Now several years into the housing crisis more than 7.5 million homes have entered into foreclosure, with millions more still at risk. Most federal government and private initiatives to stem the tide of foreclosure have fallen short in the face of continued poor economic conditions as well as reported abuse and misconduct of the largest financial institutions at each stage of the mortgage process from origination to foreclosure. It is clear that the voluntary loan modification efforts, conducted under the Administration’s Home Affordable Modification Program or through the mortgage industry, have not been able to help enough affected borrowers.
Many homeowner advocates and consumer groups are looking to the settlement negotiations with the state attorneys general and the nation’s top mortgage servicers to begin to resolve many of the widespread problems in servicing and foreclosure practices. However, recent news reports indicate that a 50-state attorneys general settlement is experiencing complications. Attorneys General from New York, Delaware, Massachusetts and Nevada
have voiced public concerns that a proposed settlement would protect banks from mortgage investigations that are not yet finished.
These states are conducting their own investigations into banks’ mortgage practices. For example, New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden are investigating mortgage securitization and recently filed a motion to intervene
in the proposed $8.5 billion settlement between Bank of America and the Bank of New York acting as trustee of 530 Countrywide residential mortgage securitizations. Attorney General Martha Coakley of Massachusetts said in a letter last month that she will not sign on to an agreement if it includes “a comprehensive liability release’’ for mortgage securitization or conduct related to a mortgage database called MERS.
We continue to wait to see how the settlement negotiations play out. We know that what little has been done to address the foreclosure crisis on a national level so far has not worked. That is why a meaningful settlement is so important to help homeowners, investors and the economy as a whole.
Ellen M. Taverna
Legislative Associate, National Association of Consumer Advocates (NACA)