Foreclosure Talks Snag on Bank Liability

Observers say federal and state officials continue to work on a settlement with the nation's biggest banks with regard to their foreclosure practices, but the process has been delayed as banks seek broad legal immunity for mortgage-related claims.

The banks reportedly are seeking legal protection with regard to loan origination, securitization, and servicing and fair-lending practices, as well as for claims tied to their use of the Mortgage Electronic Registration Systems (MERS), but federal and state officials countered with an offer to cover only robo-signing and other servicer-related practices.

Federal officials hope to forge a settlement by Labor Day, and observers say banks may agree to a settlement approved by 80 percent of states.

Source: “Foreclosure Talks Snag on Bank Liability,” The Wall Street Journal, Ruth Simon, Vanessa O’Connell, and Nick Timiraos (Aug. 22, 2011)