Apparently efforts by US banks to win broad liability releases are proving to be a major obstacle in talks to resolve foreclosure practices and mortgage servicing.
The liability releases would give the US Banks protection from further state and federal probes into their mortgage practices, including the lending and securitization of loans, and would form part of a settlement which could exceed $20 billion. However these attempts are encountering resistance, with the Delaware Attorney General Beau Biden and New York Attorney General Eric Schneiderman both saying they don’t want further investigations blocked by a settlement of liability.
Biden in particular is quoted as saying he has “strong reservations” over the deal, particularly over the practices of securitization and lending.
State attorneys from all 50 states are in the midst of negotiating a nationwide agreement on foreclosure practices involving the five largest mortgage servicers in the country, which are Citigroup Inc., Wells Fargo & Co., JP Moore and Chase & CO., Bank of America Corp and Ally Financial Inc. The settlement is intended to set standards as to how banks service loans, conduct foreclosures and interact with borrowers, and is also seeking monetary payments.
According to Jamie Dimon, chief executive officer of JP Morgan Chase, the bank is prepared to go to court in order to get the settlement done correctly, as the bank would rather litigate it than be subject to double and triple jeopardy.
But Biden feels that claims in areas which haven’t been fully investigated shouldn’t be relinquished, and says “I hesitate to release these claims and those potential liabilities, mostly because we’re still in the midst of investigating many of the other related issues.”
In May, California Attorney General Kamala Harris announced that a mortgage fraud task force would investigate the sale of mortgage-backed securities to investors and mortgage lending, so it looks as if this problem is set to rumble on for a while yet.