Banks stake $5 billion to settle foreclosure inquest

The nation’s largest banks have offered to pay up to $5 billion to settle claims by federal and state officials of improper mortgage-servicing practices, according to the Wall Street Journal. This offer low-balls what was proposed by state and federal officials, some of whom are asking for more than $20 billion in penalties.

May 13, 2011
foreclosure, housing market, real estate market, mortgage, housing bubble

The nation’s largest banks have offered to pay up to $5 billion to settle claims by federal and state officials of improper mortgage-servicing practices, according to the Wall Street Journal.

This offer low-balls what was proposed by state and federal officials, some of whom are asking for more than $20 billion in penalties. The banks’ figure comes as officials and mortgage companies push their efforts to strike a settlement of investigations sparked by questionable foreclosure practices that came to light last fall, such as alleged “robo-signing.” The amount of penalties is a key point of contention between banks and officials.

On Tuesday, bank representatives with state and federal officials in the latest round of negotiations. On Friday, banks received revised term sheets from government negotiators. One sheet revised proposed changes in mortgage-servicing practices. The second indicates how penalties would be allocated, including instructions on how to reduce loan balances for certain borrowers.

For more information: http://online.wsj.com/article/SB1000142405274870386420457631573232421242...

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