AGs Promise Relief, Accountability

BLOG VIEW: The mortgage markets received some clarity on at least one hot-button issue this week, when the Federal Housing Finance Agency formally announced some of the broad strokes involved with the long-rumored expansion of the Home Affordable Refinance Program.

But roughly one year after they began, the multistate negotiations among attorneys general, federal agencies and the nation's biggest servicers are still very much ongoing.

Bank of America, Citi, Chase, Wells Fargo and GMAC will likely meet with federal and state officials next week, though those plans have not been finalized, according to Geoff Greenwood, communications director for Iowa Attorney General Tom Miller, who's leading the settlement talks on the AGs' side. Officials from the Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission and the Treasury Department would likely be in attendance, as would members of the state AGs' seven-member negotiation committee.

The negotiation committee – which totaled eight members prior to California Attorney General Kamala Harris' recent voluntary departure – is responsible for hashing out an agreement in principle with the servicers and federal officials.

Greenwood declined to project a time frame for a potential deal, and also declined to comment on what sticking points remain.

"We're getting much closer," Greenwood told MortgageOrb, adding that recent media reports suggesting a deal is imminent might be premature. Principal reductions, he also explained, are "still very much on the table."

In an editorial posted on his website last week, New Mexico Attorney General Gary K. King vowed that any proposed settlement would not provide banks with "immunity" from criminal prosecution. He also stated that the ongoing talks do not prevent any state from bringing investigations of their own. He further said that the scope and terms of any potential release have not been determined.

"The decision to participate in this multistate investigation was made to assure a comprehensive investigation and to leverage resources to achieve the strongest settlement possible," King wrote. "There has been significant progress in these negotiations with the large mortgage lenders. While several large states, such as New York and California, have decided to withdraw from these negotiations, New Mexico is presently continuing its participation."

One of those negotiation expats, New York's Eric Schneiderman, made a rare televised appearance this week on MSNBC's The Rachel Maddow Show. Schneiderman, whom Miller previously accused of undermining the AG talks, was ousted after expressing concern that the multistate negotiations could impede his office's ability to investigate banks' mortgage securitization practices. Schneiderman is one of two state AGs to home in on boom-era mortgage practices (the other being Delaware's Beau Biden).

While speaking with Maddow, Schneiderman said his goal is to hold accountable the people and banks responsible for the housing crash. He also described the crisis as man-made – something created by "regulatory neglect and greed."

"We think we're going to be able to obtain real meaningful relief" for borrowers, Schneiderman said in reference to his and Biden's investigations.


Please enter your comment!
Please enter your name here