Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and five other mortgage servicers will have to meet a July 13 deadline to submit remedial plans for their foreclosure practices while federal and state officials continue working on broader settlement terms.
“That deadline is still on track, as broader negotiations continue,” said Jessica A. Smith, a spokeswoman for the Department of Justice, which is coordinating talks among lenders, U.S. housing officials and state attorneys general. “The banks’ action plans have been significantly shaped by the detailed negotiations that continue to take place with federal authorities and state attorneys general.”
The Office of the Comptroller of the Currency accused eight banks and two service providers of “unsafe and unsound” practices in their mortgage servicing and foreclosure practices. Remediation plans are due to the OCC next week. The companies include HSBC Holdings Plc., MetLife Inc., PNC Financial Services Group Inc., U.S. Bancorp and Wells Fargo & Co. (WFC)
The Department of Housing and Urban Development, the Justice Department and all 50 state attorneys general have been negotiating a separate settlement that may total more than $20 billion with the five largest U.S. mortgage servicers: Bank of America, JPMorgan, Wells Fargo, Citigroup and Ally Financial Inc. A final agreement, setting standards for servicing loans and processing foreclosures, may serve as a template for claims against the rest of the industry.
Changes Are Possible
Smith said regulators must review and approve the banks’ action plans and “may require changes as a result of developments and ongoing oversight.”
Citibank officials are “committed to working with our regulators to further strengthen our mortgage foreclosure practices and meeting the new requirements by the implementation deadlines,” said Sean Kevelighan, a spokesman for the New York-based bank. Rick Simon, a spokesman for Charlotte, North Carolina-based Bank of America, said “we expect to be fully prepared to provide our submissions next week.”
Gina Proia, a spokeswoman for Detroit-based Ally, said the bank intends to meet the regulators’ deadline.
Kristin Lemkau and Vickee Adams, spokeswomen for JPMorgan in New York and Wells Fargo in San Francisco, both declined to comment.
Media representatives for London-based HSBC, Pittsburgh-based PNC and Minneapolis-based U.S. Bancorp either had no immediate response or weren’t available.
The proposed accord would require banks to set up a fund for states to resolve civil mortgage complaints as well as a separate federal account that would require them to provide a specified amount of mortgage relief to borrowers, said two people close to the negotiations who asked to remain anonymous because the talks are private.
Banks could get credit toward their relief obligation if they reduce the amount owed by borrowers and modify loans in their portfolio, one of the people said. The exact mechanism to determine and award credits is still being discussed, the person said.
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