JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and three other U.S. mortgage servicers are in advanced talks to resolve state and federal claims over faulty foreclosures, according to two people briefed on the matter.
Negotiators tentatively set a July 13 target for a settlement, which may exceed $20 billion, the people said, speaking on the condition of anonymity because the talks are private. Some banks are briefing their boards on deal terms, which would form state and federal funds to resolve claims and provide relief to borrowers, they said. The target date may be postponed as parties iron out details.
Attorneys general and federal officials are negotiating with the group of lenders -- also including Citigroup Inc. (C),Wells Fargo & Co. (WFC) and Ally Financial Inc. -- to resolve probes into how banks treated borrowers during a surge in mortgage defaults. A final agreement, setting standards for servicing loans and processing foreclosures, may serve as a template for claims against the rest of the industry.
The July 13 target corresponds with a separate deadline the Office of the Comptroller of the Currency set for banks to submit an “action plan” for fixing deficiencies and compensating people whose homes were improperly seized. If talks aren’t done by then, the OCC may push back its date, the people said.
Also,Sources close to the negotiations between the state attorneys general and mortgage servicers told the New York Post Wednesday they are nearing a $60 billion settlement in the robo-signing investigation.
But analysts said the that not all of the reported $60 billion would go to the state as a fine. Some would go to modify mortgages. If so, the settlement could be offset by the amount of loss provisions these banks have already set aside on these loans.
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