AGs, banks move closer to settling robo-signing, mortgage servicing issues
The office of Iowa Attorney General Tom Miller said state AGs and banks are inching closer to resolving mortgage servicing and foreclosure issues at big banks. When asked about reports suggesting bank officials laboring toward a settlement, a spokesman for Miller's office said, "I can't confirm that bank officials worked over the weekend. They did not meet with us over the weekend." "We're getting closer, but I wouldn’t use the word 'imminent,'" said Geoff Greenwood, communications director for AG Miller's office. The projected $20 billion mortgage servicing settlement has been in the works for months. The deal would finalize issues AGs took up with the banks over robo-signing and other issues stemming from the handling of foreclosures. While a settlement would allow banks to put a large amount of foreclosure servicing issues to rest, Miller's office said the settlement would not resolve legal issues with mortgage-backed securities nor cases regarding fees related to Mortgage Electronic Registration Systems. Securities litigation, which includes RMBS-related lawsuits, remains a huge area of exposure for big banks. Monoline insurers, such as MBIA Inc. (MBI), are suing financial institutions like Countrywide, which is now part of Bank of America (BAC), saying misrepresentations made on mortgage loans unfairly put the insurers on the hook for excessive risks. The Association of Financial Guaranty Insurers went a step further in a report released in August, estimating "BofA repurchase obligations aggregate in the range of $10 billion to $20 billion" for its members alone. Then you have investors, and even one attorney general's office, rebuffing the $8.5 billion proposed mortgage-backed securities settlement between Bank of America and The Bank of New York Mellon, which served as trustee on one RMBS transaction. The investors and various government agencies have filed motions in court, claiming that agreement fails to address the concerns of other parties. Write to Kerri Panchuk.