February 7, 2012 / 4:41 PM / 6 years ago

Eyes on dissident states as U.S. mortgage deal nears

(Reuters) - Announcement of a broad mortgage settlement with major banks, that would bring relief to distressed U.S. homeowners, could come as early as Thursday, two people familiar with the matter said.

Negotiators said the federal-state mortgage servicing settlement already has the backing of over 40 states and the final number will depend on whether dissident states such as California and New York decide to join,

New York Attorney General Eric Schneiderman said he planned an announcement at 6 p.m. (2300 GMT) on Tuesday about the settlement, but spokesman Danny Kanner declined to provide further details on Tuesday afternoon.

A decision from California Attorney General Kamala Harris also remained elusive, and her office had no comment on Tuesday.

Florida Attorney General Pam Bondi, who has been on the team of states negotiating the deal, has also not confirmed her participation the deal.

“Florida is active on the negotiating committee, and when we are able to speak publicly about the matter we will,” Bondi told Reuters on Tuesday.

Some hard-hit states did make their support public on Tuesday. Michigan Attorney General Bill Schuette, for example, said in a statement he was joining the settlement.

Michigan expects to receive around $500 million in benefits under the deal, including $101 million directly to the state to fund housing and foreclosure prevention efforts, he said.

Under a settlement that state and federal officials have spent more than one year negotiating, top U.S. banks would resolve civil government claims about improper foreclosures and abuses in originating and servicing mortgage loans.

In exchange, the banks - Bank of America (BAC.N), Wells Fargo & Co (WFC.N), JPMorgan Chase & Co (JPM.N), Citigroup (C.N) and Ally Financial Inc - would pay up to $25 billion, much in the form of cutting mortgage debt for distressed homeowners.

Negotiators are trying to get as many states on board as possible to maximize the value of the settlement.

Delaware’s banking commissioner has come out in support of the deal, while the state’s attorney general remains on the sidelines, for now.

Delaware stands to leave up to $40 million in homeowner relief on the table, if it does not join a multi-state mortgage settlement, according to a letter from the state’s banking commissioner seen by Reuters on Tuesday.

Delaware homeowners would receive some $32 million in relief, and the state would receive $8 million to provide housing counseling and foreclosure prevention services, according to the letter.

PRESERVING LAWSUITS

Delaware Attorney General Beau Biden, who is the son of U.S. Vice President Joe Biden, has said he is opposed to the settlement as it is drafted, and wants to make sure he can preserve his lawsuit against MERS, the banks’ mortgage electronic registry, which he filed last year.

MERS is not a party to the settlement, but the proposed deal is expected in part to resolve claims against the banks for their use of MERS.

In a statement provided to Reuters on Tuesday, Biden’s office said he “continues to consider the terms of the settlement and advocate for improvements that address his concerns.”

    But the state’s banking commissioner, Robert Glen, in a letter dated Monday, said he would support the nationwide deal because it provides “immediate, substantial relief to struggling homeowners nationwide and in Delaware.”

    It is unclear if Delaware would still get some relief even if Biden does not sign on. Glen said in his letter that not all of the benefits would be available to Delaware in the absence of the attorney general’s agreement.

    State attorneys general faced a Monday deadline to report whether they planned to support the settlement. State banking commissioners, too, had to report their position to the Conference of State Bank Supervisors by February 6.

    Late on Monday Iowa Attorney General Tom Miller, who is leading the settlement negotiations on behalf of the states, said more than 40 states agreed to join the deal.

    AN ALTERNATIVE PLAN?

    States - including Delaware, California and New York - and several activist groups have criticized the terms of the proposed deal as too lenient toward the banks.

    Two top concerns have been whether the settlement would prohibit the states from lawsuits they had either already launched or were considering, and whether attorneys general would get relief tailored to their state’s needs.

    Under a draft of the settlement, the banks would provide $17 billion in loan modifications for delinquent borrowers; $3 billion in refinancing for homeowners who are current on their payments but unable to refinance because they owe more than their homes are worth; and around $1.5 billion in direct payments of up to $2,000 each to borrowers who lost their homes to foreclosure, according to Glen’s letter.

    Participating states will also receive a total of $2.5 billion for housing programs.

    Reporting By Aruna Viswanatha in Washington, D.C. and Rick Rothacker in Charlotte N.C., additional reporting by Karen Freifeld in New York and Michael Peltier in Tallahassee; Editing by Tim Dobbyn

    0 : 0
    • narrow-browser-and-phone
    • medium-browser-and-portrait-tablet
    • landscape-tablet
    • medium-wide-browser
    • wide-browser-and-larger
    • medium-browser-and-landscape-tablet
    • medium-wide-browser-and-larger
    • above-phone
    • portrait-tablet-and-above
    • above-portrait-tablet
    • landscape-tablet-and-above
    • landscape-tablet-and-medium-wide-browser
    • portrait-tablet-and-below
    • landscape-tablet-and-below