Majority of States Reported on Board with Robo-Signing Settlement

by devteam February 7th, 2012 | Share

Details are still sketchy, butrnapparently a settlement has been agreed upon between five major banks and arnmajority of the states’ attorneys general. rnThe settlement involves Bank of America, Wells Fargo, Citigroup,rnJPMorgan Chase, and Ally Financial and arises out of charges that the banks andrntheir subsidiary servicers used robo-signing and other abuses in processingrnthousands of foreclosures. </p

The settlement was announced by leadrnnegotiator, Iowa Attorney General Tom Miller who, according to CNBC said of therndeal, “This enables us to move forwardrninto the very final stages of remaining work. Federal and state officials, asrnwell as representatives from the banks, continue to address matters that theyrnmust complete before finalizing any settlement,” Miller said in a statementrnreleased late Monday.”</p

Therernwere no further details available on the Miller’s office website and he refusedrnto provide more information to CNBC including the number of states who havernsigned.  The deadline for reaching anrnagreement was Monday night, however bright lines in these talks have beenrnfungible in the past.</p

Thernagreement has been reported to involve cash in the amount of $25 billion fromrnthe banks. $17 billion of which would go toward writing down mortgage principalrnbalances for some 850,000 troubled homeowners. rnOf the remainder, $3 billion would go to restitution payments of $1,500rneach to borrowers who lost their homes to foreclosure and the rest toward staternfunds for foreclosure relief.  </p

CNBCrnis speculating that 40 states have agreed to participate in thernsettlement.  Delaware AG Beau Biden wasrnclear in an interview on MSNBC Monday night that his state was not party to itrnand there is speculation that New York’s Eric Schneiderman, head of thernPresident’s new mortgage fraud office has not agreed to it either.   California’s AG Kamila Harris is the bigrnIF.  She walked away from negotiationsrnfour months ago claiming that the settlement did not do enough for homeownersrnin her state which has led the nation in the number of foreclosures.  </p

Accordingrnto Inside Mortgage Finance, Harris recentlyrnreturned to the table “in exchange for a commitment of a solid dollar amountrnfrom the banks” and other sources say that might involve raising the settlementrnfrom $19 billion to the $25 billion referenced above. The Wall Street Journal, reported that any special treatment ofrnCalifornia would leave other AGs feeling disgruntled, specifically mentioning Florida’srnPam Bondi.  </p

Inrnaddition to any cash from the banks, the settlement will include a mandate forrnnew regulations for servicers.  Arntentative settlement document was proffered last March that, as most of thernstandards have since become part of the general discussion about servicing, isrnprobably a good indication of the contents of this part of the finalrndocument.  These include: </p<ul type="disc"<liEnforcing firm modificationrntimelines for servicers to meet, including notifications to borrowers ofrnactions on modification requests.</li<liProviding a single point of contactrnfor borrowers over the course of the modification process.</li

  • Requiring a freeze on foreclosures during modificationrn considerations and providing methods for penalties and enforcement.</li
  • Outlining steps for banks to verify the accuracy ofrn amounts owned and placing limits on fees the banks can charge distressedrn borrowers.</li
  • Adopting directives to improve tracking of mortgagern notes and chain of title.</li
  • Increasing supervision of foreclosing law firms and otherrn third-party vendors. </li</ul

    Thernsettlement agreement apparently contains nothing that would preclude the statesrnfrom continuing to investigate the banks, especially in the case of suspectedrncriminal actions.  It also would dornnothing to interfere with suits by individual borrowers against the banks orrntheir servicers.</p

    MNDrnwill update this story as more information becomes available.

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  • About the Author


    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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