The Zacks Analyst Blog Highlights: Citigroup, Bank of America, JPMorgan Chase, Wells Fargo and U.S. Bancorp

The Zacks Analyst Blog Highlights: Citigroup, Bank of America, JPMorgan Chase,
                         Wells Fargo and U.S. Bancorp

PR Newswire

CHICAGO, Jan. 9, 2013

CHICAGO, Jan. 9, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog includeCitigroup, Inc. (NYSE:C), Bank of
America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo &
Company (NYSE:WFC), U.S. Bancorp (NYSE:USB).

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Here are highlights from Tuesday's Analyst Blog:

Foreclosure Mess Finally Resolved

Homeowners whose properties were wrongly foreclosed as well as the entire
housing sector can now breathe a sigh of relief. The Office of the Comptroller
of the Currency (OCC) and other banking regulators have announced a
foreclosure settlement deal with 10 banks.

The banks –

Citigroup, Inc.

(NYSE:

C

),

Bank of America Corporation

(NYSE:

BAC

),

JPMorgan Chase & Co.

(NYSE:

JPM

),

Wells Fargo & Company

(NYSE:

WFC

),

U.S. Bancorp

(NYSE:

USB

), among others, have agreed to pay in aggregate $8.5 billion in settlement.
Four banks are still in discussions with the regulators.

Out of the total, $3.3 billion will be utilized for direct payments to
eligible borrowers, while $5.2 billion will be used for providing relief to
troubled homeowners through principal reductions and loan modifications. The
deal will enable more than 3.8 billion homeowners, whose property was wrongly
foreclosed in 2009–2010 by the abovementioned mortgage servicers to get cash
compensation, ranging from a few hundred dollars to maximum of $125,000.

As a part of the deal, borrowers are expected to be contacted by the end of
March with details related to their payments. Further, the regulators will
form 11 categories of aggrieved borrowers and the banks will categorize
borrowers for payments.

Additionally, under the terms of the deal, the process initiated by the OCC in
2011 – to review all the borrowers' files that were wrongly foreclosed in
2009-2010 – would end. Under that proposal, the banks were required to hire
independent consultants to go through the loan files and look for any faulty
foreclosure practice.

However, this was turning out to be costly and time-consuming affair for the
banks – having already spent nearly $1.5 billion on the consultants hired.
Therefore, they opted for a one-time settlement deal.

Yet, banks would have to take one-time charges related to the settlement.
Wells Fargo anticipates a pre-tax charge of about $644 million in the fourth
quarter of 2012 related to the deal, whereas Citigroup expects to record a
pre-tax charge of $305 million.

Further, BofA anticipates its fourth-quarter results to be adversely impacted
by about $2.5 billion of pre-tax charge for the settlement deal, litigation
(primarily mortgage-related) and other mortgage-related matters. For USB, the
deal is anticipated to lower its fourth-quarter earnings per share by 3 cents
for the cash part of the deal.

Though the settlement is expected to marginally dent the companies'
fourth-quarter results, in the long run it will be a relief for the banks.
Further, the distressed homeowners would also be benefited. We are hopeful
that like the earlier foreclosure settlement deal, this one would also be a
decisive step in restoring confidence in businesses and rejuvenating the
sagging housing market.

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