The New York Times is reporting that fourteen large banks appear ready to cough up another TEN BILLION dollars to end allegations of foreclosure abuse. In a nutshell, the federal investigations purportedly involve faulty paperwork and excessive fees — Go figure!
This settlement, though, is different from the $25 Billion one between all but one of the states’ attorneys general and federal agencies earlier this year. $3.75 Billion will compensate those out on the bricks and $2.25 Billion will go to other distressed borrowers so that they are able to stay in their own homes.
Mortgage News Daily is reporting: “The Times suggests that one impetus behind the agreement has been the cost to banks of conducting an independent review of some four million loan files. The review was mandated by the Office of Comptroller of the Current and the Federal Reserve in 2011 and required 14 banks to engage consultants to go through files looking for illegally charged fees, improper use of forced placed insurance rights, and miscalculated loan payment amounts. The cost of these reviews has skyrocketed above original estimates with some taking as much as 20 hours of consultant time per file at $250 per hour. There were also hints that the reviews were not yielding the kind of information the government agencies had sought. The settlement would end these reviews.”
Most of the talks have proceeded back channel. It appears that a deal may be forthcoming by the end of the week; however, it is unknown precisely whom nor when people will receive money.