U.S. Banks to Pay $8.5 Billion for Mortgage Aid ; Deal with Regulators Aims to Resolve Claims of Foreclosure Abuses

By Silver-Greenberg, Jessica | International Herald Tribune, January 9, 2013 | Go to article overview

U.S. Banks to Pay $8.5 Billion for Mortgage Aid ; Deal with Regulators Aims to Resolve Claims of Foreclosure Abuses


Silver-Greenberg, Jessica, International Herald Tribune


The settlement announced Monday is intended to end a troubled foreclosure review of millions of loan files that was mandated by the banking regulators.

U.S. regulators have reached an $8.5 billion settlement with 10 major lenders to resolve claims of foreclosure abuses, including the use of flawed paperwork and bungled loan modifications that may have led to wrongful evictions.

The settlement announced Monday, which includes the largest U.S. lenders, like Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, concludes weeks of negotiations between the banks and U.S. regulators, led by the Office of the Comptroller of the Currency. It is intended to end a troubled foreclosure review of millions of loan files that was mandated by the banking regulators. Among the problems that came to light in the last several years were sloppy record-keeping and so-called robo-signing, in which foreclosures were made based on forged or unreviewed documents.

Four banks -- Ally Financial, Everbank, HSBC and OneWest Bank -- that were originally part of the negotiations did not sign onto the deal.

Under the settlement, $3.3 billion in cash relief will go to borrowers who went through foreclosure in 2009 and 2010. The remaining $5.2 billion will be directed to people in danger of losing their homes and will be used to reduce the amount of principal owed or the monthly payments, for example. Payments under the settlement, which covers 3.8 million households, could be as much as $125,000.

Regulators said that borrowers would be contacted regarding relief by March 31.

The pact, which was negotiated over the weekend, almost collapsed after officials from the Federal Reserve demanded that the banks pay an additional $300 million to address their part in the 2008 financial crisis, according to several people briefed on the negotiations who spoke on condition of anonymity.

In the end, the Federal Reserve agreed to back down after the banks threatened to torpedo the deal altogether. By signing the settlement, the 10 banks can resolve the outstanding chapter in their wrangling with U.S. banking regulators over foreclosure- related abuses.

In February, five major mortgage servicers, all included in the settlement announced Monday, agreed to pay $26 billion under a separate deal with 49 state attorneys general, the Justice Department and the Department of Housing and Urban Development after allegations arose in 2010 that bank employees were hastily plowing through documents used in foreclosure proceedings without properly reviewing them for accuracy.

The latest foreclosure settlement was driven, to a large extent, by banking regulators, who decided that a mandatory review of loan files was inefficient, costly and simply not yielding relief for homeowners, the people briefed on the matter said.

The goal in scuttling the reviews, which were mandated as part of a consent order in April 2011, was to provide more immediate relief to homeowners.

The comptroller's office and the Federal Reserve said Monday that the settlement "provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

U.S. Banks to Pay $8.5 Billion for Mortgage Aid ; Deal with Regulators Aims to Resolve Claims of Foreclosure Abuses
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.