$10 Billion Deal Follows February's $25 Billion Settlement.

[ by Melanie Gretchen ]

Five large banks are near agreement on another multibillion-dollar settlement with U.S. regulators to resolve charges they unlawfully cut corners when foreclosing on delinquent home loan borrowers.  The OCC hopes a deal with the top 5 banks - Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, and Ally Financial - will lead to a larger deal involving, all told, 14 banks owing about $10 billion. 

This deal would address an outstanding issue that was left unsettled after the $25bn deal that the banks reached with the Justice Department in February 2012.  In 2011, the OCC had separately required the big banks to "look back" and compensate borrowers wrongfully foreclosed upon in 2009 and 2010.  Yet, rather than enter into a deal requiring case-by-case analysis, the banks are opting for a lump-sum settlement.

Terms & Conditions of the Deal.  The 5 largest banks would be responsible for most of the targeted $10 billion that would be paid back to borrowers foreclosed upon in 2009 and 2010.  One final issue that needs to be negotiated is how the banks will calculate individual payouts.  The banks will get credit for compensation they've already given to wrongfully foreclosed borrowers.

For further details, go to [Reuters, 12/31/12].