Investigations had started from last fall by the attorneys general of all the states, HUD, the Justice Department and the federal regulators including the Federal Reserve against five of the largest banks for foreclosure abuses. But since then cracks have developed. Without proper completion of investigation the team is being accused of rushing into a monetary settlement with the financial entities that will give them immunity from the state lawsuits. But at least three of the states have broken away from the move and rejecting the idea of limiting the accountability of the banks from the grave offences.
The attorney general of Massachusetts Martha Coakley clearly stated in a letter to the assessors of the counties, “Massachusetts will not sign on to any global agreement with the banks if it includes a comprehensive liability release regarding securitization and the MERS conduct”. MERS, a pan American company set up by the mega banks recorded the titles through its digital system enabling the banks to skirt fees to be paid at the records office; also plenty of hassle and paper work was avoided. MERS is now being charged for illegal dealings.
Courts are now being overwhelmed by cases brought by individual house owners who have faced wrong foreclosures. They now want to know whether the foreclosure move and seizure had been legal. It is alleged that the entity foreclosing, in many instances, MERS, did not have the legal standing to do so as they did not own either the mortgage or the promissory note.
Top prosecutors at Delaware and New York have already raised their voices regarding giving the nod to any such settlement that would release the banks from liability.
A settlement would have partly resolved the problem between the lenders and the house owners. It would lay out future guide lines for the banks to follow. The agreement would make the banks pay compensation in dollars to those who have been wrongly foreclosed upon. But the longer time it takes for talks to drag on the less likelihood is there of an accord being reached, opines analysts.
The lead to the investigations is being given by Tom Miller the attorney general of Iowa. He has been pushing for an early settlement. He said, “In many cases a loan modification is in everybody’s best interest, the homeowner, the investor, services and the national economy. I know it’s worth our best efforts to save as many homes as we can”.