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Federal Official Believes Banks Ready to Pay $20 Billion to Resolve Robo-Signing Probe

June 15, 2011

Our Redlands foreclosure defense attorneys have written here many times about the progress toward a settlement in the robo-signing investigation. After the story broke last fall that major lenders were pushing through foreclosures with falsified paperwork and no safeguards, the attorneys general of all 50 states joined forces to investigate whether any laws were broken and what penalties might be appropriate. One suggestion widely floated in the media for settling the case was a fine of $20 billion, but lenders countered in May that they'd refuse to pay more than $5 billion. Now, the Huffington Post reported June 6, the federal prosecutor leading the talks has told the AGs he believes banks are ready to accept the $20 billion number.

The news came from anonymous sources listening to a phone conference between the AGs' offices and Associate U.S. Attorney General Tom Perrelli. After talking with the five lenders affected -- Bank of America, Chase, Ally, Wells Fargo and Citigroup -- Perrelli said he believed the banks had accepted that the settlement will cost more than they prefer. The deal is not finalized; several issues remain, including how much liability the lenders will be released from in the settlement. However, the news was encouraging for consumer advocates concerned that the AGs' group was de-fanged by previous federal settlements. Several states, including California, are conducting their own investigations into lender misconduct in the mortgage crisis.

As Orange foreclosure defense lawyers, we're pleased to see that the lenders may pay more serious consequences for their misbehavior than we thought. The federal settlements mentioned above were generally not very painful for lenders and required them to make few policy changes. That's unfortunate, because robo-signing isn't just about whether paperwork was in order -- it's also about whether the safeguards required by the paperwork were respected. By submitting false affidavits, lenders not only lied to the courts -- they also failed to check on basics like whether they had the right to foreclose. Despite lenders' protestations that this was just a technicality, a few cases of wrongful foreclosures have surfaced in the media. Many more foreclosures may have been legitimate but pushed through so quickly that there was no reasonable chance of finding an alternative.

Howard Law PC focuses on helping clients find alternatives to foreclosure, even when their loan servicers don't appear interested in helping. Because we've worked in this field since the beginning of the housing crisis, we know lenders have a long list of excuses for delaying and denying loan modifications. Over and over again, our Fallbrook foreclosure defense attorneys hear from clients about lenders repeatedly losing paperwork, requesting information they already have, providing contradictory information or using incorrect calculations. While borrowers resubmit their documents yet again and try to wait patiently for a decision, their loan servicers are quietly putting them through the foreclosure process. Don't wait to receive a foreclosure sale notice in the mail -- defend your home and your rights with legal action.

If your home is in default or foreclosure and you're tired of calling and calling the loan servicer without getting a response, call Howard Law instead. For a free, confidential case evaluation, send us a message through our website or call 1-800-872-5925.