Friday, February 25, 2011

Big Banks Warn of Mortgage Servicer Settlement Costs

by Bill McBride on 2/25/2011 09:15:00 PM

Update: From Cheyenne Hopkins at American Banker: Don't Believe Everything You Read: The Real Skinny on Servicer Settlement Talks (ht Nemo)

Regulators have not agreed on a dollar figure, and $20 billion is in the words of one source involved in the negotiations "a crazy figure."
From Nelson Schwartz and Eric Dash at the NY Times DealBook: 3 Banks Warn of Big Penalties in Mortgage Inquiries
Several big banks warned investors on Friday that they could face sizable financial penalties as a result of state and federal investigations into abusive mortgage practices.
...
The state and federal inquiries “could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs,” Bank of America said

Wells Fargo said in its filing that it was “likely that one or more of the government agencies will initiate some type of enforcement action,” including possible “civil money penalties.”

Citigroup acknowledged that federal and state regulators were investigating its foreclosure processes, which could result in increased expenses, fines and other legal remedies ...
Earlier stories suggested the penalties and "equitable remedies" could total $20 billion for all mortgage servicers.