State AGs Reviewing Settlement Draft

After HUD Secretary Shaun Donovan announced last Wednesday that the state attorneys general settlement with the nation’s largest servicers is just weeks away – with a spokesperson for Iowa Attorney General Tom Miller’s office corroborating the claim – news today is a settlement draft is now in the hands of the state attorneys general for review.

The Associated Press released the update Tuesday, stating the settlement terms could require as much as $25 billion from the banks – keeping consistent with projections made in October.
Under the settlement draft, about 750,000 individuals will receive about $1,800, according to the Associated Press.
Donovan also stated last week that about 1 million homeowners may receive principal reductions if the proposed settlement wins approval.
Dispelling rumors suggesting President Barack Obama will announce a settlement during his State of the Union address Tuesday evening, Miller’s office released a statement Monday saying, “We have not yet reached an agreement with the nation’s five largest servicers, and we won’t reach a settlement any time this week.”
In a letter to officials involved in the settlement negotiations last week Ohio Attorney General Sherrod Brown expressed concerns that the proposed settlement may be too easy on banks.
“A settlement must provide meaningful, widespread relief to Ohio homeowners. Unfortunately, the numbers reported in various media accounts fail to meet this test,” Sherrod wrote.
He also stated, “The proposed principal reduction program must focus on banks settling with their own money, rather than shifting their financial liability to Private Label Securities (PLS) trusts.”
Brown reiterated his concerns Monday, according to Reuters. “Instead of criminal prosecutions, we are talking about not much more than a slap on the wrist,” Brown said. “In many ways, Wall Street isn’t just too big to fail, it’s also too big to jail.”