NEW YORK - JPMorgan Chase & Co., Bank of America Corp., and three other US mortgage servicers are in advanced talks to resolve state and federal claims over faulty foreclosures, according to two people briefed on the matter.
Negotiators tentatively set a July 13 target for a settlement, which may exceed $20 billion, the people said, speaking on the condition of anonymity because the talks are private. Some banks are briefing their boards on deal terms, which would form state and federal funds to resolve claims and provide relief to borrowers, they said. The target date may be postponed as parties iron out details.
Attorneys general and federal officials are negotiating with the group of lenders - also including Citigroup Inc., Wells Fargo & Co., and Ally Financial Inc. - to resolve probes into how banks treated borrowers during a surge in mortgage defaults. A final pact, setting standards for servicing loans and processing foreclosures, may serve as a template for claims against the rest of the industry.
The July 13 target corresponds with a separate deadline the Office of the Comptroller of the Currency set for banks to submit an "action plan" for fixing deficiencies and compensating people whose homes were improperly seized.
"We are trying to integrate our settlement with the OCC action plan," said Geoff Greenwood, spokesman for Iowa Attorney General Tom Miller. "The action plan does not involve us, but we're trying to work together." Miller is leading the talks on the states' behalf.
The proposed accord would require banks to set up a fund for states to resolve civil mortgage complaints and a separate federal account that would require them to provide a specified amount of mortgage relief to borrowers, two people said.
The settlement's total value might reach $60 billion, the New York Post reported yesterday, citing unidentified people close to the discussions.