Since the start of the recession, millions of Americans and many people in Kansas have lost their homes to foreclosure. Many people continue to struggle to pay their mortgage each month and are willing to do anything to stop foreclosure.

Fortunately, the foreclosure process will likely be changing after federal and state officials reached a $25 billion settlement with five of the nation’s largest mortgage lenders. The settlement comes after it was discovered many banks were guilty of deceptive foreclosure practices including “robosigning” in which documents were signed without anyone verifying the information.

As part of the settlement, Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co., Citigroup Inc. and Ally Financial Inc. will face more than $760 million in fines. However, the Federal Reserve says they plan to go after eight more banks.

About $1.5 billion from the $25 billion settlement will go to homeowners who lost their homes to foreclosure between September 2008 and December 2011. People can expect to receive cash payouts of about $2,000.

In addition, banks have begun sending letters to consumers who went through some form of the foreclosure process in 2009 and 2010. Those consumers have the opportunity to request that a review of their case be completed. About 4 million letters have been sent to homeowners. So far about 121,000 homeowners have requested a review.

Although the settlement and review process by banks is a positive sign, it does little for the people who are struggling to pay their mortgage. However, people who are facing foreclosure may have options available to them. By filing for bankruptcy, an individual may be able to stop foreclosure and get their finances back on track.

Source: The Wall Street Journal, “Fed Plans to Fine Eight More Banks for Foreclosure Violations,” Alan Zibel, Mar. 19, 2012

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