Obama hails housing settlement

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STORY: U.S. President Barack Obama hailed a new $25 billion housing settlement that will "turn the page" on a period of abusive foreclosure practices as he vowed to make sure that big U.S. banks live up to their end of the bargain.

The settlement announced on Thursday (February 9) at the U.S. Justice Department seals more than a year of negotiations after evidence emerged late in 2010 that banks robosigned thousands of foreclosure documents without properly reviewing paperwork.

The banks involved in the deal are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc, and Ally Financial Inc.

Under the deal, roughly 750,000 borrowers who lost their homes to foreclosure between 2008 and 2011 can expect to receive a $2,000 cash payment.

The banks would also provide $17 billion in principal reduction and loan modifications for delinquent borrowers who are facing foreclosure.

The deal would also include $3 billion to help borrowers who are current on their mortgage payments but unable to refinance because they owe more than their homes are worth

The housing settlement gives President Barack Obama, as he seeks re-election in November, a chance to show his administration is willing to get tough with big banks to help ordinary Americans survive the pain of the nation's foreclosure crisis.

For the banks, the deal resolves civil government claims over faulty foreclosures and servicing misconduct.