Consumer Advocacy Group Weighs in on AG Settlement
Rumors have been circulating for somerntime that the Obama Administration is pressuring the 50 state attorneys general,rnthe Justice Department and the Department of Housing and Urban Development tornsettle with major banks over issues relating to errors in servicing andrnforeclosure abuses including the robo-signing uproar. The settlement has been controversial and severalrnattorneys general including those in California, Delaware, and New York have optedrnout of the settlement and/or launched independent lawsuits of their own,rnclaiming the settlement is not sufficient to the offense. The rumors have intensified over the last fewrndays based on a theory that the President hopes to announce the settlementrnduring his State of the Union Address tonight.</p
Today the Center for Responsible Lending</bwhich has been an early and outspoken critic of mortgage lending came out inrnfavor of the settlement saying, while it isn't perfect, it would represent an importantrnstep forward in addressing foreclosure abuses. rn”The settlement would include key reforms to clean up unfair mortgagernservicing practices,” the statement from the Center said. “It would also provide an important templaternfor ways banks can use principal reduction to reduce unnecessary foreclosuresrnand put the country back on a path to economic recovery.”</p
While the Center admits that not allrndetails of the settlement are available as yet, but based on currentrninformation, the key reforms include:</p<ul class="unIndentedList"<liThernelimination of robo-signing as banks would agree to individually reviewrnforeclosure documents according to the law.</li<liAdoptionrnof practices that would improve communication with services and end servicerrnabuses including fairer treatment for homeowners who are late on mortgagernpayments.</li<liMorernsustainable loan modifications including a requirement that banks "get serious"rnabout reducing principal balances.</li<liWhilernthe state AGs would be prohibited by the settlement from pursuing furtherrnactions against the banks, the Center said that nothing in the settlement wouldrnprevent homeowners from suing on an individual basis nor would the settlementrnshield the banks from prosecution for criminal activities or from claims basedrnon mortgage securities violations, fair lending suits or claims against thernMortgage Electronic Registration System.</li<liThernsettlement would be enforceable in court by an independent monitor.</li</ul
The Center said that its researchrnindicates that the country is only about half-way through the mortgage crisis,rnbut the proposed settlement would wrap up a year-long investigation intornrobo-signing and other abuses and is “crucial to containing the damagingrneffects of foreclosures on our economy.” rnIt stresses, however, that additional policy actions on multiple frontsrnis a necessary addition to the settlement.
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