A group of 10 mortgage servicers on Monday agreed to pay a total of US$8.5 billion to end a US government-mandated case-by-case review of housing crisis foreclosures, in an acknowledgment that the program had proven too cumbersome and expensive.
About 3.8 million borrowers whose homes were in foreclosure within the time frame of the review will receive cash compensation ranging from hundreds of US dollars to US$125,000, depending on the type of errors they experienced, the US Office of the Comptroller of the Currency (OCC) said.
The reviews followed the “robo-signing” scandal that emerged in 2010 involving allegations banks pursued faulty foreclosures by using defective or fraudulent documents.
Bank of America Corp, Citigroup Inc, JPMorgan Case & Co, Wells Fargo & Co, MetLife Bank and five others will pay US$3.3 billion directly to eligible borrowers, and US$5.2 billion in loan modifications and forgiveness, regulators said.
The OCC and the US Federal Reserve Board said they accepted the agreement to get relief to consumers quicker.
In April 2011, the government required the servicers to review foreclosure actions between 2009 and 2010 to determine whether borrowers had been unlawfully foreclosed on or suffered some other financial harm due to errors in the foreclosure process.
“It has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers,” US Comptroller of the Currency Thomas Curry said in a statement.
The agreement announced on Monday resolves matters left unsettled by a US$25 billion deal that the top five servicers reached in February last year with the US Department of Justice, housing authorities and state attorneys general to end an investigation into foreclosure practices, including robo-signing.
Those authorities had taken a broad approach to dealing with allegations of robo-signed documents and faulty foreclosures, while the bank regulators had initially opted for the more targeted, individual reviews.
Bank of America said it supports the new approach “because it expands the number of borrowers who will receive payment, speeds the delivery of those payments and will provide support for homeowners still struggling to make payments.”
MetLife said it was fully cooperating with the OCC review process and said its portion of the settlement was US$37 million.
The other servicers said they were pleased to reach the settlement.
Regulators said the agreement replaces the case-by-case reviews with a broader framework, which allows borrowers to receive compensation regardless of whether they suffered harm.
Instead, the payouts will be based on whether a borrower falls into one of 11 categories, ranging from whether the person was eligible for protections under the US’ Servicemembers Civil Relief Act, whether the borrower was not in default, or whether they were denied a loan modification.
The other banks involved in the settlement are: Aurora Bank FSB, PNC Bank NA, Sovereign Bank, SunTrust Banks Inc and US Bank.
US regulators are continuing negotiations with four other servicers and are expected to enter into similar settlements with them.
At least one US lawmaker was disappointed with the settlement.
Representative Elijah Cummings, the top Democrat in the US House of Representatives’ Committee on Oversight, said he had serious concerns that the deal “may allow banks to skirt what they owe and sweep past abuses under the rug without determining the full harm borrowers have suffered.”
On Friday, Cummings and Oversight Committee Chairman Darrell Issa sent a letter to the agencies requesting a briefing on the settlement.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by