Banks close to $10bn foreclosure settlement

Banking regulators are close to signing a $10 billion deal with 14 banks to settle charges of foreclosure abuses, sources told The New York Times. The Office of the Comptroller of the Currency is spearheading the settlement, four separate sources told the Times. The charges settled would include cheating homeowners out of due process during foreclosure and other bank actions, such as excessive fees, that may have forced homeowners from their homes. The deal involves the five largest lenders -- Bank of America, Citibank, JPMorgan Chase, Wells Fargo and Ally Financial -- that agreed to a $26 billion settlement in April with state attorneys general, the Justice Department and the Department of Housing and Urban Development, the Times reported. The new deal designates a larger share of funds to go directly to homeowners who have been evicted than the deal settled in April -- $3.75 billion compared with $1.5 billion. The bulk of both settlements, however, is to go to people whose loans are on the brink of falling into foreclosure. That is to go to lowering principle and other forms of payment relief. The agreement, which is expected to be announced Thursday, also cancels a mandate by the U.S. Federal Reserve and the Comptrollers Office that banks hire consultants to review about 4 million loans looking for bank errors that created hardship, including foreclosures, for homeowners. That review was expected to take about 8 hours per loan at the cost of $250 per hour. The reviews, however, are taking about 20 hours per loan and they have not yielded the results regulators expected. The reviews were expected to turn up bank errors that helped create massive numbers of foreclosures since 2007, when the housing bubble burst, creating a financial crisis that turned into an global economic downturn. To date, the reviews have cost banks about $1.5 billion.