U.S. regulators are pursuing sanctions against banks that foreclosed upon homeowners using faulty paperwork. Last week, the regulators and the 14 largest servicers of mortages in the U.S. reached a settlement that says the banks will compensate people whose foreclosures or loans were botched, according to Bloomberg.
The U.S. Justice Department, the Department of Housing and Urban Development and 10 state attorneys general negotiated the settlement with banks last week. They are still working on what kinds of fines they will charge the banks. The regulators were trying to reach a consensus for addressing the problems, which they believed would be best for consumers.
According to Bloomberg, the regulators and attorneys general are deciding whether they will require banks to lower principals on some mortgages. They are also trying to work with banks to change and improve certain practices related to foreclosures, loan modifications, and refinancing. The banks will review the foreclosures they processed between 2009 and 2010.
In the settlement, the banks agreed to hire outside consultants who will work to identify any instances where a homeowner was improperly foreclosed upon because of mistakes by the banks.
Some have questioned whether the settlement goes far enough. The regulators say they are seeking to overhaul the system and make sure it is working for consumers as much as for banks and investors. The regulators want to make sure that the system is fair. It is certain that the mortgage lenders will be fined, but the amount and timing is not yet known.
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