If you live in New York, Nevada, Massachusetts or Delaware, then you can rest assured that your attorney general is pretty steamed about the robo-signer crisis. So steamed, in fact, that they are doing everything possible to prevent the current proposed settlement with the nation’s biggest lenders from happening. A lot of people support this reluctance to cave in and, from many perspectives, let the big banks “get away with it.” However, the department of Housing and Urban Development (HUD) and the Justice Department are less than thrilled with the AGs’ behavior. In fact, they are taking steps to get some cooperation, and the sooner the better.
For starters, both HUD and the Justice Department have singled out New York AG Eric Schneiderman to abandon his objections publicly. Schneiderman is protesting that the settlement would preclude him from further legal action against offending servicers. HUD spokespeople emphasize that some forms of legal action would still be an option, just not all, and HUD Secretary Shaun Donovan has basically accused Schneiderman and the others of stalling an “immediate opportunity to help a large number of borrowers to stay in their homes” if they block the settlement. Nevada AG Catherine Masto has made it clear she is not really in the mood to sign on the line either, with a public statement to Bloomberg that she would be “very cautious” about signing a statement that would interfere with her own civil and criminal investigations into Bank of America’s foreclosure practices.
Another issue for many AGs is whether or not lenders will be required to provide principal reductions on some or all loan modifications. While most lenders are holding firm against – and most AGs are holding firm in favor – Bank of America has recently announced it will consider this option. The lender is also pursuing talks with individual AGs in an effort to remove itself from the general fray. There are also rumors of a settlement that would allow some AGs, Schneiderman included, to continue their fraud investigations once the settlement had been implemented.
This sounds like a conflict with no resolution. Do you think that there should be a nationwide settlement with the “big banks” or should each state tackle the lenders on its own?
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