Mortgage Companies Agree to $8.5 Billion Settlement With Government
Ten different mortgage servicers, including many of the largest banks in the U.S., agreed to terms with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board on Monday to settle claims regarding foreclosure processing and mortgage loan servicing for $8.5 billion.
The agreement punishes "deficient practices" in loan servicing and foreclosure processing. The terms include $3.3 billion in total cash payments to nearly 4 million borrowers who saw their homes foreclosed upon in 2009 and 2010. The remaining $5.2 billion will be administered in the form of "loan modifications and forgiveness of deficiency judgments," according to the OCC.
The 10 parties involved are Aurora, Bank of America , Citigroup , JPMorgan , Metlife , PNC , Sovereign, SunTrust , U.S. Bancorp , and Wells Fargo .
Some of the offending banks issued statements today declaring their respective shares of the financial obligations.
Citigroup announced that its share would be reflected by a $305 million charge to its fourth-quarter pre-tax earnings, while the remaining $500 million in foreclosure-related debts were covered by existing loan loss reserves. US Bancorp said it would take an $80 million pre-tax hit to fourth-quarter earnings, as well as $128 million in loan modification charges which were covered by loan loss reserves.
Borrowers eligible for remuneration will be contacted by the end of March, and will receive anywhere from hundred dollars to $125,000, depending on the situation, according to the OCC.
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