States still divided on mortgage probe

One year ago, state and federal officials started a probe into shoddy mortgage practices and foreclosure mishandlings of major U.S. banks that has yet to reach a settlement. Many of the state attorneys general and federal officials do not agree on how best to arrange the settlement and how much responsibility the lenders should face for the housing crisis that started in 2008.

Bloomberg reported that all 50 states were originally involved in the investigation, which has now broadened to force banks to provide mortgage relief to struggling homeowners affected by the illegal practices. But individual states are considering taking up their own investigations to find more relief for homeowners, which could put a nationwide settlement with the banks out of reach.

“We’re trying to reform the entire mortgage-servicing industry, which has been an intractable problem for this country the last four years,” Iowa Assistant Attorney General Patrick Madigan, who is helping to lead negotiations, said in an interview with the news source. “That’s something nobody else has been able to achieve.”

Florida's Attorney General Pam Bondi said all states that have pulled out of the negotiations should return to help the remaining states decide on a settlement. Bondi understands a settlement has not been reached, and hopes to expedite the finalizing of the deal so more homeowners can receive aid from the lenders, Reuters reported.

The news source reported that in September the attorney general of California left the nationwide negotiation with the lenders citing that the proposed deal did not provide enough relief to affected homeowners, and was granting banks too [much?] immunity from further legal claims and not making them take responsibility for their actions and the impact it had on the housing market. 

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