Feds investigating banks over foreclosure expenses

by Ryan Smith30 May 2014
At least five banks are being investigated by the U.S. Attorney’s Office over whether they overcharged the government for foreclosure expenses on federally backed mortgages.

PNC Financial Services Group, MetLife Inc., Royal Bank of Scotland, PHH Corp., Santander Holdings USA and Citizens Financial Group have all received subpoenas in the case, according to a Reuters report. U.S. Attorney Preet Bharara is looking for information about forecloser-related expenses on loans guaranteed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration.

Foreclosures typically cost between $1,000 and $3,000. The bulk of those costs are eaten up by legal fees. Two of the banks under investigation, MetLife and PNC, said in regulatory filings that the subpoenas requested information on foreclosure costs incurred by law firms, according to Reuters.

Bharara’s probe is being conducted under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). An earlier FIRREA investigation by Bharara resulted in $1.1 billion in settlements from Deutsche Bank, Flagstar, Citigroup and JPMorgan Chase, Reuters reported. A current case is seeking $2.1 billion from Bank of America.


Should CFPB have more supervision over credit agencies?