Mortgage Settlement Proposal Unpacked

Yesterday, we quoted from Gretchen Morgenson’s column on how the Attorneys General are jumping to settle too quickly, with inadequate information.  And last week we shared Max’s comments on the 27-page term sheet.  Like most experts, at least those interested in consumer protection, both raised their voices against a quick and inadequate settlement and lamented the fact that the AGs found it necessary to create a requirement that banks refrain from committing perjury in their affidavits.

Since it may not be too late, we want to throw one more analysis out, this one from Abigail Field at Daily Finance.  Field’s piece points out (via Naked Capitalism) that we’ve heard this tune before, eight years ago, and somehow we’re still right where we started.

Her information also points up just how critical it is for the AGs to take the time to dig in and find out what’s really going on:

I mean, the servicers haven’t even been honest during these negotiations: A consumer bankruptcy attorney who discussed some issues at length with the AG’s executive committee was asked for evidence of current servicer misconduct. The servicers had told the committee that no one misapplied payments, charged multiple late fees for a single late payment or did any of several other abusive practices anymore. They insisted all that had stopped two years ago. But since these practices are still common, the attorney had no problem producing the evidence. (And these seemingly pathological liars have law firms that boast of “a deep and invaluable reservoir of credibility with courts, prosecutors and regulatory agencies nationwide.”)

Who knows what other lies the servicers are telling? To stop servicer abuses, terms like those in the agreement will have to be enforced, especially giving borrowers the right to sue to enforce the agreement.

See full article from DailyFinance: