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January 5, 2012
Analyzing a Likely Settlement between State AGs and Mortgage Servicers
According to Housingwire, a likely $25 Billion settlement between State Attorneys General and mortgage servicers may include the following elements described by DBRS structured finance analyst Kathleen Tillwitz:
- Approximately $17 Billion would be allocated for principal reductions;
- $3 Billion would be designated to cover the costs of refinancing for current, underwater borrowers;
- The remaining $5 Billion would be delivered in cash, $3.5 Billion of which will help fund state and federal foreclosure mediation programs and $1.5 billion will go to borrowers who suffered foreclosure abuses. The compensation payment to each borrower is estimated to range between $1,500 and $2,000.
However, strong criticisms of the proposed settlement that may delay the proposed settlement for several more months include:
- Likelihood that costs of principal reductions will be borne by investors in the residential mortgage backed securities, not mortgage servicers; and
- Likelihood that some borrowers may default in order to qualify for principal reductions under the settlement.
Link: http://www.housingwire.com/2012/01/04/debt-forgiveness-likely-to-dominate-ag-mortgage-servicing-settlement
(ag) Jan. 5, 2012, in Lending Issues, Predatory Lending, Consumer Protection
January 5, 2012 in Consumer Protection, Lending Issues, Predatory Lending/Subprime Lending | Permalink
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Comments
This proposed settlement is woefully deficient for a number of reasons, not the least of which is a deficient payout for abuses of borrowers and our legal system. In my opinion, contrition should start with consent decrees signed by mortgage servicers agreeing not to lobby Congress, nor to engage in obstruction of regulatory initiatives designed to protect consumers for a lengthy period of time. Finally, correction of systemic defects should conclude with Congressional legislation which precludes banks from tainting the system with its perpetual flood of cash.
Each and every citizen and business, local, state, and federal governments rely upon a secure, fair, and just federal banking system. So, given America's absolute reliance upon banking, our leadership in Washington must avoid half measures, and passing of legislation, only to have it diluted in the hallways of Congress with a wink and a nod. If Congress wants to elevate its stock with Americans, remove the buying of Congressional influence and votes by the financial services lobby, which taints process and justice for Main Street and the middle class...But then there's Citizens United!
Posted by: David Young | Jan 6, 2012 11:05:22 AM
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Posted by: payday loan maryland | Jan 10, 2012 12:19:59 PM
