WSJ: Banks Face $17 Billion in Suits Over Foreclosures

The nation's major banks could be facing at least $17 billion in lawsuits because of improper foreclosure practices, a group of states' attorneys general said Tuesday

May 25, 2011

Foreclosure sign

State attorneys general from across the country have told five major banks that they are facing at least $17 billion in lawsuits if they don't settle claims of improper foreclosure practices, the Wall Street Journal reported today. ( Attorney general from all 50 states and Washington, D.C., are conducting investigations of the foreclosure practices of the banks amidst allegations of fraud and other misconduct.

The figure doesn't cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven't proposed a specific comprehensive settlement figure, but Tuesday's discussions represented the first effort to formally quantify potential liability. ...

Banks have argued that their problems are largely technical and that few if any borrowers have faced wrongful foreclosures. State and federal officials have faulted mortgage companies for not hiring enough staff to provide assistance to millions of borrowers that have fallen behind on their mortgages.

The banks have proposed a $5 billion settlement of the cases, which both state and federal officials have said isn't large enough.

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