Tuesday, November 16, 2010

Robo-Signing Settlement – The Devil Is In The Details

Apparently, some of the largest banks are close to settling with the states on the issue of robo-signed foreclosure documents. CNBC's Diana Olick is reporting that although there is no single solution to the sloppy foreclosure practices, it seems that three of the largest mortgage bank servicers may be agreeing to the same solution. The plan is to create a fund that will be used to compensate borrowers who have already lost their homes to a wrongful foreclosure. Those homeowners will be required to prove they were wronged by the bank during the foreclosure process. The attorney general for each state will administrate the fund and will allocate the appropriate funds. A third party mediator will be put into service to review the claims made by borrowers to determine if a wrong had occurred.

Additionally, there are discussions centered around banks doing away with the dual track system of modifications and foreclosures; meaning, the foreclosure process will not begin until all options of modifications have been exhausted. I recently posted about a client who was in the midst of a modification and received a foreclosure notice. This all sounds promising, but like everything else, the devil is in the details. We will see.