Deal Nearly Finalized for Robosigners to Pay $25 billion
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UPDATED: Jan 30, 2012
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After countless numbers of the nation’s home loan borrowers were fraudulently foreclosed on by the big banks’ practice of “robosigning,” the federal government and the guilty financial institutions may be nearing a settlement.
The settlement is reported to be worth $25 billion, which will be distributed to all mortgage loan borrowers who were victimized by fraudulent foreclosures, according to the Huffington Post. This settlement is exclusive to robosigning practices, and will likely bar the banks from facing any other repercussions for foreclosure fraud. However, this deal will not exclude guilty banks from facing charges for other abuses and violations that took place during market’s collapse.
This agreement between our nation’s legal system and predatory lending practices proves to be a large victory for attorneys general who refused to let the offending banks off the hook by signing a quick and small settlement. Assuming the settlement finalized, it will also prove to be a huge victory for the victimized mortgage loan holders.
“I think it is fair to give [New York Attorney General] Eric Schneiderman and the other progressive attorneys general a lot of credit for holding the line,” said a source intimate with the negotiations to the Huffington Post. “This is a big victory for them.”
Just two days prior to the announcement of this landmark settlement, President Obama announced the creation of a mortgage crisis unit, which is to be headed by Schneiderman. The mortgage crisis unit is but another step in creating government agencies geared towards protecting the public from predatory or deceptive financial practices. The Consumer Financial Protection Bureau (CFPB), headed by the newly appointed director, Richard Cordray, was also established this month, and will likely work closely with this new crisis unit.
However, the settlement has yet to be finalized. While Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial have all agreed to the settlement, signatures from other involved banks are still pending, which has prompted many to wonder whether or not all will be obtained, according to The Associated Press.