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| JPMorgan Chase and Wells Fargo are two of the banks involved in the current negotiations. (photo: New York Magazine) |
31 December 12
anking
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 in February between state attorneys general and five
large banks. That set aside $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. As of early 2012, four million Americans had
been foreclosed upon since the beginning of 2007, and a huge amount of
abandoned homes swamped many states, including California, Florida and
Arizona.
Federal agencies like the Securities and Exchange
Commission and the Justice Department are continuing to pursue the banks
for their 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 have been occurring for roughly 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.
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