The nation’s largest banks expect to pay billions of dollars in fines and legal bills as a result of a 50-state investigation into foreclosure paperwork problems arising from the “robo-signer” scandal. Annual reports filed with the Securities and Exchange Commission, Wells Fargo, Citigroup and Bank of America stated that the investigation could cost each company well over $1 billion.
The probe comes after widespread allegations that the banks and their loan servicing subsidiaries foreclosed on homeowners without having the documents necessary to make the foreclosures legal. Attorneys general and bank regulators in all 50 states are pursuing a joint investigation into possible wrongdoing.
[Related article: Robo-Signers and the Business of Foreclosures]
The investigation may result in as much as $20 billion in fines, according to anonymous sources quoted by Bloomberg News.
“With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action against Wells Fargo, which may include civil money penalties,” the bank said in its 2010 annual report to the SEC.
That could cost Wells Fargo $1.2 billion, according to the bank’s filing. In addition, the bank said it is facing seven class-action lawsuits, plus numerous suits from individual borrowers, which could cost the bank as much as $1.2 billion.
At Citigroup, fines and legal bills of $4 billion are “possible,” the company said. The investigation could cost Bank of America $1.5 billion, including “significant legal costs,” the company said in its report.
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