Banks have probably already set aside most of the costs for this settlement, Richard Bove, a bank analyst at Rochdale Securities LLC, said in an interview with Bloomberg Television.
"In terms of the impact on the banks, it's not going to be actually that significant despite the huge amount of money we're talking about," Bove said.
JPMorgan, the largest U.S. bank, won't need to set aside additional costs to cover its share of the agreement. The bank expects that the financial impact on results for this quarter and future periods won't be material, Kristin Lemkau, a spokeswoman for the New York-based bank, said in an e-mail.
"This settlement will help provide additional support for homeowners who need assistance, brings more certainty to the housing market and aligns to our ongoing commitment to help rebuild our neighborhoods and get the housing market back on track," Dan Frahm, a Bank of America spokesman, said in a statement.
The goal was to punish banks responsible for botched foreclosures and repair damaged neighborhoods, said HUD Secretary Shaun Donovan.
"We all recognize you can't undo the pain of the crisis by writing a check," Donovan said. The settlement "forces the banks to clean up their acts."
Borrowers whose loans are owned by banks and haven't been pooled into mortgage bonds will be most likely to benefit from the agreement, said the administration official at the briefing. Borrowers who suffered foreclosures from the start of 2008 through 2011 will be eligible for payment.
Amounts May Vary
The actual amount of restitution to individual borrowers will depend on how many make claims, with the official estimating that each borrower could get between $1,500 and $2,000.
Banks must spend the money within three years or face a fine. The proposal must be approved by a federal judge. Banks will get extra credit for funds distributed in the first 12 months, the official said.