Banks signing foreclosure deals with US regulators

* Announcement of final deal could come in next few days

* State AGs still negotiating with banks

By Dave Clarke

WASHINGTON, April 7 (Reuters) – Most of the 14 lenders
involved in a probe over mortgage servicing abuses have signed
agreements with U.S. 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 U.S. 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 Feb. 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 (BAC.N: Quote, Profile, Research),
Wells Fargo (WFC.N: Quote, Profile, Research) and JP Morgan Chase (JPM.N: Quote, Profile, Research).

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.

The state attorneys general along with the Justice
Department, the Department of Housing and Urban Development,
the Federal Trade Commission, and Treasury officials are
separately negotiating with banks over mortgage servicing

Those negotiations have gone more slowly as the states and
some federal agencies pursue heftier fines, in the range of $20
billion, and a more dramatic overhaul of mortgage servicing
standards, including reducing the principal of some loans in an
effort to keep borrowers in their homes.

All the agencies involved had said earlier this year that
they wanted to announce a deal with the lenders at the same
time but the banking regulators are now moving ahead with their
piece while the other discussions continue.

On March 24 when Reuters reported a deal with banking
regulators was near Iowa Attorney General Tom Miller, who is
heading up the states’ probe, issued a statement saying it was
“unfortunate” that banking agencies were pursuing a settlement
on their own but that it would not derail the AG’s

The states are not united on what settlement they should
seek with banks. Some Republican AGs have complained a proposal
sent to banks last month goes too far while Democratic AGs like
New York’s Eric Schneiderman have warned a deal should not
preclude states from individually pursuing actions against
(Reporting by Dave Clarke in Washington and Joe Rauch in
Charlotte, editing by Matthew Lewis )

Banks signing foreclosure deals with US regulators