Coordinated Foreclosure Settlement May Derail Due to Regulator Divisions

By Kyle Chezum Updated on 3/25/2011

The Office of the Comptroller of the Currency, the primary regulator for this nation's largest banks, has announced that it intends to seek its own settlement from the banks at fault for mishandling foreclosure documents.  Multiple federal authorities and all the representative state attorneys general have, up until now, worked together to investigate and lay out plans for a broad, market-wide settlement with all banks involved in the allegations.  With the OCC's split, this coordinated settlement may not become a reality.

Sources say the OCC had grown impatient with the coordinated settlement arrangements due to disagreements as to the structure of the settlement itself.  The office plans to develop a document that would outline policy changes and fines to be levied on banks.

Iowa Attorney General Tom Miller, the leader of the investigative team of attorneys general, expressed disappointment with the OCC's decision but was optimistic.  "While it is unfortunate that the OCC may be heading toward a path of working outside and independently of other federal agencies, state attorneys general, we will continue our efforts to the fullest extent possible," he said.

He is adamant that the coordinated settlement won't be held up by this turn of events.  Unfortunately, the opposite will likely be true.  This derailment may add months to the timeline of negotiations.