Tags: Fed | Fines | Banks | Foreclosure

Fed May Slap Fines on More Banks Amid Foreclosure Mess

Tuesday, 03 Apr 2012 08:07 AM

Regulators might slap fines on eight financial firms who were not part of a recent settlement over home foreclosure practices involving sloppy documenting, the New York Times reports.

According to the Federal Reserve HSBC’s United States bank division, SunTrust Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest, and Goldman Sachs — should be fined for "unsafe and unsound practices in their loan servicing and foreclosure processing," Suzanne G. Killian, a senior associate director of the Federal Reserve’s Division of Consumer and Community Affairs, told lawmakers recently, the newspaper reports.

Five big mortgage servicers — Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial — recently agreed to a $25 billion settlement for improperly handling foreclosure activities although they did not admit wrongdoing.

Proceeds from the settlement will help compensate victims of alleged foreclosure fraud.

Some criticize the move altogether.

Dick Bove, a banking analyst at Rochdale Securities, has said the money will go those who aren't making their payments regardless of whether they were victims of faulty or fraudulent paperwork or not.

"Those people lucky or smart enough to stop making payments on their homes may get their loan balances reduced," Bove told CNBC recently.

"Other beneficiaries of the agreement may be homeowners who have seen the value of their houses drop below the size of their mortgages. They get a freebie that other homeowners who have paid their mortgages down will not get."

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