What are some of the major concerns with the Attorney General's Foreclosure Settlement?

A: We’ve read a lot of articles in the news about the Attorney General’s foreclosure settlement with the major banks and servicers.

We’ve read all we can about that settlement, although we haven’t been able to see the entire agreement because that consent decree, to our knowledge, has not been filed in court yet.

But we have some concerns about the settlement from a consumer and borrower standpoint, and from the standpoint of private consumer lawyer.

The first major concern is that the settlement was entered into from what appears to be a situation where there was no full investigation done.
Now the US Government and the fifty state Attorney General’s have an incredible amount of subpoena power and could have done a very detailed and thorough investigation on all of the wrongful foreclosure and the robo-signing instances throughout the country

We will never know what really happened behind the scenes until that full investigation is done.

Now the second issue, we’re concerned that borrowers are not going to get enough relief under the settlement.

There’s talk of big numbers, billions of dollars in the settlement but how does that translate and get down to borrowers?

If we look at the loan modifications promised in the settlement, we’ve seen all that before.

The federal government ran a loan modification program, which was terrible, it was a dismal failure. We don’t want to see more of that again for these same borrowers.

Second the issues of refinancing; well that’s kind of a bit like a coupon settlement, you’re going back to the mortgage industry and basically buying more services from them.

There’s a big concern whether people are going to have the credit, the credit to really qualify for those refinancing and now the principal reduction.

That’s a little too late.

The principal reductions for many folks should’ve came a long long time ago and we don’t understand how a principal reduction helps someone pay the current amount on their mortgage.

Now the issue regarding the wrongful foreclosures, where they’ll receive up to two thousand dollars.

I don’t know how that relief is adequate for anyone.

If you’re like the folks we know in Michigan and Arizona who their homes were wrongfully foreclosed on, their families were kicked out of those homes, had to move somewhere else and then the bank reveals “oh sorry it’s a mulligan, here we’re just going to take it back and give your house back.”

Well that’s a problem, you’re going to give those folks two thousand dollars for being kicked out of the house and losing their home?

We don’t see how under any circumstances two thousand dollars for a wrongful foreclosure is anywhere near adequate.

A fund should be set up and there should be a damage matrix, like in mass torte settlements, where folks can prove their claims and get paid out of a fund rather than just two thousand dollars.

Now lastly the servicing standards announced in the settlement, although we haven’t read them all, we have concerns about those servicing standards.

What it appears from first blush is that the services are now going to have to comply with the law.

Well they had a requirement to do that all along.

Without regulation in effect, rather than a consent decree which expires in a certain period of time, without regulation and better yet legislation we don’t see how in the future the servicing industry’s not going to fall back into the same patterns we’ve been seeing all along.

So we hope those concerns for borrowers are somehow resolved in the settlement but we’ll see how it plays out over the following months and years as the settlement is implemented.

Legal Help for Wrongful Foreclosure and Seizure in Any State. Phillips & Garcia, P.C., a leading law firm in wrongful foreclosure and seizure cases, is now taking cases in any state where there has been a wrongful foreclosure, lock-out and trash-out of a borrower's home. We are licensed in Massachusetts and associate with a qualified attorney in your state.