Thursday, February 9, 2012

A Possible Robo-Signing Settlement?

The Washington Post reports this morning that five major banks and forty state attorneys general are close to agreeing on the terms of a settlement to release claims against the banks related to fraud and abuse in foreclosure practices.

The article, by Brady Dennis and Sari Horwitz, is here.


The parties have been working on the settlement for almost a year and a half. According to the article, the attorneys general of New York and California recently signaled their willingness to join the settlement, giving momentum to the negotiations.


The most publicized charges against the bank stem from the practice of robo-signing, whereby foreclosure documents were allegedly signed in the absence of the legally-required underlying loan documentation.

Here's an excerpt from the article:
The pending deal would force the lenders to revamp how they interact with troubled homeowners and would bar them from trying to foreclose on borrowers while simultaneously negotiating mortgage modifications. In addition, firms would have to make sure borrowers have a single point of contact rather than be shuttled to different employees with each interaction.
(Re: the possibility of "a single point of contact": do I hear in the distance the sound of joyful borrowers?)

If the settlement is approved, the banks would pay approximately $25 billion to the states. Some of those funds would ultimately end up in the hands of (1) homeowners struggling to fend off foreclosure and (2) previously foreclosed-upon individuals.

C-3PO and R2-D2 may be looking for a new line of work...