Lawmakers Ask Fed to Delay Foreclosure Deal for Review

A U.S. congressional oversight panel asked regulators to delay a multibillion dollar mortgage settlement with 14 large banks so that the lawmakers could review the deal, according to a letter made available on Saturday.

"We would like more information about how the potential settlement amount is to be determined in light of the potential wrongdoing identified to date," said the January 4 letter to Federal Reserve Chairman Ben Bernanke and the Comptroller of the Currency Thomas Curry.

The top Republican and Democratic lawmakers on the House of Representatives Oversight Committee asked regulators how aid may be distributed and in what form, and what may happen to homeowner files that are still awaiting review.

The Wall Street Journal reported that the Federal Reserve was holding up the settlement with banks to resolve allegations that they unlawfully cut corners when foreclosing on delinquent borrowers.

The settlement with five big banks - Bank of America, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial - would be part of a larger deal that the Office of the Comptroller of the Currency hopes will include 14 banks and total about $10 billion, a source told Reuters last week.

The deal would potentially compensate borrowers who went through foreclosures in 2009 and 2010, and it was unclear why the Fed had not signed off on it, the Journal said.

The terms under discussion would have 14 large banks pay a total of $3.75 billion in cash and the balance in other forms of borrower relief, the newspaper reported, citing people familiar with the matter.

Spokesmen for the Fed and the OCC were not immediately available for comment.

The Fed and the OCC have disagreed about exactly how payments to consumers under the settlement would be determined, the Journal said. Smaller banks that were concerned that the settlement terms favor larger lenders also opposed the deal, the Journal added.

A majority of the 14 servicers have already agreed to the terms of the deal, which would be in jeopardy if it is not completed this weekend, the Journal said.