Magazine article Mortgage Banking

Servicers Take High 4Q Charges Due to Litigation, Regulatory Costs

Magazine article Mortgage Banking

Servicers Take High 4Q Charges Due to Litigation, Regulatory Costs

Article excerpt

Eight of the nation's largest publicly traded mortgage servicers had to take large charges against earnings or accruals for expected servicing costs in the fourth quarter of last year, according to Keefe, Bruyette & Woods (KBW), New York.

The multimillion dollar (and in some cases billion dollar) charges were due to factors that included foreclosure related matters., as well as the attorneys general settlement and the consent orders issued by the Federal Reserve and the Office of the Comptroller of the Currency (OCC).

In its report, KBW Mortgage Matters: Review of 4Q11 Mortgage Results, KBW reviewed publicly announced actions taken by several leading servicers, including Bank of America's $1.5 billion in mortgage related litigation expense, some of which was related to servicing issues.

The report noted that JPMor gan Chase announced in the fourth quarter a 3528 million expense for additional litigation reserves, primarily for mortgage related matters. PNC announced S240 million of foreclosure-related expenses, primarily as a result of "ongoing governmental matters," KBW said.

Ally Financial took a $270 million charge in the fourth quarter for penalties expected to he imposed by regulators and governmental agencies in connection with foreclosure-related matters, KBW noted. …

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