Legal action concerning the foreclosure procedures by two of the largest US mortgage lenders is due to send shock waves thru the banking sector. The actions could result in Billion Dollar fines and may be just the tip of the ice berg as regulators get to grips with other banks. It could mean that some American homes were seized incorrectly.
Bank of America and Wells Fargo & Co may face fines or enforcement actions from regulators. The huge mortgage lender has stopped foreclosures all over the US and is currently looking at 102,000 to identify if any of these cases have used faulty procedures.
Attorneys general in all 50 states are investigating foreclosure practices amid revelations that lenders were seizing homes without proper documents to prove they had the right to do so.
Wells Fargo reports that legal action costs could amount to $1.2 billion beyond the reserve already set aside. Bank of Americaââ¬â¢s losses may be as much as $1.5 billion.
The situation is not 100% clear as Citigroup Inc. said yesterday that as much as $4 billion in additional costs from pending legal matters are ââ¬Åpossible, but not probable.ââ¬Â
“small number” of foreclosures should not have occurred, a top bank regulator told a Senate committee last week after his agency surveyed less than 3,000 loan files
The US has become a very difficult place to obtain a mortgage with banks tightening up procedures esentially only allowing individuals with super clean credit to obtain mortgage finance.
Author Nicholas Marr
