Most of the 14 lenders involved in a probe over mortgage servicing abuses have signed agreements with US bank regulators to clean up how they deal with troubled borrowers, according to a source with knowledge of the agreements. Banking regulators still have to sign the agreements and an announcement that a final deal has been reached could be made in the next few days.
The regulators involved in the agreements with lenders, which include some of the largest US banks, are the Office of the Comptroller of the Currency, the Federal Reserve and the Office of Thrift Supervision.
A group of 50 state attorneys general and about a dozen federal agencies are probing bank mortgage practices that came to light last year, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day. On February 17 John Walsh, acting head of the Office of the Comptroller of the Currency, told the Senate Banking Committee that banking regulators were investigating the servicing practices at 14 lenders including Bank of America, Wells Fargo and J.P. Morgan Chase.
The agreement includes offering restitution to borrowers who were wrongly foreclosed upon and this process would be reviewed by an outside auditor, according to the source who asked not to be named because the negotiations are ongoing. Banking regulators have not reached a decision on financial penalties the lenders may have to pay.
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