AG foreclosure settlement may widen to smaller servicers
The settlement between the five largest mortgage servicers and a multistate coalition of attorneys general could expand to include smaller firms, but it's unlikely to happen before a deal is announced in the coming weeks, a source familiar with the matter told HousingWire Wednesday.
All 50 state AGs opened a joint investigation into industry-wide foreclosure practices in October 2010. Evidence surfaced that year of mishandled documentation and robo-signing of foreclosure affidavits without a proper review of the loan files.
Their focus centered on the big five mortgage lenders: Bank of America ($13.46 -0.05%), Wells Fargo ($40.65 0.45%), JPMorgan Chase ($52.89 0.6%), Citigroup ($51.79 0.19%) and Ally Financial ($25.66 0.04%). These firms currently service more than $6 trillion in mortgages for a combined market share near 58%.
The Department of Justice recently reached out to nationally chartered banks as part of an effort to bring in nine more servicers to the settlement, according to a Reuters report.
These reported firms along with the big five also signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve in April. The orders were an agreement to correct the missteps and change processes such as installing a single point of contact for troubled borrowers and stopping foreclosures on those being considered for a modification.
These other nine firms include HSBC ($58.12 -0.49%), PNC Financial Services ($72.17 0.885%), U.S. Bancorp ($35.26 0.125%), SunTrust Banks ($32.06 -0.245%) and MetLife ($43.12 -0.18%), which closed its forward mortgage business Tuesday but will continue servicing existing loans.
Neither bank could immediately confirm whether it was contacted. But in its third-quarter financial filing, HSBC disclosed the expectation of being approached. However, the bank said joining any settlement would occur after an announcement.
"Following the conclusion of these discussions and the announcement of any such settlement with the five largest servicers, we expect that the next nine largest mortgage servicers, including HSBC Bank USA and HSBC Finance, will be approached regarding a settlement although the timing and proposed terms of such settlement discussions are not presently known," according to the filing.
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