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Banks OK Foreclosure Settlement That Could Give State Homeowners $8.4 Billion

palmbeachpost.comMar 13, 2012

By Kimberly Miller

Florida's struggling homeowners are one step closer to getting a share of the state's foreclosure settlement - valued at $8.4 billion - after formal bank agreements were filed in federal court Monday.

The agreements with the nation's five largest lenders are the culmination of a nationwide attorneys general investigation that began in the fall of 2010 with allegations that forged documents were used to repossess people's homes.

Included in the settlement are JPMorgan Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial.

The agreements, which outline strict new standards for handling mortgages, still need a judge's approval. But Florida Attorney General Pam Bondi said the filing in the U.S. district court in Washington is a significant accomplishment.

The landmark agreement, considered the largest federal/state civil settlement ever obtained, was announced Feb. 14.

"Today's filings pave the way for court orders that will provide substantial relief to Florida's homeowners, hold banks accountable and reform the mortgage servicing industry," Bondi said.

South Florida foreclosure defense attorneys were able to do only a cursory review of the hundreds of pages filed in court Monday, but at least two lawyers found positives for homeowners.

Royal Palm Beach foreclosure defense attorney Tom Ice, whose firm was instrumental in discovering the robo-signing issues that ultimately led to the nationwide investigation, said there are now higher standards for banks to complete a foreclosure.

"The requirements for providing documentation of loan ownership and good-faith verification to foreclose will undoubtedly make robo-signing more difficult," Ice said. "And in some cases, where the necessary documents and information is missing, it may create an insurmountable problem for the bank to foreclose quickly, or foreclose at all."

Though the details of the settlements were not available until Monday's court filings, critics have derided the agreements for releasing banks from state-sought civil and administrative claims, including claims for damages, fines, remedies and sanctions in relation to foreclosure wrongdoing.

But several other claims are not exempt from prosecution, according to Monday's agreements. Those include criminal complaints, as well as claims against securities and securitization; claims against the Mortgage Electronic Registration System, or MERS; and claims of county or city records clerks.

Individual homeowners are still clear to file lawsuits against their lenders and generally will not be asked to waive that right if they receive aid from the settlement.

"I was most concerned that there would be some sneak releases for things that we think the banks should be held liable for," said Roy Oppenheim of Oppenheim Law in Weston. "But they are not being released from suits against MERS or securitization."

Oppenheim also noted that foreclosure processing companies, such as the now closed DocX, were not given "get-out-of-jail passes."

Nationally, the $25 billion deal with the banks could provide up to $40 billion in cash, refinances and principal write-downs to homeowners.

Florida negotiated a special guarantee with Wells Fargo, JPMorgan Chase and Bank of America ensuring at least $4 billion will be awarded in the form of principal reductions, loan modifications and refinances for underwater borrowers.

Florida's haul includes a $334 million payment to the state, 10 percent of which is considered a penalty. The attorney general has discretion on how to use the remainder, but it generally must go to foreclosure-rescue programs or fraud investigations.

About $171 million will be cash payments to Florida borrowers who lost homes to foreclosure between 2008 and 2011 and were victims of servicer abuse. An additional $309 million will refinance underwater borrowers current on their loans.

Ice said he is concerned about the enforcement provisions in the settlements, which he described as an "agreement to agree."

"We don't want this to go the way of the Florida Supreme Court's requirement that banks verify their pleadings," Ice said. "All that accomplished was that the banks began robo-verifying the complaints."

Back to March 2012 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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