Banks could face billions in fines over foreclosures

Two of the nation's largest banks may face billions in potential fines or enforcement actions from state and federal regulators over allegations of improper foreclosure paperwork. 

Wells Fargo & Co. and Bank of America say they're being investigated by several government agencies over their foreclosure practices.

Regulators could seek upward of $20 billion in penalties for problems with the foreclosures, which would come from the Treasury Department and Department of Housing and Urban Development, is still in the works, according to several news reports. 

In a filing with the Securities and Exchange Commission, Wells Fargo said the investigations are centered around whether the bank violated fair-lending laws and followed proper procedures with its foreclosure affidavits. 

"With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action against Wells Fargo, which may include civil money penalties," the company said in its filing. "Wells Fargo continues to provide information requested by the various agencies."

The bank also said there are seven class-action suits and several individual-borrower actions have been filed against it, which focus on problems with foreclosure paperwork, which could lead to losses as high as $1.2 billion. 

"Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose," Wells Fargo said in the filing.

Bank of America also said the investigations could lead to “significant legal costs,” according to its annual report to the SEC.