The following is an excerpt from John W. Schoen | January 26, 2012 | msnbc.com |
In the Wild West of the ongoing mortgage mess, there’s a new sheriff in town. And he’s not handing “Get Out of Jail Free” cards in return for a $25 billion check.
The appointment of New York Attorney General Eric Schneiderman to head a special task force that will investigate mortgage fraud marks a turning point in a year-long effort to resolve a wave of legal challenges to abusive and illegal foreclosure practices.
After a year of talks aimed at a settlement with five big banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC) — attorneys general in all 50 states this week have been are poring over the 100-page draft of a the $25 billion deal requiring bankers to commit to modify problem loans that they have been slow to do until now. Under the proposed terms, the banks would also agree to follow strict foreclosure guidelines and procedures and contribute as much as $5 billion to foreclosure relief programs.
On Wednesday, President Barack Obama tapped Schneiderman to co-chair a joint federal-state task force to pursue criminal charges related to abusive mortgages and the bundling of those loans into investments. Some observers suggested the appointment was intended to blunt Schneiderman’s opposition to the multistate settlement. Schneiderman has said he’s not about to let bankers off the hook.
“My concern … has always been to make sure that we’re not releasing claims that obviously now are even more important to me because I’m investigating them,” he told reporters Wednesday.
From the beginning of the settlement talks, the five big banks have been holding out for a blanket waiver of legal liability to protect them from future lawsuits or prosecution. The creation of Schneiderman’s task force makes that blanket waiver extremely unlikely. It may even collapse the deal, JP Morgan Chase Chief Executive Officer Jamie Dimon, told CNBC.
“My own read is (the creation of the new task force) has a pretty good chance of derailing it,” said Dimon.
The proposed settlement was also dealt a major blow Wednesday when California Attorney General Kamala D. Harris said its terms would limit her ability to bring civil charges against mortgage lenders that wrongfully foreclosed on homeowners.
Read more at: msnbc.com
