U.S. banks to resist loan mods in mortgage probe
U.S. banks being probed over their foreclosure practices expect to negotiate with state attorneys general, but they are unlikely to agree to forced loan modifications, lawyers for lenders said this week.
Big mortgage servicers such as Bank of America Corp (BAC.N)and JPMorgan Chase & Co (JPM.N) are under the microscope over the use of "robo-signers" -- people who sign hundreds of affidavits a day.
U.S. attorneys general for all 50 states are jointly investigating whether bank units that foreclose on bad loans failed to review documents properly or submitted false information to evict delinquent borrowers.
Lawyers for big banks say servicers want to be cooperative with the AGs and clean up their procedures, but they do not want to be forced into modification programs that come with huge logistical headaches and limit banks' ability to handle delinquent mortgages on a case-by-case basis.
Attorney Andrew Sandler, who represents lenders at Washington, D.C. firm BuckleySandler, said settlement talks will get contentious if AGs seek such remedies as loan modifications.
"That's where servicers will draw a line in the sand," Sandler said on Sunday.
Other lawyers involved in the AG probe also said banks would resist a settlement based on loan modifications. Alternatives could include fines or even a fund to help foreclosed families relocate.
Any settlement is likely to be complicated by the number of states involved and the position of individual banks.
Richard Gottlieb, a Chicago-based Dykema attorney who also has lender clients, argues that servicers do not have the authority to force modifications beyond what is allowed in contracts with investors.
"The servicer doesn't have the right to modify a loan, the owner does," Gottlieb said, adding that modifications are irrelevant if the house is vacant.
[Source: By Dan Levine, Reuters, San Francisco, 26Oct10]
Informes sobre DESC
|This document has been published on 06Nov10 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.|