A foreclosure deal that has been in talks for several months by state officials has reached its deadline today. However, with many states not feeling comfortable with terms in the agreement, some wonder whether mortgage relief will be a real possibility for homeowners who were impacted.
Foreclosure Settlement Deal Deadline Arrives
After months of discussions on how to hold banks liable for a scandal known as robo-signing, which is the illegal process of using computer-generated signatures on court-ordered documents to speed up the foreclosure process, the deadline for states to come to an agreement has arrived today.
It seems officials are still having a difficult time coming up with a nationwide settlement deal that they believe will hold the five largest mortgage servicers, Bank of America Corp., Citigroup Inc., Wells Fargo and Co., Ally Financial Inc. and JPMorgan Chase and Co., accountable for their actions.
A proposal for banks to pay $25 billion has been introduced, but many states have balked at the terms, which include protection for banks from future litigation. In particular, deal-makers are awaiting word from California Attorney General Kamala Harris. Without her contribution, the deal’s value will drop by several billion dollars.
Mortgage Relief to be Offered through Refinancing and Loan Reductions
Despite the unpopular term set forth in the deal that banks could not be prosecuted in the future, several states have already signed off on the settlement. While some states signed because they don’t have the financial backing to fight the terms others want to speed up mortgage relief for impacted homeowners.
If the deal was approved in its current state, it would set forth a number of requirements for banks, including:
- Providing mortgage refinancing for underwater borrowers
- Funding loan principal reductions
- Making payments to states and borrowers who lost their homes to foreclosure
The deal would also set requirements for how banks conduct foreclosures, though these requirements have yet to be named by those close to the matter. With many states still not comfortable with how the settlement talks have progressed, it’s possible that today’s deadline won’t be met with a solution.