Banks to Pay $10B in Foreclosure Settlement with OCC: Reports
Regulators apparently agree with widespread criticism that the vast foreclosure review process went off the rails.December 31
Independent foreclosure reviews at the major banks were meant to compensate wronged homeowners and restore some faith in the integrity of mortgage servicing. Instead, the process has become mired in questions of objectivity.November 1
Under the OCC, a complex foreclosure review process is funneling hundreds of millions of dollars to administrators and advertisements. Critics charge that banks and homeowners would be far better served by a simpler program.November 2
Mortgage servicers are making a push to remind homeowners who may be facing foreclosure they have roughly 48 days to request independent reviews.November 13
Fourteen of the nation's biggest banks are expected to pay a combined $10 billion to settle allegations they mishandled foreclosures that followed the housing crisis.
The Office of the Comptroller of the Currency is set to announce as early as Monday that JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (NYSE: C) and others have agreed to the settlement, according to reports Sunday by several media outlets.
As part of the pact, the banks are expected to pay $3.75 billion directly to borrowers on whom the banks wrongly foreclosed.
The settlement also would end reviews of foreclosures that involved verifying claims by borrowers and checking their files for errors and evidence of botched paperwork and other abuses by lenders.
The reviews stem from an April 2011 enforcement action by the OCC that required the banks to retain independent consultants to review their foreclosure activities in 2009 and 2010. The effort was aimed at identifying borrowers who may have suffered financial injury as a result of errors, misrepresentations or other flaws in the foreclosure process.
Homeowners had until Dec. 31 to request reviews, which are expected to be free and to be monitored by regulators to ensure they are thorough and impartial.
The reviews themselves proved to be a boon to consultants the banks hired to perform them, while the cost of the reviews mushroomed to several times the amount that borrowers are expected to receive in benefits, American Banker reported in November.
The average loan review cost $10,000 or more, according to some estimates. That is multiples of what both the banks and consumers anticipated the average borrower could expect to receive.
The settlement expected to be announced on Monday would come nearly a year after five of the country's largest mortgage servicers agreed to pay $25 billion to settle a probe by the attorneys general in 49 states and the federal government that the banks allegedly robo-signed affidavits in foreclosure proceedings as part of a series of servicing-related abuses.