There is a multi-state mortgage settlement proposition. It has been worked on for the last year at least, but it has been stopped from moving forward yet again. There are concerns that some of the states have held out. This is why they have ignored yet another deadline. States were given two weeks to examine the proposal and sign it. The idea was for top banks to pay $25 billion to end some of the civil government lawsuits that are out there. The lawsuits are all about misconduct with regards to home loans and faulty foreclosures.
Since 2007 there has been a lot of dissatisfaction over the handling of the mortgage crisis. In fact many homeowners that had to move stated they were unfairly treated and not given a chance to save their homes. There was talk that some mortgage companies set up mortgages that were not fair under the US laws and fair policy requirements. Additionally it was proposed that some companies just gave out the funds, even though they knew the borrower would never be able to fulfill the requirements.
Officials involved in the settlement wished for a final settlement to be reached this week, but it seems nothing will move yet because there are still some states holding out and dragging their feet. The settlement is seen by some as a way for banks to get out of too many claims. There is also concern that the homeowners will not get the relief they need if a settlement is reached.
A spokesperson stated there is more concern with the details than any timeline that is needed. The downside is that many homeowners or previous homeowners are in limbo with their relocation. They may be able to salvage something, but on the other hand if the settlement drags on these same homeowners could be in a worse situation.
There are at least three banks that have been named in the disputes; Citigroup and Ally Financial are two of them. States such as Arizona are also holding out trying to determine if the settlement is the way to go. Bank of America and Countrywide were also part of the lawsuits that may finally be resolved if a settlement is reached.
Several states are in fact not resolved to agree to the settlement yet. These states are not willing to make a public statement either with regards to their decisions or thoughts. Massachusetts had an interesting issue with foreclosures where the courts decided to void two home foreclosures on the basis that the bank could not prove they held the mortgages at the time of the home seizures.
The effects of the sub-prime downfall are everlasting. In another five years some homeowners may still be working towards a resolution, especially if the settlement continues to be rejected time and again because officials are uncomfortable with the proposed concepts.
Jon Huser
