Details are still sketchy, but
apparently a settlement has been agreed upon between five major banks and a
majority of the states’ attorneys general.
The settlement involves Bank of America, Wells Fargo, Citigroup,
JPMorgan Chase, and Ally Financial and arises out of charges that the banks and
their subsidiary servicers used robo-signing and other abuses in processing
thousands of foreclosures.
The settlement was announced by lead
negotiator, Iowa Attorney General Tom Miller who, according to CNBC said of the
deal, “This enables us to move forward
into the very final stages of remaining work. Federal and state officials, as
well as representatives from the banks, continue to address matters that they
must complete before finalizing any settlement,” Miller said in a statement
released late Monday.”
were no further details available on the Miller’s office website and he refused
to provide more information to CNBC including the number of states who have
signed. The deadline for reaching an
agreement was Monday night, however bright lines in these talks have been
fungible in the past.
agreement has been reported to involve cash in the amount of $25 billion from
the banks. $17 billion of which would go toward writing down mortgage principal
balances for some 850,000 troubled homeowners.
Of the remainder, $3 billion would go to restitution payments of $1,500
each to borrowers who lost their homes to foreclosure and the rest toward state
funds for foreclosure relief.
is speculating that 40 states have agreed to participate in the
settlement. Delaware AG Beau Biden was
clear in an interview on MSNBC Monday night that his state was not party to it
and there is speculation that New York’s Eric Schneiderman, head of the
President’s new mortgage fraud office has not agreed to it either. California’s AG Kamila Harris is the big
IF. She walked away from negotiations
four months ago claiming that the settlement did not do enough for homeowners
in her state which has led the nation in the number of foreclosures.
to Inside Mortgage Finance, Harris recently
returned to the table “in exchange for a commitment of a solid dollar amount
from the banks” and other sources say that might involve raising the settlement
from $19 billion to the $25 billion referenced above. The Wall Street Journal, reported that any special treatment of
California would leave other AGs feeling disgruntled, specifically mentioning Florida’s
addition to any cash from the banks, the settlement will include a mandate for
new regulations for servicers. A
tentative settlement document was proffered last March that, as most of the
standards have since become part of the general discussion about servicing, is
probably a good indication of the contents of this part of the final
document. These include:
Enforcing firm modification
timelines for servicers to meet, including notifications to borrowers of
actions on modification requests.
Providing a single point of contact
for borrowers over the course of the modification process.
- Requiring a freeze on foreclosures during modification
considerations and providing methods for penalties and enforcement.
- Outlining steps for banks to verify the accuracy of
amounts owned and placing limits on fees the banks can charge distressed
- Adopting directives to improve tracking of mortgage
notes and chain of title.
- Increasing supervision of foreclosing law firms and other
settlement agreement apparently contains nothing that would preclude the states
from continuing to investigate the banks, especially in the case of suspected
criminal actions. It also would do
nothing to interfere with suits by individual borrowers against the banks or
will update this story as more information becomes available.