SALEM, Ore. (Legal Newsline) - Oregon Attorney General John Kroger said Wednesday he plans to join a settlement with the nation's top mortgage servicers.
"The Oregon Department of Justice is deeply committed to protecting consumers," he said in a statement.
"In assessing any potential consumer protection settlement, I compare the benefits of the settlement with potential benefits that might accrue in the future if we chose to litigate rather than settle. I have made that assessment in this case, and I am confident that signing this agreement is in the best interest of Oregon consumers."
Kroger said the deal penalizes the banks for engaging in wrongful foreclosure practices and brings "badly needed" relief to his state's distressed homeowners.
The attorney general noted he is "very interested" in pursuing multi-state and independent investigations of illegal mortgage securitization and other practices that led to the housing crisis.
"Because the release in this agreement is narrowly drafted, it will allow Oregon to pursue these matters aggressively," Kroger said. "Simply put, I am not confident we could get a better agreement on this limited set of issues if we litigated for several more years."
Talks between the state attorneys general, federal officials and the five banks -- Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. -- have dragged on for months now.
The probe began in October 2010 with inquiries into so-called "robosigning" practices, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.
The newest deal is said to lower nearly 1 million homeowners' mortgages by about $20,000 and provide for payments of $1,800 to those harmed by the banks' lending practices.
However, the settlement would cover only those mortgages held by the five banks, not those held by Fannie Mae or Freddie Mac.
Kroger said further details about the deal would be released next week, but provided some highlights pertaining to his own state, in particular:
- An estimated $30 million would go to the State of Oregon; and
- An estimated $100 million to $200 million in relief would go to distressed state homeowners, including "underwater" borrowers and homeowners facing foreclosure.
The attorney general said the agreement, which is not final, still must be submitted to a federal judge for approval.
The proposed settlement was, at one point, rumored to be $25 billion. But that could change now that California Attorney General Kamala Harris has rejected the deal, calling it "inadequate."
Last week, Harris, who stepped away from negotiations in September, said the newest version was still too lenient, providing too much protection for financial institutions, and would prevent the State from taking legal action against the banks.
Without California's support, it is said the deal could decrease by as much as $6 billion.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.