Foreclosure Fraud Price Tag: $20 Billion

Shahien Nasiripour
HuffPost
First Posted: 06/ 6/11

WASHINGTON -- The nation's largest mortgage companies are operating on the assumption that they will have to pay as much as $20 billion to resolve claims of widespread foreclosure abuse, an amount four times what they had originally proposed, the top federal official overseeing the discussions told state officials Monday, according to people who participated in the conversation.

Associate U.S. Attorney General Tom Perrelli told a bipartisan group of state attorneys general during a conference call that he believes the banks have accepted the realization that a wide-ranging settlement to the months-long probes will cost them much more than the $5 billion offer they floated last month, according to officials with direct knowledge of the call. Perrelli said he's basing his belief on his recent conversations with representatives of the five targeted firms: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.

Three unresolved issues remain, these people said. State and federal officials have not agreed on the scope of banks' release from liability that would accompany such a deal; negotiators continue to hammer out how much of the money pot will be split between restructuring borrowers' mortgages and bank fines, and officials are not yet near an agreement on how the coalition of state and federal government agencies will monitor and enforce bank behavior in the wake of a settlement agreement.

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