Mortgage Foreclosure Deal Slowed by Infighting

Thursday, 24 Feb 2011 01:16 PM

 

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U.S. regulators' efforts to settle with banks over improper mortgage foreclosures are being hampered by infighting among the groups involved in the talks, and a settlement may take a while, according to sources familiar with the matter.

Banking regulators, a coalition of state attorneys general, and the biggest U.S. mortgage lenders are trying to forge a settlement with banks, which have been accused of foreclosing on borrowers without having the necessary paperwork in place.

Sources familiar with the settlement talks say the various groups disagree on the size and scope of a settlement.

The members of the Treasury team setting up the new Consumer Financial Protection Bureau, along with the Federal Deposit Insurance, have been pushing for a larger settlement than the Office of the Comptroller of the Currency, the sources said.

The Federal Reserve appears to be somewhere in the middle and has not backed the OCC's approach, as regulators continue to focus on the size of the penalty for improper foreclosures.

On Tuesday, the Wall Street Journal reported the Obama administration was pushing for a settlement that would include reductions in loan principal for struggling howeowners.

The newspaper also said some attorneys general and federal agencies want a $20 billion settlement that would include civil fines or creating a fund to assist homeowners.

Last fall, the biggest U.S. mortgage lenders, including Bank of America, Wells Fargo, JPMorgan Chase and Ally Financial's GMAC Mortgage, temporarily halted or refiled paperwork on foreclosures nationwide.

A coalition of all 50 state attorneys general began a probe into the matter soon after, and the Securities and Exchange Commission, the Department of Justice and bank regulators have opened their own inquiries.

© 2014 Thomson/Reuters. All rights reserved.

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