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JPMorgan Chase (JPM) will pay nearly one-fifth of the total cost of the settlement reached this week between regulators and 10 of the nation's biggest lenders.
January 9 -
Fourteen of the nation's biggest banks are expected to pay a combined $10 billion to settle allegations they mishandled foreclosures that followed the housing crisis.
January 7
Goldman Sachs (GS) and Morgan Stanley (MS) will pay a combined $557 million to settle allegations they mishandled foreclosures that followed the housing crisis.
The settlement includes $232 million in payments to eligible borrowers and $325 million in loan modifications, forgiveness of judgments and other assistance, the Federal Reserve announced on Wednesday.
Roughly 220,000 borrowers whose homes were foreclosed on in 2009 and 2010 by Litton Loan Servicing, a former unit of Goldman, and Saxon Mortgage Services, an ex-subsidiary of Morgan Stanley, are expected to receive cash payouts that range from hundreds of dollars to as much as $125,000 as part of the settlement.
Morgan Stanley is expected to pay $227 million, including $97 million in cash and $130 million in other assistance, while Goldman is expected to $330 million, according to a person familiar with the agreement. A Fed spokeswoman declined to detail the payouts for each company, citing a need to finalize details of the settlement.
"We're pleased to have resolved this matter," Morgan Stanley spokesman Mark Lake said. A Goldman Sachs spokeswoman did not respond immediately to a request for comment.
The pact mirrors a settlement announced on Jan. 7 among 10 of the nation's biggest mortgage servicers, the Fed and the Office of the Comptroller of the Currency. The agreement, which includes JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (NYSE: C), Wells Fargo (WFC), MetLife Bank (MET), U.S. Bancorp (USB), PNC Financial (PNC), SunTrust Banks (STI), Sovereign Bank and Aurora Loan Services, ends reviews of foreclosures that involved verifying claims by borrowers and checking their files for errors and evidence of botched paperwork and other abuses by lenders.
The reviews themselves proved to be a boon to consultants the banks hired to perform them, while the cost of the reviews increased to several times the amount that borrowers were expected to receive in benefits, American Banker
The Fed said it expects to reach agreements with other banks that have been asked by regulators to review their foreclosure activities.
