States are facing a deadline of today to sign onto a deal over abusive foreclosure practices. The settlement, with the nation’s largest banks, would address issues like so-called "robosigning." That’s when bank employees signed off on foreclosures like they were working an assembly line, without properly checking the documentation.
Under the reported details of the deal, banks will pay billions to homeowners who lost their homes to foreclosure. But several of the largest states in the country, including California and New York, have yet to officially sign on.
This deal has been in the works for a year. Banks have been trying to limit their legal liability for "robosigning." Meanwhile, state attorneys general have been trying to get the most financial relief they can for homeowners.
The settlement now in the works would provide as much as $25 billion total. That would work out to somewhere between $1,500 and $2,000 for the average homeowner.
Peter Morici at the University of Maryland has been following these up-and-down settlement talks: "It’s not that the people who were foreclosed on weren’t behind and indeed worthy of losing their homes," he said. "But rather, the procedures and processes were not adhered to and there was gross negligence."
Meanwhile, California and New York have been pushing for more. More financial help for struggling homeowners who are still in their homes, but are underwater on their mortgages. And more leeway to pursue legal action later against the banks.
Reports out this morning say the settlement has been adjusted to meet some of those needs, which is good news for "a lot of relief to homeowners who are behind on their mortgages and facing foreclosure,"Morici said. "Many foreclosures will go forward if this agreement is signed. However, we can expect that some bankers for gross misdeeds may be prosecuted."