Settlement negotiations are in place with the nation’s five (5) largest mortgage servicers to compensate victims of Robosigners. These lenders include Ally Financial, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo.
Robosigners are lender representatives that signed several thousand documents without reading and reviewing them for accuracy, creating issues in foreclosure litigation as a result. This practice came to light as a result of the 2008 financial crisis because the number of foreclosures increased greatly as a result.
On the Upside: A portion of the estimated $25 billion settlement will be used to assist homeowners facing foreclosure in participating states. Compensation may also be available to homeowners that fell victim to Robosigning practices. The lenders would also be required to participate in an upgraded procedure for processing foreclosures in order to provide homeowners with greater protection.
On the Downside: After a final settlement, the participating lenders would be protected from future litigation by the participating states. This raises concern to several state Attorney Generals, such as in California and New York’s Eric Schneiderman.
Opponents to the agreement argue that although the number seems large, these lenders are “getting off too easy”.
This opposition is also fueled in part by the concern that there may be other, undiscovered predatory, deceptive, and/or illegal practices in place with these lenders that warrant further investigation and potentially prosecution. Since protection for the participating lenders is part of the package, this may prevent investigation, prosecution, and protection concerning such ongoing practices.
Likewise, President Obama announced that he anticipates creating a task force which will further investigate lenders’ wrongdoing. If such a task force is created prior to the execution of the settlement agreement, this could result in a failure of the settlement. The lenders are bargaining for protection from further litigation and may not be willing to pay such sums without that promise.
Further, compensation to the victims of foreclosure is limited to a small class of persons damaged within a restricted date range. Homeowners with Freddie Mac or Fannie Mae loans will be exempt.
To learn more about this potential agreement, CLICK HERE or CLICK HERE.
