Latest Bank Mortgage Settlements Aim to Get More Relief to Consumers
By ANNAMARIA ANDRIOTIS, ARUNA VISWANATHA and GABRIEL T. RUBIN
Billions of dollars of relief may be on the way for borrowers who got mortgages before the housing bust. Deutsche Bank and Credit Suisse agreed to pay consumers $4.1 billion and about $2.8 billion, respectively, as part of settlements they struck with the federal government this week over their handling of mortgage-backed securities before the housing meltdown. The two settlements, totaling $12.5 billion, are the latest penalties in a long-running series between the Justice Department and large banks over their role in deceptively selling billions of dollars of subprime mortgages as safe securities, exacerbating losses for investors nearly a decade ago. The settlements are notable in part because consumer relief accounts for a greater share of the total fines compared with many previous agreements and consumer advocacy and other nonprofit groups aren’t expected to get a piece of the funds….“Everybody is focused on the big number but where the money actually lands and how it lands and if it is really hard money or not is something very different,” said Basil Petrou, managing partner at Federal Financial Analytics. Both Deutsche Bank and Credit Suisse are still ironing out the details of their settlements with the U.S. government.