40-plus states agree to robo-signing settlement

Attorneys general from more than 40 states have signed a proposed settlement agreement with five of the nation’s largest mortgage servicers over robo-signing foreclosure processing abuses.

February 07, 2012
robo-signing, mortgage, mortgage finance, bank settlement

Attorneys general from more than 40 states have signed a proposed settlement agreement with five of the nation’s largest mortgage servicers over robo-signing foreclosure processing abuses, according to the lead negotiator, Iowa Attorney General Tom Miller, and posted on CNBC. This comes after more than a year of back-and-forth between states and lenders.

The deal with Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial will reportedly total $25 billion. Some $17 billion of that would go toward writing down mortgage principal for an estimated 850,000 troubled borrowers, $3 billion could go toward restitution payments of $1,500 each to borrowers who lost their homes to foreclosure, and the rest could go to state funds for foreclosure relief, according to reports and estimates by Inside Mortgage Finance.

The total could be less, however, if California does not sign on. As of late Monday, officials there said Attorney General Kamala Harris had not agreed to the proposal.

New York also did not sign on, according to sources in Attorney General Eric Schneiderman's office. Schneiderman had said he would not sign, but reports earlier in the week suggested he was reconsidering, given his new roll as co-chair of a Justice Department task force to investigate mortgage-related abuses.

Attorneys general from Delaware and Nevada also have reportedly not agreed to the deal. Despite the Feb. 6 deadline, states can still sign on and the expectation is that more will.

 

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