State prosecutors are offering a deal to U.S. banks that allegedly misrepresented mortgage securities sold during the housing bubble that will limit their liability in exchange for a multibillion-dollar payment.
The Federal Housing Finance Agency is accusing Bank of America, Citigroup Inc., JP Morgan Chase and more than a dozen other banks of irresponsibly marketing mortgage securities to investors and not properly reviewing borrowers’ paperwork, which led to the housing crisis.
Talks between state prosecutors and the banks are ongoing. According to the Financial Times, state prosecutors are proposing to release the banks from legal liability related to the alleged violations of securities law in exchange for penalties estimated between $10 billion and $25 billion.
