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“Today's settlement by the U.S. and 49 state attorneys general with the 5 biggest mortgage servicers – the big banks Citibank, Bank of America, Wells Fargo and JP Morgan Chase – along with Ally Financial, is an important and enforceable first step toward holding the big banks accountable for not only wrecking the economy but using a variety of unfair foreclosure practices to ruin the lives of millions of Americans and, in many cases, taking their homes illegally. The settlement:
- will establish a fair mortgage servicing system and end outrageous abuses ranging from fraudulently robo-signing false documents to what is called “dual-tracking,” – the practice of supposedly negotiating loan modifications while at the same time carrying out foreclosures on consumers who thought the bank was working with them in good faith.
- requires payments of $25 billion by the big banks. This amount includes modest compensation to victims of unfair foreclosures, money for principal reductions to help underwater homeowners (who owe more than their house is worth) stay in their homes as well as funds for state attorneys general to conduct other activities to help homeowners.
Although the settlement is limited, it stops bad behavior, establishes fair servicing standards, modestly compensates victims and takes steps to keep people in their homes all while allowing future investigations to address other violations. “This settlement is a down payment on what the banks still owe for their unconscionable behavior. We want to applaud Attorney General Martha Coakley who fought so hard for homeowners, for taxpayers, for Bay Staters throughout the process of settling this case.”
“At the same time, we note that more needs to be done to hold the banks fully accountable. Banks’ payments from this settlement should be looked at as a deposit, or down payment, on what they really owe. Fortunately, the settlement's releases from further liability are narrow and the settlement allows other claims to go forward, including for criminal and other violations by the banks, as well as claims against the Mortgage Electronic Records System (MERS) for its facilitation of the robo-signing frauds,” said Weyant.
“Going forward, the new Consumer Financial Protection Bureau (CFPB) – the people’s consumer watchdog who takes the place of the so-called regulators who aided, abetted or ignored the banks' unfair practices – will play a critical role in enforcing the new standards and taking other actions to protect homeowners and other consumers,” she concluded.
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