By Alan Zibel and Dan Fitzpatrick
Ten U.S. banks reached an $8.5 billion settlement with bank
regulators concerning charges of foreclosure-abuses, the regulators
said Monday.
Bank of America Corp (BAC), J.P. Morgan Chase & Co. (JPM),
Wells Fargo & Co. (WFC) and Citigroup Inc. (C) all signed onto
the agreement, while four smaller banks--HSBC Holdings PLC's (HBC,
HSBA.LN) U.S. bank division, Ally Financial Inc., OneWest Bank and
Everbank--did not.
The settlement resolves allegations of foreclosure improprieties
brought by the Office of the Comptroller of the Currency and
Federal Reserve in 2011. The banks are eager to complete the
settlement because they are due to report fourth-quarter earnings
in the coming weeks and want to put the matter behind them. The
talks almost collapsed over the weekend after bankers threatened to
walk away from the deal if the Fed's demand for an additional $300
million was included, a person briefed on the talks said.
The settlement would end a review process set up in 2011 amid
public outrage over banks' foreclosure practices. Swamped with
foreclosure filings, many banks used "robo-signers" to sign off on
thousands of cases, stating falsely that they personally reviewed
each one.
Others signing onto the deal were Aurora Loan Services, MetLife
Bank, PNC Financial Services Group (PNC), Sovereign Bank, SunTrust
Banks Inc. (STI) and U.S. Bancorp (USB).
The pact would replace a process for reviewing individual
borrowers' loan files to determine if they faced financial harm as
a result of improper loan processing as the foreclosure crisis
worsened. Talks began after large banks voiced concerns with a
process set up by the OCC and the Fed over foreclosure-related
abuses that surfaced over two years ago.
The OCC decided the deal would benefit fit both sides by giving
more money to consumers more quickly and end an open-ended and
expensive process for the mortgage industry.
It has become clear that carrying the process through to its
conclusion would divert money away from the affected homeowners and
also needlessly delay the dispensation of compensation to affected
borrowers," Comptroller of the Currency Thomas Curry said. "Our new
course of action will get more money to more people more quickly,
and it will speed recovery in the nation's housing markets."
Write to Alan Zibel at alan.zibel@wsj.com and Dan Fitzpatrick at
dan.fitzpatrick@wsj.com