In the
foreclosure agreement between the 5 big banks and the Federal and State governments,
there remained open the option for the governments to pursue additional penalties.
The first of these actions is being made public today...
Wall Street Journal
RUTH SIMON
3/12/12
Foreclosure Pact Alleges a Pattern of Malfeasance
Quote:
U.S. and state officials accused five large U.S. banks of
overcharging and misleading borrowers in court documents filed Monday
as part of the $25 billion settlement of alleged foreclosure abuses.
The filing offered a detailed description of how the five banks allegedly
violated state and federal law. Officials spent more than a year investigating
foreclosure practices that began as a probe of "robo-signing,"
or employees approving documents without proper review.<snip>
In settling, the five banks—Ally Financial Inc., Bank of America Corp.,
Citigroup Inc., J.P. Morgan Chase & Co . and Wells Fargo & Co
—neither admitted nor denied guilt.
Under the agreement, the banks will provide principal relief and other
borrower assistance valued at $17 billion. In addition, roughly $5 billion
of the settlement will be paid in fines, while $3 billion will be used to help
refinancing for homeowners who owe more than their homes are worth.
The deal also includes new mortgage-servicing standards.
<snip>
The issues laid out in the complaint go well beyond the allegations of robo-signing.
Among other things, the complaint alleges that the five banks
charged borrowers excessive or improper fees, failed to properly apply
borrower loan payments and wrongfully denied borrowers loan modifications.
The banks also provided homeowners with "false or misleading information,"
failed to have appropriate staffing levels to meet the surge in troubled loans,
and overcharged and improperly foreclosed on members of the military, according to the complaint.
Banks also engaged in a "continuing abuse of the bankruptcy process"
and filed "false or fraudulent claims" for reimbursement from the
Federal Housing Administration's mortgage insurance program,
according to the court filing. The complaint singles out Countrywide Financial Corp.,
which was acquired by Bank of America in 2008, for faulty underwriting that has
cost the Federal Housing Administration "hundreds of millions of dollars in damages."
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