One in every 256 California homeowners got a foreclosure notice in December 2011, but the robo-signing scandal stopped foreclosures in their tracks two years ago, when the practice became public knowledge. The nation's five largest banks -- Wells Fargo, Bank of America, JP Morgan Chase, Citigroup and Ally Financial -- were processing foreclosures and seizing property without review.
"People who were supposed to be attorneys were showing up in a court of law with documents saying here's what gives us the right to foreclose on these people's homes. And those documents were made up," said Mark Goldman, San Diego State University Real Estate Lecturer.
The proposed deal caps the bank's legal liability, in exchange for payments to affected homeowners and a chance to reduce principle on outstanding loans that are larger than the value of the property they were taken out on.
California's Attorney General Kamala Harris resisted joining the agreement because she doesn't think the state's share of the settlement is big enough.
