Powered by Blogger.

Bank of America, Wells Fargo May Face Fines on Foreclosures

    Feb. 26 (Bloomberg) -- Bank of America Corp. and Wells Fargo & Co., the largest U.S. mortgage firms, said they may face fines or enforcement actions from regulators amid investigations into foreclosure procedures.
    The probes may also lead to “significant legal costs,” Charlotte, North Carolina-based Bank of America said yesterday in its annual report to the Securities and Exchange Commission. Wells Fargo, based in San Francisco, said in its filing that penalties are likely.
    “I’m sure the banks are ready to put this past them and investors would certainly like to but this is not an issue that is going to go away,” Blake Howells, an analyst at Becker Capital Management Inc. in Portland, Oregon, said in an interview. “There will be more lawsuits that come down the road.” Becker Capital oversees $2.4 billion.
    The largest U.S. banks have been trying to reassure investors that costs from faulty foreclosure documents are manageable. Wells Fargo said yesterday it didn’t expect litigation costs to have a “material adverse” impact on its financial position. Bank of America said it faced $230 million in fees from slowed foreclosures.
    Bank of America halted foreclosures in all 50 states in October and announced in a Nov. 5 filing that it was reviewing as many as 102,000 cases to screen for faulty practices. Attorneys general in all 50 states are investigating foreclosure practices amid revelations that lenders were seizing homes without proper documents to prove they had the right to do so.
    $20 Billion Deal
    U.S. regulators may try to extract $20 billion of penalties in a settlement with banks that serviced flawed loans, two people briefed on the talks said this week. Terms of an accord, from regulators led by the Treasury Department and Department of Housing and Urban Development, haven’t been formally presented to banks, according to the people, who spoke on condition of anonymity because the discussions aren’t public.
    Bank of America also said a bondholder group pressuring the lender to repurchase soured mortgages has almost doubled the number of securitizations it’s challenging.
    The group is disputing 225 securitizations, up from 115 as of Oct. 18, according to Bank of America’s filing. Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are among the investors, people familiar with the matter said in October.
    “On the putbacks, investors have braced themselves for a multiyear workout,” Howells said. “This might, on the margin, make people rethink the potential size of the liability.”
    Costs of Litigation
    Wells Fargo said the high end of estimated litigation losses could be $1.2 billion beyond the reserve already set aside. Bank of America’s losses may be as much as $1.5 billion. Citigroup Inc. said yesterday that as much as $4 billion in additional costs from pending legal matters are “possible, but not probable.”
    Banks are releasing estimates after the SEC, in an October letter to corporate finance chiefs, said companies should disclose potential losses “when there is at least a reasonable possibility” that they may be incurred, even if the risk is too low to require reserves.
    Citigroup, the third-largest U.S. bank by assets, also said U.S. regulators are examining how it structured and sold collateralized debt obligations as part of an investigation into mortgage-related businesses.
    The bank is cooperating with the SEC and other watchdogs, the New York-based company said in a filing. The probe is part of inquiries involving Citigroup’s “subprime and other mortgage-related conduct,” and other businesses affected by the credit crisis, it said.
    --With assistance from Hugh Son, Donal Griffin and Jody Shenn in New York. Editors: Dan Reichl, Jim McDonald.
    To contact the reporter on this story: Dakin Campbell in San Francisco at

Post Title

Bank of America, Wells Fargo May Face Fines on Foreclosures


Post URL

http://viewbestworld.blogspot.com/2011/02/bank-of-america-wells-fargo-may-face.html


Visit View Best in The word for Daily Updated Animal Funny Pictures Collection

No comments:

Post a Comment

My Blog List

Blog Archive