Miller
WASHINGTON (Legal Newsline) - A spokesman for Iowa Attorney General Tom Miller, who is leading the ongoing settlement talks with the nation's top mortgage servicers, says the attorneys general and their federal partners are "getting closer" to a deal.
State attorneys general, the U.S. Justice Department, Treasury Department and the new Consumer Financial Protection Bureau are in the midst of negotiating a settlement with lenders Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc.
The probe began last October with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.
In an e-mail Wednesday, Geoff Greenwood said state and federal officials continue to meet with the banks. This week, they are meeting in Washington, he said.
Though sources at Citigroup and Bank of America have said the rumored $20 billion settlement is "imminent" and could be wrapped up this week or next, Greenwood said not quite.
"We are getting closer, but at this time I wouldn't characterize a deal as imminent," he said.
"I'd say we're likely, but not certain, to reach an agreement. I'm not sure how much longer it will take... we'll know more as we keep negotiating."
Greenwood said he couldn't go into much detail about the ongoing talks, but did note that there is no settlement at this point.
"We have taken on an enormous task and there are many, many moving parts. This is a case that focuses on homeowners, and we plan to limit the scope of the settlement to servicing and foreclosure abuses and practices," he said.
"We started a year ago with investigating robosigning and we will address robosigning practices. Most notably, we are trying to reform a dysfunctional servicing system and we have nearly finished working on this component of the negotiations."
Generally speaking, he said, the settlement they're working on has other components, including targeted principal reduction, other help for homeowners and foreclosure-related initiatives, and some sort of enforcement/monitoring mechanism.
When asked about liability releases, Greenwood said they're still working on release language and do not have a release agreement.
"We are negotiating an agreement that holds the banks accountable. We will not grant immunity from criminal prosecution. We will not release all civil liability. We will not release securities cases," he said.
More and more state attorneys general have come out against the releases, arguing they would let the banks off the hook when it comes to future investigations.
Kentucky Attorney General Jack Conway was the most recent to voice his concerns, last month.
Conway said he opposes any offer of government immunity to the financial institutions.
"We are a little concerned the banks may not be taking us seriously," Conway told the Louisville Courier-Journal. "We want them to know if they don't come up with an agreement we are going to take some actions."
Delaware Attorney General Beau Biden and Massachusetts Attorney General Martha Coakley both have said they would hesitate signing a deal that could protect the banks from continuing mortgage investigations.
Nevada's Catherine Cortez Masto has said she was going to be "cautious" about whether to sign a settlement with the five banks, especially if it could impact her state's own litigation.
Perhaps the most opposed is New York Attorney General Eric Schneiderman, who has argued that servicing is at the center of the proposed deal with the banks.
However, Schneiderman, who is currently doing his own comprehensive investigation into the mortgage industry, was removed from the committee negotiating a nationwide settlement with the lenders in August.
At the time, Miller said the New York attorney general "actively worked to undermine" its effort.
But Schneiderman isn't the only attorney general to leave the negotiating table.
Earlier this month, California Attorney General Kamala Harris left of her own accord.
Harris sent a letter to Associate U.S. Attorney General Thomas Perrelli and Miller, calling the proposed deal "inadequate" for homeowners and saying it provided too much protection for financial institutions.
"After much consideration, I have concluded that this is not the deal California homeowners have been waiting for," the attorney general wrote.
"(The) relief contemplated would allow too few California homeowners to stay in their homes."
Harris' move seemed to be in response to pressure from union leaders and politicians.
Last month, Californians for a Fair Settlement sent a letter to Harris, asking that she reject any proposed deal.
California Lt. Gov. Gavin Newsom also joined the group in its call, calling the deal a "deeply flawed settlement proposal."
The group said the proposed amount is "outrageous," adding that it wouldn't cover damages for California much less the entire nation. It, too, pointed to the settlement's liability release language.
Miller, in a statement issued after Harris' departure, seemed unfazed.
"California has been an important part of our team and has made a significant contribution to this case. However, the multistate effort is pressing forward and we fully expect to reach a settlement with the banks," he said. "This multistate is about foreclosures and mortgage servicing abuse, and we are 100 percent focused on providing relief to homeowners while it can still make a difference and save homes from foreclosure.
"Providing relief after the foreclosure crisis is over would be a hollow victory indeed. Individual states are situated differently and after a settlement is reached it will be provided to all 50 states so that each attorney general can make a decision on whether or not to join."
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.