The Wall Street Journal reported on May 11 that mega banks, Bank of America, JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co. have agreed to pay as much as $5 billion to settle deficiences related to the foreclosure process.
The amount is a small cry from the $20 billion U.S. bank regulators wanted as punishment from the mega banks.
The U.S. bank regulators and a task force of Attorney Generals from all 50 states are trying to clear the foreclosure mess as quickly as possible. Bank regulators sent orders to 14 banking institutions in April to improve their foreclosure practices. Banks will get 60 days to outline a plan to rectify their mortgage-servicing flaws and hire third-party consultants to identify flaws related to foreclosures in the last two years.
The foreclosure mess began when many lenders used robo-signers – employees who signed hundreds of mortgage documents a day without verifying information like the outstanding amounts of previous borrowers. Additionally, signatures were not reviewed by notaries and when notarizations took place, it was unlikely that the officials executing the signings kept legal requirements in mind.