States, mortgage lenders in talks over fund for borrowers in foreclosure mess

By Ariana Eunjung Cha and Brady Dennis
Washington Post Staff Writers
Wednesday, November 17, 2010; 12:03 AM

State attorneys general and the country's biggest lenders are negotiating to create a nationwide fund to compensate borrowers who can prove they lost their home in an improper foreclosure, state and industry officials said.

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The fund would present a solution for both sides, helping banks avoid lengthy and costly court challenges from homeowners and aiding state investigators in their efforts to seek relief for homeowners who were wronged, the officials said.

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