State attorneys general have until Friday to sign on to the settlement draft proposed last Monday that would resolve claims against the nation's top five mortgage servicers surrounding documentation errors in foreclosure processing, according to the _Wall Street Journal's_ Ruth Simon.
Based on a document obtained by the _Journal_, Simon says the deadline has been set by lead negotiators who are trying to pull together an agreement between states, the U.S. Department of Justice, HUD, Ally Financial, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.
The year-long back-and-forth between states' lead counsels and the nation's largest mortgage servicers may be in its final days Ã¢â‚¬Â¦ possibly.
Two state attorneys general have already rejected the settlement proposed. Delaware Attorney General Beau Biden and California Attorney General Kamala Harris have both voiced their opposition to the agreement as it stands.
Ian McConnel, director of the fraud division for the Delaware attorney general, says BidenÃ¢â‚¬â„¢s opposition to the settlement Ã¢â‚¬Å“should come as no surpriseÃ¢â‚¬Â given his prior public comments on the issue.
""We've reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California,Ã¢â‚¬Â Shum Preston, spokesperson for the California Justice Department told DSNews.com.
Ã¢â‚¬Å“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability. At this point, this deal does not suffice for California,"" Preston said.
Ã¢â‚¬Å“With about one out of every five of the nation's foreclosures being in California, the value of any settlement without the inclusion of the Golden State may not be of interest to the banks,Ã¢â‚¬Â according to James Frischling, president and co-founder of NewOak Capital, an advisory, asset management, and capital markets firm.
Frischling says without a release from California, Ã¢â‚¬Å“[t]he liabilities they [the servicers] face would still be massive, so California is the 800 pound gorilla in the room that must be part of any settlement.""
The settlement terms could include as much as $25 billion in penalties assessed against the servicers, which would be used to fund principal writedowns and mortgage modifications and be used to compensate borrowers impacted by servicer errors.
ItÃ¢â‚¬â„¢s been reported that smaller servicers may also join the settlement, which would release them from future litigation by the state and federal officials involved on matters related to past documentation and affidavit issues.
The _Washington Post_ reports North Carolina Bank Commissioner Joseph Smith has been tapped to ensure that the terms of the settlement are carried out. Smith was President ObamaÃ¢â‚¬â„¢s pick to lead the Federal Housing Finance Agency (FHFA) back in November 2010, but his nomination failed to win approval in the Senate.