AIG Reserves $178M To Settle Homeowner Loans

American International Group Inc. said it has agreed to reserve $178 million, part of which will pay broker and lender fees, in a settlement of its alleged mishandling of subprime homeowner loans that a federal regulator said were not properly managed.

New York-based insurer AIG said on Friday that an agreement was reached with the Office of Thrift Supervision (OTS), a regulatory banking arm of the Treasury Department, over practices of the company’s three lending subsidiaries in managing subprime borrowers.