As discussed in previous posts, the attorneys general of the 50 states and several major banks have been involved in settlement negotiations concerning widespread abuses in the mortgage industry and fraudulent foreclosure practices for well over a year.
According to news reports, these negotiations are now nearing an end as the attorneys general of more than 40 states and the banks implicated in the scandal -- Wells Fargo, JPMorgan Chase & Co., Bank of America, Ally Financial and Citigroup -- have reached a settlement that could be worth as much as $25 billion if all states agree to its terms.
Specifically, the prospective settlement calls for the following:
- The banks would agree to lower the principal of qualifying homeowners whose homes are now worth far less than the amount of their mortgage (i.e., those Americans with underwater mortgages)
- The banks would send payments -- rumored to be in the amount of $2,000 -- to homeowners who have already fallen victim to foreclosure
The $25 billion settlement represents the culmination of a 16-month investigation by state attorneys general into whether the aforementioned banks relied upon faulty procedures (i.e., improper document review, falsified signatures and use of "robo-signers") to foreclosure upon thousands of homes.
Interestingly, Arizona Attorney General Tom Horne has not yet signed off on the terms of the settlement -- joining the ranks of states such as California, Delaware, and New York.
Here, a spokesperson for Attorney General Horne indicated that while he is leaning heavily toward agreeing to the terms of the settlement, he cannot do anything until an outstanding lawsuit against Bank of America is resolved.
However, the spokesperson did indicate that an official announcement on the matter should be coming in the next few days.
It is worth noting that even though Arizona missed Monday's deadline for agreeing to the settlement, it -- and the other holdout states -- will likely be permitted to join as the final details are worked out.
"Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement," said Iowa Attorney General Tom Miller, leader of the settlement negotiations, in a prepared statement.
Stay tuned for further developments from our Phoenix bankruptcy blog ...
If you are facing foreclosure, you should strongly consider contacting an experienced bankruptcy attorney to learn more about your rights and your options under Chapter 13 bankruptcy.
This post is for informational purposes only and is not to be construed as legal advice.
Arizona Capitol Times, "Arizona leaning toward joining $25 billion foreclosure settlement with banks" Feb. 8, 2012
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