Foreclosures Abound and Attorneys General want to Save Homeowners
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The US economy is in dire straits while unemployment is high and foreclosures abound. The attorney general of California, General Kamala Harris, has recently dropped out of talks involving lenders. It may be pointed out here that lenders became embroiled in a controversy last year because of robo signatures.
They had been signing on documents even without verifying them properly. Hence, many people have lost homes to foreclosures. Now the attorney generals of various states have started to protest. In fact, meetings are being held regularly with Citigroup, Bank of America, JP Morgan Chase, and Ally Financial.
Federal officials are trying to make settlements that include reductions on principal amount payments. These settlements are expected to improve the real estate scenario. Banks want a deal to stave off legal implications. Besides Ms. Harris, the attorney general of New York, Eric Schneiderman, has also raised objections.
However, there is no agreement currently on divisive issues. Ms. Harris’s ultimate decision to move away from the negotiation table has made others aware that there is a need to quickly make a decision. The attorney general of Iowa, Tom Miller, said that many states will sign the agreement. He is confident that the deal “will not only hold banks accountable…but will help struggling homeowners across the country sooner rather than later, in a meaningful way.”
There has been political pressure from various factions too, which has further settlement to be reached. Liberal groups have asked for a much higher settlement. The Obama administration, too, is working hard to ensure that the process works out smoothly. Besides bipartisan politics, the economy is also being weighed down by underwater mortgages. A home is said to be underwater when the owner owes more on the home than it is worth.
Ms. Harris also was reported saying that she would only consider a deal that is more owner-friendly. She also mentioned her concern about the rapid increase in foreclosures.
Massachusetts Attorney General Martha Coakley, on the other hand, has “lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures.” The issue of robo signatures is being investigated upon.
It may be mentioned here that the mortgage crisis triggered in the U.S. occurred because people took out mortgages that they know they couldn’t pay off. So when the economic growth bubble burst, these people lost jobs and defaulted on loans. The foreclosure crisis closely followed behind the bursting of the economic growth bubble.
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