing bubble burst. In some cases, companies that process mortgages failed to verify the information on foreclosure documents. The worst practices, known collectively as “robo-signing,” included employees signing documents they hadn’t read or using fake signatures to sign off on foreclosures.

President Barack Obama is expected to tout the settlement in his State of the Union address Tuesday. His administration has put pressure on state officials to wrap up a deal more than a year in the making.

Canadian man gets 18 years for credit fraud

FARGO, N.D. — A Canadian man accused of masterminding one of the largest high-tech bank robberies in U.S. history was sentenced to nearly 18 years in prison Monday following a years-long investigation into fake debt collection agencies that prosecutors say stole the identities of about 38,000 people.

Adekunle Adetiloye was accused of organizing a scheme to open nearly 600 fraudulent bank accounts and bilk 22 major banks, potentially costing credit card firms and banks up to $5 million. Assistant U.S. Attorney Nick Chase in North Dakota, where the case was handled, said the 40-year-old had an “insatiable hunger for other people’s money.”

Defense attorneys had argued that their client, the only person charged in the case, was a “marginal and minimal participant” whose role was to handle mail and withdraw money from ATMs. But prosecutors and the judge believed he was central to the scheme.

Investigators said Adetiloye incorporated two different companies in Delaware — Syspac Financial Services and Commet Consultant Inc. — that claimed to be debt collection companies. He gained access to commercial data providers, including large-scale outfits LexisNexis and ChoicePoint that only allow access to law enforcement, financial services and debt collection companies.

With access to those data providers, Adetiloye and others obtained the personal identification information to about 38,000 people, most of whom were medical professionals, and used that information to open credit card, debit and checking accounts, prosecutors said.

Those data providers said it was only the second such breach of that scale.

Jailed NY fraudster admits plot to kill witness

NEW YORK — The convicted mastermind of a $100 million mortgage fraud scheme admitted Monday to plotting the death of a key witness in his trial while behind bars, with an undercover investigator posing as a hit man.

Former AFG Financial Group Inc. President Aaron Hand pleaded guilty to conspiracy to commit murder. Prosecutors had said he gave the phony contract killer money to buy a gun, issued detailed instructions — including how to make the murder look like a gang attack — and agreed to pay $2,000.

“I wish I was there to … watch him suffer,” Hand told the investigator in a recorded conversation at the prison, according to prosecutors.

He was already serving 8 1/3 to 25 years in prison and is facing an additional sentence of 8 to 16 years to run consecutively when he is sentenced Feb. 6. He had faced 25 to life if convicted on the more serious charge of attempted murder.

His attorney told the New York Post the deal was a “more appropriate” way to resolve the situation.

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