The revelation will likely add to large banks' woes, as the five biggest servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- currently face up to $30 billion in penalties from state attorneys general and federal agencies for wrongful foreclosures and other mortgage-related misdeeds.
Lenders and servicers, which collect borrowers' monthly payments and foreclose on them when they fall behind, face 67 pending class-action suits in more than 20 states that challenge foreclosures based on so-called "robo-signing" and other poor documentation practices, according to FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel.
The companies face 57 additional suits in 25 states over alleged improprieties resulting from loan modifications in the Obama administration's signature foreclosure-prevention initiative, known as HAMP, and 24 lawsuits over non-HAMP modifications, according to the remarks. Further, investors in mortgage securities have filed 21 suits that allege misconduct and seek to force banks to buy back the loans at face value, an outcome that could cost banks hundreds of billions of dollars.
Read the full story at the Huffington Post.
For more on mortgages and related topics see these AOL Real Estate guides:
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- How to Get a Low Mortgage Rate
- Mortgage Jargon in Simple Terms
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