WASHINGTON Feb 11 Federal and state officials
are close to entering another round of settlements to resolve
robo-signing and other foreclosure abuses by mortgage servicers,
according to government officials familiar with the matter.
The advancement in the settlement discussions comes one year
after the Justice Department and state attorneys general
announced a related $25 billion deal with five major banks.
Talks with three additional servicers are at an advanced
stage and announcements could come in the next month or two,
said the officials, who asked not to be named. They would not
disclose which servicers are close to settling.
Another half-dozen servicers could eventually settle for a
combination of cash and relief to distressed homeowners,
bringing the total for the remaining servicers up to $5 billion,
though it could be less depending on how many servicers
authorities decide to go after.
The talks are progressing on separate tracks with each
servicer, and will likely not be announced as a group, one of
the sources said.
The settlements would mean another round of consumer relief
could go to troubled borrowers whose mortgages are serviced by
institutions beyond the five largest.
The servicers expected to eventually resolve federal and
state charges include those that recently settled related
allegations from their regulators: Aurora Bank, HSBC, MetLife
Bank, PNC, Sovereign, SunTrust, and U.S. Bank.
Last year, SunTrust said it began preliminary discussions in
January 2012 and set aside $120 million for a possible
settlement. US Bancorp has also reported $130 million in related
HSBC spokesman Neil Brazil said the bank remained in
discussions. Representatives of the other banks either declined
comment or did not respond to a request for comment.
A Justice Department spokeswoman declined comment.
Last February the Justice Department, the Department of
Housing and Urban Development and 49 states accused five big
banks -- Bank of America, Wells Fargo, JPMorgan Chase, Citigroup
and Ally Financial -- of unlawfully cutting corners when dealing
with the deluge of foreclosures triggered by the financial
The bulk of the $25 billion settlement was slated to be
provided in the form of relief to homeowners, including
principal reductions or loan modifications for delinquent
borrowers facing foreclosure.
The banks have reported that much of the money from the
settlement has already gone out the door, but some housing
advocates have said they seen limited results.
"Instead what we found, unfortunately too often, it has
allowed business to continue as usual for mortgage servicers,"
said Brian Kettenring, who leads watchdog group Campaign for a
Fair Settlement, on a media call last week to discuss the
The monitor overseeing the deal, Joe Smith, is expected to
release later this month updated numbers about the consumer
relief provided by the banks. Smith's first report of audited
figures is not due until later this spring.
The ongoing talks are separate from those conducted by bank
regulators to resolve similar issues. Last month more than a
dozen banks agreed to pay more than $9 billion to end
case-by-case reviews of past home foreclosures.
The Office of Comptroller of the Currency and the Federal
Reserve Board ordered the servicers in 2011 and 2012 to review
individual loan files and compensate harmed borrowers, after
widespread mistakes were discovered in the way they had
processed home seizures.
Those reviews proved slow and expensive, and regulators
decided last month to enter into a series of settlements to
provide cash and other support to certain foreclosed borrowers
and end the reviews.
Those settlements helped restart talks with the states and
the Justice Department, sources said.