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Settlement nears on making banks reduce loans
Still, several housing and community organizations have complained that the settlement wouldn’t go far enough.
George Goehl of the National People’s Action, a collection of community housing groups, said $25 billion for homeowners would be a “paltry down payment,” considering that roughly 11 million homes are underwater by a combined $750 billion.
“Anything less than $300 billion is a win for the 1 percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud,” Goehl said.
But if California and New York agree to the deal, other holdouts, including Arizona and Nevada, would likely follow suit.
“My office is continuing to review the intricate draft settlement terms and advocating for improvements to address Nevada’s needs,” Nevada Attorney General Catherine Cortez Masto said in a statement.
Delaware might not. Attorney General Beau Biden has said he still has concerns about the settlement “as currently constructed,” he said in a statement.
“We are continuing to review the complicated documents that we received a week ago, and are continuing to advocate for improvements to address our concerns,” Biden said.
The settlement would end a painful chapter that emerged from the 2008 financial crisis, when home values sank and millions edged toward foreclosure. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — an action known as robo-signing.
The agreement also promises to reshape long-standing mortgage lending guidelines. It would make it easier for those at risk of foreclosure to make their payments and keep their homes.
Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement.
The settlement would apply only to privately held mortgages issued from 2008 through 2011. Banks own about half of all U.S. mortgages — roughly 31 million loans.
The deal is subject to approval by a federal judge.
• Associated Press Writers Randall Chase in Dover, Del., Michelle Price in Phoenix, Ken Ritter in Las Vegas, Donald Thompson in Sacramento, Calif., and Michael Virtanen in Albany, N.Y., contributed to this report.
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