The total cost to the five largest US banks of faulty mortgages and foreclosures now totals some $72 billion according to Bloomberg News. Bank of America Corp. (NYSE: BAC) gets over half the bad news with $41.8 billion of the total. Wells Fargo & Co. (NYSE: WFC) is on the hook for about $6 billion, Citigroup Inc. (NYSE: C) totals $3.61 billion, and JPMorgan Chase & Co. (NYSE: JPM) toted up $18.5 billion in expenses. Ally Financial accounts for the rest.
Most of the expenses are related to real-estate investors who found flaws in underwriting and false information about home values and borrower incomes in the mortgage-backed securities they bought. The banks are nearing a settlement rumored to be in the range of $25 billion with 40 states in the “robo-signing” of foreclosure documents.
Several large states, including California, Nevada, and New York, have yet to agree to be part of the proposed settlement.