States have until Feb. 3 to decide whether to accept a proposed nationwide settlement of a foreclosure probe with banks including JPMorgan Chase & Co. and Citigroup Inc. (C) that may total as much as $25 billion.
State and federal officials have been negotiating an agreement with the largest mortgage servicers that would set standards for how banks conduct home foreclosures while providing mortgage relief to borrowers. Any accord would be separate from a state-federal probe of mortgage securitization announced last week.
Nevada Attorney General Catherine Cortez Masto wrote in a Jan. 27 letter to the U.S. Justice Department, the Department of Housing and Urban Development and Iowa Attorney General Tom Miller, who is helping to lead negotiations, seeking more details on the deal. Masto said she needs answers quickly to 38 questions to evaluate the agreement because the sign-on deadline is Feb. 3.
“I need this information as soon as possible to allow my office to continue to evaluate the proposal on behalf of the state of Nevada,” she wrote. Jennifer Lopez, a spokeswoman for Masto, confirmed the letter, a copy of which was obtained by Bloomberg News, and declined further comment.
All 50 states announced an investigation into bank foreclosure practices in 2010 following disclosures that companies were using flawed documents in seizing homes. A group of state attorneys general and federal officials have since negotiated terms of a proposed settlement.
Separately, Joseph Smith, the North Carolina commissioner of banks, will serve as monitor to ensure banks comply with terms of the settlement, according to a person familiar with the matter who wasn’t authorized to speak publicly about it. A representative of the office couldn’t be reached for comment after regular business hours yesterday.
States are now considering whether to sign on the agreement and discussed the terms last week. At a meeting in Chicago with officials from Democratic attorney general offices, Miller declined to comment about whether there’s a deadline for states to accept the deal.
“We, along with our federal partners, are responding directly to Attorney General Masto to try to address her concerns,” Geoff Greenwood, a spokesman for Miller’s office, said in an e-mail yesterday. Greenwood confirmed the Feb. 3 deadline.
Masto is part of a group of attorneys general including New York’s Eric Schneiderman and Delaware’s Beau Biden who have said any settlement shouldn’t provide liability releases to the banks for claims that haven’t been investigated.
‘Inadequate for California’
Biden has said he won’t sign onto the deal as drafted. California Attorney General Kamala Harris’s office last week called it “inadequate for California.”
“You investigate first and settle later, and we’re still in the midst of investigations,” Biden said in an interview last week.
Schneiderman, who’s joining federal agencies to investigate the bundling of mortgage loans into securities sold to investors, said in an interview last week that the releases in the proposed foreclosure settlement will allow that probe to proceed.
“That major hurdle is out of the way,” he said.