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Banks pay New York state $25 million for alleged foreclosure abuses

Deal comes one month after a record-setting national mortgage settlement

A month after reaching a record $25 billion foreclosure settlement with U.S. mortgage lenders, several states are ready to collect.  Today it’s New York, which will collect $25 million from five major banks over their alleged abuse of the Mortgage Electronic Registration System (MERS).

The state attorney general’s office accused JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. of using the electronic mortgage database for deceptive and fraudulent foreclosure filings. Citigroup Inc. and Ally Financial also agreed to a financial settlement, though they were not named in the New York lawsuit. None of the banks admitted or denied guilt as part of the deal.

The state will use the money for further investigations and for mortgage defaults and foreclosures, according to Reuters. In return, New York State Attorney General Eric Schneiderman agreed to drop penalties related to pending MERS claims.

Recently, four other states have struck similar deals with the banks, including Delaware, Massachusetts, California and Florida. And the claims are likely to continue—February’s national settlement, which is awaiting a judge’s approval, left banks open to continued government investigation and to individual and state criminal suits.

Alanna Byrne

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