Big Lenders May Be First to Settle Foreclosure Probe, Iowa Says
The five largest loan servicers, including Bank of America Corp. and JPMorgan Chase & Co., may be the first to settle with the 50 state attorneys general probing foreclosure practices, Iowa Attorney General Tom Miller said.
No settlements have been reached yet, Miller said yesterday in a phone interview. The other three are Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc., said Miller, the leader of the 50-state investigation. The five have 59 percent of the U.S. market, Miller said.
“What we’re looking at is five separate agreements with the five largest servicers,” Miller said. “We’re still a ways away” from reaching agreements, he said. “We’re working very hard to figure out what should be in the settlement.”
All 50 U.S. states are investigating whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The probe, announced Oct. 13, came after JPMorgan and Ally Financial’s GMAC mortgage unit said they would stop repossessions in 23 states where courts supervise home seizures, and Bank of America, the largest U.S. lender, froze foreclosures nationwide.
Tom Kelly, a spokesman for JPMorgan in New York, declined to comment. Shannon Bell, a spokeswoman for New York-based Citigroup, declined to comment. Gina Proia of Detroit-based Ally declined to comment. Shirley Norton, a spokeswoman for Charlotte, North Carolina-based Bank of America, declined to comment.
Teri Schrettenbrunner, a spokeswoman for San Francisco- based Wells Fargo, declined to comment, saying it was premature since no agreement has been reached.
The probe has since widened to include other mortgage practices, with attorneys general suggesting a potential resolution should include improving the loan modification process, barring foreclosures when people are modifying loans and creating a general fund to compensate homeowners who may have been victims of wrongful foreclosures.
Miller said the attorney-general group has had at least one face-to-face meeting with representatives from all five of the largest banks, along with “follow-up phone calls.”
The group will reach individual settlements rather than a global agreement with the servicers, he said.
“It won’t be the same document for everybody,” he said. “There are differences in the companies and in performances.”
The group isn’t pursuing a criminal investigation, Miller said. “Our focus is to reform the servicing process and that’s inherently civil, not criminal,” he said.
In an interview last week, Miller said the group might consider matters including whether servicers are charging borrowers appropriate fees.
“We hear stories far too often of it taking months before servicers get back to people, or they lose documents and that they don’t modify a loan when it makes sense,” Miller said last week.
The 50-state group “offers one of the most promising avenues to increasing loan modification and servicer accountability that we have seen so far,” said Paul Leonard, California director for the nonprofit Center for Responsible Lending in Durham, North Carolina.
He said the group would act more independently than Congress or federal regulators because of the influence of industry lobbyists in Washington.
“The attorneys general come at this with a fresh eye,” Leonard said in an interview yesterday. “They can assess and make changes that they feel necessary.”
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