Banks Preparing $10 Billion Settlement Over Bad Mortgages

The Wall Street Journal is reporting that several banks are negotiating a $10 billion settlement with federal regulators to stop the review foreclosure cases for errors.

The WSJ reports that the potential agreement comes after the “large banks voiced concerns with a process set up by the Office of the Comptroller of the Currency and the Federal Reserve over foreclosure-related abuses that surfaced more than two years ago.”

The banks were required by regulators in April 2011 to conduct an exhaustive review of foreclosures and to compensate consumers in cases where consumers could demonstrate an error, according to the WSJ. Reviews of some individual borrower files were taking as long as 25 to 30 hours rather than the eight to 10 hours initially expected, people familiar with the process told the paper.

The paper did not report the names of the banks involved in the potential settlement, but said that “Wells Fargo & Co.’s top mortgage executive, Mike Heid, led the push, and other big banks have since pressed for an agreement.”

The potential settlement comes on the heels of a $1 billion United States Department of Justice (DOJ) lawsuit against Bank of America over allegations of mortgage fraud.

People with bad mortgages should be aware that Chapter 13 or Chapter 7 bankruptcies stop the foreclosure process. A bankruptcy filing generates an automatic stay that prevents creditors from taking action against you to collect debts.

If a foreclosure is imminent, an attorney can provide you with the best advice about when to file for bankruptcy based on your current income and the urgency of your situation.

Post bankruptcy life can be less stressful for those who are facing foreclosure. If your financial situation is a problem, contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.

Law Firm of Kevin D. Judd– Maryland and Washington DC bankruptcy attorney

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