Regulators are near to a $10 billion settlement with 14 banks,
according to people close to the negotiations.
U.S. banking regulators are close to a $10 billion settlement
with 14 banks that would end the government's efforts to hold
lenders responsible for foreclosure abuses like faulty paperwork and
excessive fees that may have led to evictions, according to people
with knowledge of the discussions.
Under the settlement, a significant amount of the money, $3.75
billion, would go to people who have already lost their homes,
making it potentially more generous to former homeowners than a
broad-reaching pact last February between state attorneys general
and five large banks. That agreement set aside only $1.5 billion in
cash relief for Americans.
Most of the relief in both agreements is meant for people who are
struggling to stay in their homes and need the banks to reduce their
payments or lower the amount of principal they owe.
The $10 billion pact would be the latest in a series of
settlements that regulators and law enforcement officials have
reached with banks to hold them accountable for their role in the
2008 financial crisis that sent the housing market into the deepest
slump since the Great Depression and shook the global economy. As of
early 2012, four million Americans had been foreclosed upon since
the beginning of 2007, and a huge number of abandoned homes swamped
many states, including Arizona, California and Florida.
U.S. government agencies like the Securities and Exchange
Commission and the Justice Department are continuing to pursue the
banks over the packaging and sale of troubled mortgage securities
that imploded during the financial crisis.
Housing advocates were largely unaware of the latest rounds of
secret talks, which had been occurring for about a month. But some
have criticized the government for not dealing more harshly with
bankers in light of their lax standards for making loans and
packaging them as investments, as well as their problems with
modifying troubled loans and processing foreclosures.
A deal could be reached by the end of the week between the 14
banks and the nation's top banking regulators, led by the Office of
the Comptroller of the Currency, four people with knowledge of the
negotiations said. It was unclear how many current and former
homeowners would receive money or when it would be distributed.
Told on Sunday night of the imminent settlement, Lynn Drysdale, a
lawyer at Jacksonville Area Legal Aid in Florida and a former co-
chairwoman of the National Association of Consumer Advocates, said:
"It's certainly a victory for consumers and could help entire
neighborhoods. But the devil, as they say, is in the details, and
for those people who have had to totally uproot their lives because
of eviction it may still not be enough."
In recent weeks, within the upper echelons of the comptroller's
office, pressure was mounting to negotiate a banner settlement with
the banks, according to people with knowledge of the matter. The
reason was that some within the agency had started to realize that a
mandatory review of millions of bank loans was not yielding
meaningful examples of the banks' wrongfully evicting homeowners who
were current on their payments or making partial payments, according
to the people.
Representatives of banking regulators did not return calls for
