Motley Moose – Archive

By the time the robo-signing scandal had spread across all fifty states their attorneys general started looking for a coordinated and comprehensive settlement with the banks:

The current settlement stems from revelations in late 2010 that banks had filed hundreds of thousands of flawed and fraudulent foreclosure documents in their rush to keep up with a tidal wave of delinquent loans wrought by the housing crisis, a practice known as “robosigning.”

Under the proposed deal, the five banks involved – Wells Fargo, Bank of America, J.P. Morgan Chase, Ally Financial and Citigroup – would agree to end those practices and overhaul the often-convoluted way they deal with borrowers trying to stay in their homes. They also would pay about $25 billion that would go toward lowering loan balances for borrowers who owe more than their houses are worth, helping others refinance at lower rates and paying up to $2,000 to hundreds of thousands of people who lost homes to foreclosure.

Brady Dennis – Proposed settlement with banks over foreclosure practices dealt a setback Washington Post 8 Feb 12

The Obama administration also sought some relief for a broad segment of affected homeowners rather than individual prosecutions of specific cases.  Sounds good?  Well, maybe not so much, as the legal ramifications of the settlement are still open to interpretation:

In effect, the White House was willing to sell blanket immunity to the originators and distributors of mortgages over the past decade. The price of this legal protection would have been low. Understandably, bankers are still keen to take the offer.

Simon Johnson – Last chance on mortgage mess Politico 22 Jan 12

Those seeking a tougher stance on bank malfeasance and a broader inquiry, potentially resulting in criminal prosecutions, into the complex mortgage retail and securitisation practices which largely precipitated the 2008 crash have been reluctant to go along with this proposal.