Three of the nation’s largest banks, Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) said they could face billions in potential fines from 50 state attorneys general and U.S. regulators over allegations of improper foreclosure paperwork.
According to Reuters, the biggest U.S. mortgage firms are being investigated for foreclosing on homes without having properly reviewed paperwork before signing it.
Bank of America, the largest U.S. bank by assets, said in its annual report to the Securities and Exchange Commission [SEC] that the wide-ranging probe into the industry’s foreclosure practices could lead to “significant” legal costs in FY2011.
BofA’s losses may be as much as $1.5 billion.
Wells Fargo & Co, the largest U.S. mortgage lender, also in a filing with the SEC said that it is likely to face fines or sanctions, such as a foreclosure moratorium or suspension, imposed by federal or state regulators.
“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 San Francisco based bank said in its filing. ” Wells Fargo continues to provide information requested by the various agencies. ”
Wells also said there are seven class-action and several individual-borrower actions against it, which could lead to losses as high as $1.2 billion.
Citigroup Inc said that as much as $4 billion in additional costs from pending legal matters are “possible, but not probable.” BofA, Wells and Citi have been trying hard to reassure investors that costs from faulty foreclosure documents are manageable.
Sources familiar with discussions among federal authorities have said U.S. regulators could seek upward of $20 billion in penalties from lenders to settle the foreclosure probe.