"The five biggest mortgage servicers- Bank of America (BAC_), JPMorgan Chase (JPM_), Citigroup (C_), Wells Fargo (WFC_) and Ally Financial- entered into a $26 billion settlement with federal and state regulators earlier this year over alleged fraudulent foreclosure practices, better known as "robo-signing".
Under the agreement, banks are required to offer various forms
of mortgage relief to borrowers and also adhere to stricter standards
regarding foreclosure. In states where banks need to prove a borrower is
in default in court- judicial foreclosure states- scrutiny of
foreclosure cases has been heightened.
Other states such as Nevada and California have enacted tough laws protecting borrowers from wrongful foreclosure practices.
The result has led to a slowdown in foreclosures, with banks
increasingly preferring to pursue alternatives such as short sales and
Still, the pipleline of delinquent loans remains large."