Posted on Friday, January 07, 2011
There has been no shortage of reports of state attorneys general seeking accountability from servicers that they allege mishandled foreclosures.
In December, Arizona Attorney General Terry Goddard filed a fraud suit against Bank of America (BofA). Nevada Attorney General Catherine Cortez Masto also filed a suit against BofA that month.
In October, Ohio Attorney General Richard Cordray filed a lawsuit against GMAC Mortgage.
Other attorneys general were crucial in implementing foreclosure moratoriums for their states and getting banks to agree to modification programs.
Now, according to a report by Bloomberg, attorney generals in all 50 states are near to reaching settlements
with the nation’s top five mortgage servicers. The states are looking to develop separate agreements, says the article, rather than one encompassing settlement; and the attorneys general will pursue a civil investigation rather than a criminal one.
This development seems to be one of a string of efforts by banks to do their part in alleviating the impact of foreclosures on homeowners. Chase Bank and Radian Guaranty both donated money to HOPE LoanPort, a web-based portal designed to streamline loan modification processes.
Wells Fargo recently reached an agreement with California Attorney General Edmund G. Brown Jr. to give $2 billion in loan modifications to California borrowers and more than $32 million to homeowners who lost their homes to foreclosure.
Arizona, Colorado, Kansas, Florida, Illinois, Nevada, New Jersey, Texas, and Washington have similar agreements with Wells Fargo.
Bank of America announced in December that it would move more than 2,000 employees from the origination department to the modification side to help meet a surge in home retention needs.
Paul Leonard from the Center for Responsible Lending told Bloomberg the group of attorneys general “offers one of the most promising avenues to increasing loan modification and servicer accountability that we have seen so far.”
By: Joy Leopold