WASHINGTON — Iowa’s attorney general said Monday that it will be several months before a final deal is reached with five big U.S. banks on changing the system of foreclosures to compel lenders to modify more struggling homeowners’ loans.
AG Tom Miller is a leader of the negotiations with the banks by the 50 state attorneys general and federal regulators. The talks began last fall after the state and U.S. officials launched an investigation of whether big banks cut corners and used flawed documents to foreclose on borrowers. Public and lawmakers’ anger flared over the disarray stemming from faulty foreclosure documents in the so-called “robo-signing” scandal.
“I’m hoping that we can wrap it up in a couple months,” Miller said.
He wouldn’t discuss specifics of the proposals. Under draft terms submitted to the banks last week, they reportedly would be barred from starting foreclosure proceedings while homeowners are trying to modify mortgage terms.
The lenders could be fined under the final agreement or forced to write down the value of their loans to borrowers who owe more on their mortgages than their homes are worth. The banks are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and GMAC. Together, they have 59 percent of all U.S. home mortgages, according to Miller.
Also under the draft terms, a lender’s denial of a mortgage modification reportedly would trigger a review by an independent individual or panel.
