Banks near $10 billion foreclosure settlement
The nation’s major banks are reportedly close to a settlement with federal regulators over abusive foreclosure practices, going back to 2009. The deal is said to be a $10 billion settlement with 14 banks.
Economist Chris Low at FTN Financial says settlements with regulators are usually “in the millions, not the billions. It’s a big number.”
But that $10 billion will allow banks to avoid further investigation of “robo-signing.” That’s the practice of processing foreclosures or loan modifications in batches, instead of reviewing each one.
Low says in 2011, the government ordered banks to hire independent consultants, to comb through each suspected case of robo-signing.
“Determining not just whether it took place, but how widespread it was,” says Low.
Banks have already spent more than a billion dollars on those reviews, and they are nowhere near done. A settlement this week would not only put an end to the arduous, expensive review process, it would also let banks sweep the mess under the rug in time to report it on their fourth-quarter earnings. That would please shareholders — they’re eager to see some of the uncertainty over abusive foreclosures cleared up.
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