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Attorneys General Announce Settlement of Robo-Signing Investigation With Five Major Lenders

February 10, 2012

Vincent Howard and our team of San Bernardino foreclosure defense attorneys were closely tracking the 16-month negotiations between the state attorneys general and the five largest mortgage lenders. So we were eager to read about the settlement that was finally reached Feb. 9 between 49 states and the lenders. The settlement involves a total of $25 billion in commitments from the lenders, to be paid to the states participating (every state but Oklahoma). Though the purposes of the money have not been completely determined, officials estimated that $17 billion will go to principal reductions for current homeowners, while those who have lost their homes to improper foreclosures, or without being offered an alternative, can make claims for $1,500 to $2,000. Borrowers who want to know more can visit a national mortgage settlement FAQ.

California and a few other states declined to join the settlement until recently, saying it was not adequate to compensate borrowers and could compromise their ability to pursue independent investigations. The settlement as it was reached addressed some of those concerns by allowing state and federal authorities to continue investigating fraud claims, including fraud against borrowers as well as fraud against investors in mortgage-backed securities. They also may bring criminal complaints, and indvidual borrowers and investors' rights to bring claims are not affected. However, the settlement does release the participating lenders from other claims by authorities, such as lawsuits over wrongful foreclosures and duplicity when loans were originated, a problem during the height of the bubble. The settlement also repeats provisions from previous settlements, such as a requirement for lenders to provide a single point of contact for those seeking loan modifications and a ban on dual-track foreclosures.

The settlement was generally perceived as unfavorable to banks, with far less immunity than they originally hoped for. Banks praised it for reducing their uncertainty, but investors driving down stock prices. However, consumer advocates said it was at best only the beginning of accountability for lenders. As the Baltimore Sun reported, homeowners nationwide are underwater by a total of $700 billion, and $25 billion is only a fraction of that. Some advocates noted that the size of the payments is unlikely to hurt the lenders -- which means it may have no real deterrent effect. Housing workers on the ground noted that people with government-owned or government-issued mortgages, including veterans and lower-income people, will not be eligible. And some noted that $1,500 to $2,000 is nothing compared to the financial and personal cost of fighting foreclosure unsuccessfully.

At Howard Law, P.C., we believe that this amount of money, while certainly better than nothing, can't come close to adequately reflecting what our clients go through when they face foreclosure. Leaving aside the personal stress and heartbreak of being foreclosed, homeowners in this position face very real financial costs. They include the cost of any professional help they hire -- including Placentia foreclosure defense lawyers like us or foreclosure defense companies -- as well as the cost of moving, the costs of finding alternative housing and the costs created by the massive hit to their credit reports. For those who could have avoided foreclosure but were bullied into it by robo-signing and other bank tactics, adequate compensation would likely be much, much higher. Fortunately, those who are dissatisfied with the payments retain the option of pursuing their own claims, with help from Vincent Howard and our San Diego County foreclosure defense attorneys.

If you believe you were unfairly foreclosed or are about to be, and you'd like to discuss your legal options with an experienced attorney, call Vincent Howard and our whole team at Howard Law. You can reach us online or call toll-free at 1-800-872-5925.

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