EXCLUSIVE: 'Robo Signing' Settlement Hits a Snag
The much anticipated "robo signing" settlement between the big banks that may have improperly foreclosed on thousands of homes across the country and a consortium of state attorneys general has hit yet another snag, with people close to the process saying a deal may not be struck until next month, FOX Business has learned.
The snag stems in large part from the attorneys general group, led by Iowa AG Tom Miller, being unable to come up with a concrete settlement arrangement with the various banks under scrutiny, which includes JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC). The list of potential remedies includes fines, or some restitution to homeowners victimized by so-called robo signers where banks hired employees who basically rubber stamped foreclosure documents, thus denying homeowners who were delinquent on their mortgages proper review and due process.
The robo signing inquiry is controversial because the vast majority of the people who were evicted from their homes were also severely delinquent on their loans; the banks merely failed to follow proper legal proceedings in evicting them because of the massive number of mortgage payment delinquencies in recent years following the 2007-2008 housing crisis.
Still, by failing to follow the rules, many banks may have also violated the law, and the state AG probe has become the latest headache for the nation's large financial institutions following their near collapse and government bailout during the 2008 banking crisis.
People close to the inquiry also tell FOX Business that the state AGs are considering a "group settlement" with as many as six banks, another obstacle to a timely settlement. The banks may also be forced as part of a settlement to contribute to a fund where money would be funneled by individual state AGs to homeowners who were improperly foreclosed upon. That money would be used to allow these people to remain in their homes longer and to work out mortgage payment plans they can afford.
A spokesman for Miller declined to comment on the matter, but he wouldn't deny the delay in the settlement, or that the AGs are considering a group settlement as opposed to settling with each bank individually, as had initially been favored.