Banks near mortgage deal with state AGs
By JOSEPH WILLIAMS | Politico
The nation’s five largest banks and a consortium of state attorneys general are Wednesday evening close to finalizing a $26 billion settlement for the roles the banks played in the mortgage meltdown, POLITICO has confirmed.
If finalized, the settlement would be the largest of its kind in history, rivaling the 1998 settlement states reached with the tobacco industry, and the largest civil action ever against the housing industry. The agreement would cap a year-long series of negotiations designed to hold banks accountable for falsifying documents related to home foreclosures in several states.
The bulk of the settlement would be set aside for struggling homeowners, including loan modifications, refinancing and principal reduction — rewriting the mortgage to reflect the current value of the home. Another portion of the money would fund a reserve account for state and federal programs and for payments to homeowners whose mortgages were improperly processed.
The consortium effort between the Justice Department and the 50 state attorneys general, led by Iowa Attorney General Tom Miller, has been looking to strike the deal with Bank of America, Citigroup, JPMorgan Chase, Ally Financial and Wells Fargo.
A deal had been widely anticipated at several points, but hit snags as several attorneys general — including Eric Schneiderman of New York, Kamala Harris of California and Beau Biden of Delaware, son of Vice President Joe Biden — raised concerns that the proposal was too small and would grant the banks immunity from possible prosecution for fraud. On Monday night, the Huffington Post, citing sources, reported that Harris and Biden agreed to join the settlement.
Others expressing reservations had included the attorneys general of Minnesota, Nevada, Massachusetts and Kentucky.
The pressure to strike a deal had produced an intense backlash from liberals last summer. But several moves appeared to change the mood, including President Barack Obama’s creation of a new mortgage crisis unit headed by Schneiderman, announced in his Jan. 24 State of the Union address. That unit is working with the Consumer Financial Protection Bureau.
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