Settlement announcement said to be imminent


UPDATE: A settlement was announced. I noted a few weeks ago that a previously secret settlement over mortgage abuses was in the works.

A deal was said to be imminent at the time, but a few last-second snags emerged. Those snags have now been resolved, and the media is reporting that that the new deal is all but final. The new settlement announcement is expected soon.

This deal, which is primarily between the OCC and 10 banks, seems even farther reaching than the February 2012 settlement, which was signed by only five banks and was hailed as a milestone in the post-collapse investigations. About $3.75 billion will likely go to people who have already lost their homes, making it potentially more generous to former homeowners.

More specifically, the deal calls for about 4.4 million homeowners who were in foreclosure processes in 2009 and 2010 to receive $250. Large checks will be sent to about $450,000. A large goal of the new settlement essentially is to correct the longer-than-expected mortgage review processes set forth by a previous settlement with the Fed, announced in April.

As it turns out, the mandated reviews were much more expensive than predicted, and much more time consuming. Recall that banks were forced to hire consultants to review the mortgages. So far, that has cost the industry $1.3 billion. The new settlement will essentially wipe out the previous review requirement. -Jim