Protesters Ream State AGs over Foreclosure Settlement
There is no official settlement.
There is no multi-billion dollar fund or penalty and there is no word from Federal Regulators as to how the banks will ultimately "fix" the foreclosure paperwork issues.
But a meeting here in DC of the fifty state attorneys general was too good to pass up for a couple of hundred protesters demanding, "a strong settlement that includes principal reduction on millions of mortgages."
I have to hand it to the Iowa deputy attorney general, Tam Orminston, who put himself into the middle of a crowd of troubled, and angry borrowers, led by National People's Action and PICO National Network. One by one borrowers told of their mortgage woes, amid shouts of "That ain't right!" from the surrounding crowd.
The protesters called a potential $20 billion settlement with the big banks "chump change," even though that number is far from agreed upon. As I stood watching, Missouri Attorney General Chris Koster came over to our camera to chat. He was advocating that a settlement be done quickly and almost sounded as if he were willing to back off some of the demands of a 27 page settlement "framework" from Iowa attorney general Tom Miller, who is leading the 50 state foreclosure investigation, that outlines new foreclosure procedures and loan modification mandates for the banks as part of a potential settlement. That document will be presented to all the AGs this afternoon but was leaked to the press Friday.
Koster did, however, say he would like to see the banks write down principal on troubled loans and added the $20-25 billion would certainly be enough for that. There is no dollar figure in the IA AG's document, as the penalty (which could end up being a fund banks pay into to be used for principal forgiveness) is still widely disputed among regulators and government agencies.
A spokesperson for the IA AG told me last week that the document AG Miller will present this afternoon is a "shot across the bow" of the big banks and that the settlement is still a "moving target."
Principal write down, forgiveness, whatever you want to call it, will be the big sticking point and the whatever billion dollar number will be too much and not enough at the same time.
I just have to throw out my own caution that if and when banks are forced to lower the amount of America's mortgages, suddenly you are going to see a whole lot more Americans "unable" to pay back what they promised. Those of us who are paying what we owe will get nothing, and this will be the overwhelming, and everlasting lesson of this latest crisis in history.