50-State Foreclosure Scandal Settlement Within Reach?
Several reports were circulating Tuesday that seem to indicate federal regulators are nearing a settlement with the nation’s largest banks over questionable foreclosure practices. Attorneys general from all 50 states are reportedly in Washington, DC this week, and are holding meetings to discuss settlement proposals. The investigation is being led by Iowa Attorney General Tom Miller.
Details of a possible settlement vary, depending on the source, but most indicate that a settlement would prohibit banks from initiating foreclosure proceedings while a buyer is actively seeking a loan modification. A settlement would also require lenders to acknowledge mortgage modification requests within ten days. A fine of as much as $20 billion has also been discussed as part of any settlement.
Additional reports indicate that regulators have not ruled out filing criminal charges in the matter after a wide-reaching settlement is decided on. Several sources close to the investigation have hinted that any fine money paid as part of a settlement could be used to pay down the principal on troubled US loans. A number of the rumored provisions of a settlement appear to be in response to the failure of the Home Affordable Modification Program (HAMP), which has severely underperformed based on expectations.