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States Attorneys General Agree to Foreclosure Settlement

More than 40 states have signed on to a draft settlement with the nation’s largest banks. It aims at helping homeowners struggling with loans bigger than the value of their homes. However, several states including California, New York, Nevada, Florida, and Delaware remain undecided. Attorneys general from these states have issues with the deal but are still talking with negotiators. Some attorneys general feel the settlement is not enough for their state. And, others worry that if they agree to the deal it would hinder their own investigations into the mortgage crisis.

If the deal goes through, some of the nation’s largest banks could yield up to $25 billion for qualified homeowners. About 1 million U.S. homeowners who are underwater on their mortgages could be eligible for as much as $20,000 in relief of principal owed. In return, mortgage servicers in states that agree to the deal would get immunity from future state servicing and originating claims. However, the deal would not be able to return houses to those who have already been foreclosed on. It would ensure that mortgage servicers agree to communicate better and avoid delays. And, treat homeowners who are late on mortgage payments fairer.

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