Wednesday, January 25, 2012

Additional Servicers May Join in AG Settlement

The settlement negotiations between the state attorneys general and the top five servicers have dragged on for more than a year now throughout frequent reports that a settlement is “close.” Working out a deal that banks feel is fair and that attorneys general feel serves their states’ residents has been challenging at best.

However, with a settlement once again reportedly “weeks away,” it appears the proposal on the table is agreeable to more than just the five banks involved from day one: Bank of America, Wells Fargo, JPMorgan Chase, Citi, and GMAC.
US Bancorp and PNC may be interested in signing onto the proposed settlement, according to a recent Reuters article.
Both banks have designated sums of money to mortgage servicing matters, according to Reuters.
In PNC’s latest earnings report, the bank reported $240 million noninterest expense for “residential foreclosure-related expenses primarily as a result of ongoing governmental matters.”
Additionally, Reuters reports the Justice Department is reaching out to other banks about the possibility of joining a settlement with the attorneys general.
Regardless, Capital Economics commented Tuesday that “the likely size of the settlement won’t force banks to reign in lending this year,” but “nor will principal reductions, which are likely to be required as part of the settlement, significantly reduce the overall amount of negative equity in the housing market.”

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