State attorneys general have warned the nation’s top banks that they may face as much as $17 billion in lawsuits over foreclosure practices if they don’t reach a settlement with the government. That number comes on top of billions more that the banks could owe to federal agencies including the Department of Justice.
According to The Wall Street Journal:
Representatives of the nation’s largest banks met in individual meetings on Tuesday with state and federal officials designed to highlight the potential costs they will face if a settlement isn’t reached….
Banks have proposed a $5 billion settlement that would be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes. Federal and state officials have dismissed that as insufficient. Some officials have pushed for a total price tag of more than $20 billion to resolve foreclosure-handling abuses that surfaced last fall.
State attorneys general from all 50 states and the District of Columbia announced investigations last fall. Tuesday’s discussions highlighted the potential for lawsuits alleging unfair and deceptive practices if a settlement isn’t reached.
Banks continue to insist that “their problems are largely technical and that few if any borrowers have faced wrongful foreclosures,” the Journal reports.