Fourteen large banks appear ready to pony up another $10 billion to end allegations of foreclosure abuse.  According to the New York Times, the settlement would end federal investigations into the bank's purported faulty paperwork and excessive fees.

Unlike the $25 billion settlement between all but one of the states' attorneys general and some federal agencies completed earlier this year, the lion's share of the new settlement would go to homeowners.  An estimated $3.75 billion would be used to compensate those already foreclosed and evicted from their homes and $2.25 billion would be used to assist other distressed borrowers to stay in their homes through principal reduction or other loan modifications or by helping those borrowers to refinance.    Under the earlier settlement $1.5 billion was to be used for cash relief to borrowers and some states have made attempts to divert their share of that amount into state treasuries.

The Times suggests that one impetus behind the agreement has been the cost to banks of conducting an independent review of some four million loan files.  The review was mandated by the Office of Comptroller of the Current and the Federal Reserve in 2011 and required 14 banks to engage consultants to go through files looking for illegally charged fees, improper use of forced placed insurance rights, and miscalculated loan payment amounts.  The cost of these reviews has skyrocketed above original estimates with some taking as much as 20 hours of consultant time per file at $250 per hour.  There were also hints that the reviews were not yielding the kind of information the government agencies had sought.  The settlement would end these reviews.

Negotiations have proceeded quietly and, according to the Times, housing advocates were largely unaware of the discussions.  A deal could possibly be by the end of the week but it is unclear how many current and former homeowners would receive money or when they would receive it.

The newspaper did not name all of the banks involved in the negotiations but did say the five who were party to the $25 billion deal  - Wells Fargo, JPMorgan Chase, Citi, Bank of America, and Ally Bank - are also party to these talks.