10. SunTrust Banks Inc.
> Loans in foreclosure: 6,001
> Avg. property value: $207,157
> Pct. seriously underwater: 64%
More than 6,000 loans serviced by SunTrust Banks Inc. (NYSE: STI) were in foreclosure as of February. Like most U.S. banks, SunTrust has been embroiled in controversy over its lending and foreclosure practices in recent years. SunTrust was one of five major lenders that in November agreed to pay a combined $162 million to settle complaints that it charged improper fees on home finance loans for veterans. Earlier in 2012, the bank agreed to pay $21 million to settle allegations that it overcharged more than 20,000 Hispanic and African American borrowers between 2005 and 2009.
9. PNC Financial Group
> Loans in foreclosure: 8,545
> Avg. property value: $185,306
> Pct. seriously underwater: 55%
PNC Financial Group Inc. (NYSE: PNC) serviced more than 8,500 loans in the foreclosure process as of last month. The average property value was just $185,306, one of the lowest of all banks, and the average debt on these mortgages was $202,286. Of the 8,545 loans in the foreclosure process, approximately 55% were considered seriously underwater. At the end of 2012, PNC was the 10th largest mortgage servicer in the country, with a portfolio size of $169.4 billion. PNC was recently required to pay $70 million in order to settle allegations of illegal foreclosure practices.
8. HSBC Holdings
> Loans in foreclosure: 16,317
> Avg. property value: $233,670
> Pct. seriously underwater: 60%
More than 16,000 loans serviced by HSBC Holdings PLC (NYSE: HBC) were in the foreclosure process as of February 2013. Six in 10 of these mortgages were considered seriously underwater. In January, the bank agreed to pay $249 million to settle complaints that it had wrongfully foreclosed on U.S. homeowners. Under the terms of the settlement, the bank paid out $96 million to 112,000 homeowners, while the remainder of the money went to reducing mortgage balances and forgiving outstanding principal on short sales, or selling a property for less than what is owed. Earlier this month, HSBC announced it was selling $3.2 billion worth of consumer loans to trim down U.S. operations.
> Loans in foreclosure: 27,697
> Avg. property value: $202,390
> Pct. seriously underwater: 54%
Citigroup Inc. (NYSE: C) serviced $6.3 billion in outstanding mortgage debt on homes in foreclosure, the seventh highest amount of all banks. Of homes in the foreclosure process, 54% were considered seriously underwater. While this figure is high, it was better than most of the nation’s largest banks. Citigroup is still fighting court battles regarding its mortgage practices as authorities accuse it of unfairly evicting people from their homes. These legal proceedings continue to hurt the company’s bottom-line.
6. Bank of New York Mellon
> Loans in foreclosure: 31,821
> Avg. property value: $236,703
> Pct. seriously underwater: 67%
At the end of 2012, Bank of New York Mellon Corp. (NYSE: BK) had $1.4 trillion under management and more than $26 trillion under custody. A core focus of the company’s business is its function as a custodian, tasked with safeguarding financial assets and handling various monetary and financial transactions. During the financial crisis, the Treasury Department named the bank as custodian for its bailout fund — meaning the bank provided record keeping and cash management for the fund. Although BNY Mellon is not a loan servicer responsible for executing the foreclosure process on delinquent loans, it is listed as the plaintiff or beneficiary in nearly 32,000 foreclosure proceedings nationwide, according to RealtyTrac data. The bank is listed because it acts as trustee on certain mortgage-backed securitizations, which are created when a large number of mortgage loans are pooled and placed in a trust. Foreclosure action related to properties held in the trust must be brought in the trustee’s name even though the trustee is not involved in the day-to-day foreclosure proceedings.