Banks required to submit a plan of action for handling loan modifications and foreclosures are going to get an extension on crafting that plan, thanks to the federal Justice Department[1]. Mortgage servicers were supposed to submit their plans for dealing with contacting struggling borrowers, handling loan modifications in good faith and adjusting other problematic aspects of the foreclosure process yesterday. However, the Office of the Comptroller of Currency and the Federal Reserve – key players in the bank settlement in mid-April that was met with so much criticism after the robo-signer fiasco – have said that the lenders can have another 30 days. The extension comes at the request of the Justice Department, which is currently working with state attorneys general and several other federal agencies to reach a separate settlement with more severe terms than that of the OCC’s settlement. The OCC has insisted from the beginning that its settlement and that of the Justice Department would “dovetail” rather than be in conflict or undermine each other.
Lenders will have until July 13 to submit their plans now, which the attorneys general hope will lead to an advantage for their side in negotiations[2]. Tom Miller, state attorney general of Iowa and leader of the AG probe, has stated multiple times that the settlement will include billions of dollars in fines and, ideally, principal reductions as well.
Do you think that the extension of the deadline is a good sign or a bad one? Are the banks still “getting away” with poor behavior by failing to submit their plans on time?
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[1] http://www.washingtonpost.com/business/economy/deadline-extended-for-mortgage-servicers-deal/2011/06/13/AGDTlCTH_story.html
[2] http://www.marketwatch.com/story/banks-have-30-more-days-to-submit-mortgage-plans-2011-06-13?link=MW_latest_news
