According to sources that prefer to remain anonymous, a foreclosure settlement is “imminent” between the remaining state attorneys general involved in the national foreclosure fraud investigation, the Department of Justice and major lenders like JPMorgan Chase, Ally Financial, Citigroup Wells Fargo and Bank of America. Reports of the settlement are allegedly coming from bank officials at BofA and Citigroup. However, added the sources, “A number of sticking points could still hang up the deal.”
The settlement is rumored to involve the development of a $20 billion relief fund for homeowners to help distressed borrowers get loan modifications and refinance existing mortgages. It is unclear how banks would pay into the fund – and in what quantities – and how eligibility for loan modifications will be determined.
The lenders and AGs probably feel that this moment is “now or never” for their settlement, which has been delayed numerous times thanks to a variety of issues, including California and New York dropping out (or being kicked out, depending on whose story you believe) of the talks. Other states’ AGs have also expressed concern about the fairness of the investigation and potential settlement although they are currently still involved in the negotiations. Delaware, Massachusetts and Nevada have all expressed serious concern, with Massachusetts’s Martha Coakley issuing a statement that she would be conducting her own investigations and expressing “lost confidence that a fair settlement…can be reached”.
Do you think that there is a really a settlement coming? If you were a lender, would you sign without California and New York on board?
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.