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American International Group Inc. has settled with a federal banking regulator allegations that it charged homeowners excessive mortgage fees and didn’t properly consider their credit ratings.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½, an insurance giant that also runs a home mortgage business, said last Friday it planned to take a $50 million charge in the second quarter to cover the cost of the settlement with the federal Office of Thrift Supervision. The company took a $128 million charge in the first quarter to pay for the cost of the settlement.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ said some of the money will be used to help borrowers with weak credit who face foreclosure after taking out mortgages from ÌìÃÀÍøÕ¾´«Ã½´«Ã½ Federal Savings Bank between July 2003 and May 2006. ÌìÃÀÍøÕ¾´«Ã½´«Ã½ Federal Savings is a Delaware-based unit of ÌìÃÀÍøÕ¾´«Ã½´«Ã½, which is based in New York. Some of these borrowers may qualify for a refund of mortgage fees instead of a new mortgage, the company said.

Under the terms of the settlement, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ is required to identify the affected borrowers and provide aid to them. The company also must hire an independent consultant to monitor its process and report back to the government.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ also agreed to pay $15 million over three years to nonprofit groups that promote financial literacy and credit counseling.

The settlement will have a small financial impact on ÌìÃÀÍøÕ¾´«Ã½´«Ã½, which reported first-quarter profit of $4.13 billion. But it could signal the direction federal regulators aim to take to clean up abusive mortgage-lending practices that critics say were common during this decade’s housing boom.

John Reich, director of the OTS, said in a prepared statement that the agency “is taking the action necessary to address problems in the mortgage markets and protect the interests of homeowners in jeopardy of losing their homes.”

The agreement with ÌìÃÀÍøÕ¾´«Ã½´«Ã½, he said, could provide a model for institutions “to address important consumer protection issues arising from their past lending practices that were harmful to certain borrowers.”

OTS said during a regular yearly examination of ÌìÃÀÍøÕ¾´«Ã½´«Ã½ Federal, loans outsourced to another ÌìÃÀÍøÕ¾´«Ã½´«Ã½ subsidiary, Plymouth Meeting, Pa-based Wilmington Finance Inc., contained excessive fees and did not adequately consider borrowers’ credit status.

The foreclosure rate nationwide is rising at an annual rate double that of two years ago. Nearly 2 million adjustable-rate mortgages are forecast to reset at higher rates over the next two years, suggesting the foreclosure rate has not peaked.

The National Association of Realtors said Wednesday it expects sales of existing homes to drop 4.6 percent this year to 6.2 million while the median home price is expected to fall 1.3 percent to $219,000. It would be the first annual drop since the trade group began keeping records in the 1960s.

In an earlier action by regulators against the company, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ agreed in February 2006 to pay $1.64 billion to settle an investigation into its accounting practices by the Justice Department, the Securities and Exchange Commission, and then-New York Attorney General Eliot Spitzer.

Shares of ÌìÃÀÍøÕ¾´«Ã½´«Ã½ fell 30 cents to $71.08 in Friday afternoon trading.

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