Another housing abuse settlement to be revealed soon

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Back in February 2012, the big five mortgage originators and servicers agreed to a $26 billion mortgage and foreclosure abuse settlement with state attorneys general, the Justice Department and the Department of Housing and Urban Development.

That deal was hailed a definitive settlement that would allow big banks to finally put the sins of the past behind it, and stocks rallied on the news.  But as it turns out, there were secret negotiations underway on yet another settlement, this one with the Office of the Comptroller of the Currency. Those negotiations were kept under wraps until just recently, when they were leaked to the media.

As it turns out, a new settlement is expected soon between the OCC and 14 banks. This one seems even farther reaching than the last one, as $3.75 billion will likely go to people "who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans," notes the New York Times.

The $10 billion pact may be announced within a week or so. Of significant benefit to banks, the new settlement will effectively halt a mandate to review past foreclosures for possible wrong-doing. That effort, which was mandated by the Fed via another deal in April, has proven costly and time-consuming. Perhaps now we can declare that the major investigations into mortgage and foreclosure abuse at the retail level--though not the securitization level--are in the past.

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