U.S. regulators postpone deadline for banks to fix home foreclosure malpractices

June 13, 2011 02:11PM

U.S. bank regulators have extended the deadline for 14 financial institutions to submit plans to rectify problems with home-foreclosure practices by 30 days, according to the Wall Street Journal. Instructions issued in April gave the institutions, including Bank of America, Wells Fargo and Citigroup, until mid-June to instigate plans after widespread problems with bank foreclosure processing operations became public last fall.

As per the instructions, the banks were required to hire independent consultants to evaluate all foreclosure proceedings from 2009 and 2010 to establish whether they improperly foreclosed on any homeowners.

The regulators have delayed at the request of the Justice Department, which is coordinating state and federal investigations into the problem. The extension is designed to avoid two sets of overlapping standards.

Banks and federal officials have made halting progress over several months to settle accusations of abuse related to mortgage servicing. As previously reported, the banks are proposing a $5 billion settlement to compensate wronged borrowers while some federal officials are pushing for more than $20 billion. [WSJ]