Industry Waits with Bated Breath as States Consider Settlement

The deadline for the 50 state attorneys general to sign onto the settlement negotiated between the committee headed by Iowa Attorney General Tom Miller and five large servicers was extended from Friday to Monday. Late Monday evening, Miller’s office issued a statement saying more than 40 states have agreed to participate in the settlement.

“This enables us to move forward into the very final stages of remaining work,” Miller said. “Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”
Miller declined to provide any further details on Monday’s developments.
For the past few months, the number repeated from various sources is $25 billion. That’s $25 billion that Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial would pay for a clean slate regarding the robo-signing misdeeds of the past.
According to a Monday article on CNBC.com, the $25 billion would be distributed in three ways: $17 billion for principal reductions, $3 billion for homeowners whose homes have been foreclosed, and $5 billion for state and federal foreclosure programs.
The $17 billion in principal reductions is expected to provide aid for about 1 million homeowners, and about 750,000 homeowners who have lost their homes to foreclosure would receive about $2,000.
While $25 billion is the number most cited, the amount is contingent on how many and which states agree to the settlement.
California Attorney General Kamala Harris previously called the proposal “inadequate” for Californians, but it is possible she will sign on to the deal.
Likewise, New York Attorney General Eric Schneiderman says the settlement is now more favorable than in the past, according to an article Monday in the New York Times.
According to the New York Times article, the proposed settlement also states that if the banks fail to follow through on the full amount of principal reductions, they will pay the government the difference along with a fine of up to 40 percent.