Ten separate banks will pay up to a total of $8.5 billion between them to settle a case over improper foreclosure practices, but some are arguing that these banks aren’t paying nearly enough.
Which banks are paying?
JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), MetLife Bank (NYSE:MET), PNC Financial Services (NYSE:PNC), Sovereign, SunTrust (NYSE:STI), U.S. Bancorp (NYSE:USB) and Aurora will together pay $8.5 billion.
What are the banks paying for?
The ten banks and mortgage companies listed above were involved in a massive settlement over improper foreclosure practices that hurt a large number of consumers in recent years. In 2008 and 2009, 3.8 million Americans were in the process of being foreclosed upon, and some 400,000 of those people may be entitled to money from the settlement. Some were not offered loan modifications they were entitled to, and the banks will face a lighter charge in those instances, while others had their homes unfairly seized and sold, which could see the banks charged as much as $125,000 in each case.
Under an agreement with the Comptroller of the Currency in 2011, consultants were required to conduct loan-by-loan reviews , but they were time-consuming and costly, and oftentimes they did not benefit consumers as they were intended to. The previous agreement seemed as though it would take too long to compensate consumers and would waste too much money in the process. The new agreement was meant to save time and money.
What does this mean for the banks and consumers?
The new agreement was meant to save time and money. For the and consumers, it will save a lot of time. Whether it will save the banks money is debatable. While $8.5 billion may seem a hefty price-tag, consumer advocates are saying that the banks are getting off easy with payments far less than originally expected. As the settlement has set a cap for what the banks pay, advocates believe consumers could end up shorted yet again.
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