Thursday, September 1, 2011
Bank of America; Wells Fargo; Chase; Citi: A Potential Legal Settlement To Watch
For some time now, the largest lenders have been in negotiations with the Attorneys General of all 50 states to reach a settlement regarding the banks' handling of foreclosures, including robo-signing and other practices. According to press reports, there are only a few holdouts among the AG's and the federal government and the banks are pushing hard to finalize the agreement. The banks want the settlement because it will insulate them from further liability (or at least so they think) for frankly turning the servicing of mortgages into complete chaos. The banks' liability to borrowers for their practices is significant. This is evident from the banks' eagerness to enter into what's been reported as a $20 billion settlement. If this settlement happens, the market may react by boosting bank stocks. Keep a lookout for this -- I will.