When the robo-signing settlement negotiations finally ended and officials took their turn at the different podiums Thursday, one man was noticeably absent.
Federal officials and 49 state attorneys general agreed to a $26 billion settlement with the top mortgage servicers found to be signing documents en masse without a proper review and foreclosing on borrowers while simultaneously considering them for a modification.
As Iowa AG Tom Miller put it: The system had become “dysfunctional.”
The only one who didn’t sign onto the deal Oklahoma AG Scott Pruitt agrees, but he struck his own settlement Thursday that he says doesn’t include a misplaced attempt at a housing stimulus.
HousingWire: How much pressure were you under to sign onto the deal?
Pruitt: Well, to the investigation that began in October 2010, I think the investigation was very helpful to the people of Oklahoma in that it allowed us to assess the various practices that we believed were unlawful. It helped us determine what was the right and sufficient amount of damages.
It was a great investigative process. I think that’s key. This was not a multistate litigation. This was a multistate investigation. We were a full participant on the investigative committee. Ultimately, we each had to make a decision about what was most beneficial to our states.
Ultimately, I believed that the global settlement was not consistent with what I viewed the role of my office should be about and consequently chose not to be a part of. It goes back to the letter I sent to the executive committee in March 2011 about the concerns I had about the investigation morphing into a settlement that dealt more with getting the housing market right as opposed to only unlawful claims, which is the role of the AGs.
HW: When did they finally give up, and communication between your office and theirs broke down?
Pruitt: I would characterize all communications between my office and theirs as constructive and informative. And ultimately we took the information that was communicated to us and was communicated to our colleagues and made an independent decision.
HW: Did you get a call from President Obama himself?
Pruitt: No, I did not.
HW: Why did Florida, Virginia and Texas reverse course from their opinions in the letter with you?
Pruitt: My focus has been more centered on collaborating with my colleagues on investigations and then assessing the harm and then making a decision. Each of us had a decision to make. I respect the decision that each state made. But ultimately it didn’t fit with Oklahoma.
HW: Will your settlement involve principal reduction?
Pruitt: It will not.
HW: Will anything go toward short-sale deficiency judgments or modifications?
Pruitt: It will focus exclusively on what their original investigation was focused upon, which was unlawful practices in the origination of notes and the wrongful foreclosures in the state of Oklahoma.
HW: What sort of form with the relief in your settlement take?
Pruitt: The relief will be $18.6 million, identical to the number that we would have received under the master settlement.
There’s no arbitrary relief that we have established. There was a restitution number in the master settlement for foreclosures that occurred in a certain period for $2,000. We’re not approaching it that way. We’re going to process each individual claim on a case-by-case basis to determine the extent of harm that each homeowner experienced and provide the requisite relief based upon the unlawful practices.
HW: The settlement cleared other AGs to participate in the federal task force. Is that something you want to participate in as well?
Pruitt: You know I’m not sure. I’ve not broached that subject with our office or the other AGs. There’s been so much focus on the foreclosure settlement itself, and we’ve not reached that point yet.
HW: Do you think the settlements from that federal fraud task force should include principal reduction?
Pruitt: I think that as I’ve indicated, I think that is not proper relief and is something that is not consistent with my role as AG and the menu of options I have before me to enforce the law. The federal government has perhaps more at their disposal for what they can and cannot do, but from a state’s perspective, from Oklahoma’s perspective the principal reduction and loan modification issues — I very much disagree with that type of option for Oklahoma.
HW: You said Oklahoma has been fortunate enough to have a stronger housing market. How has the state avoided the brunt of the situation other areas of the country find themselves in?
Pruitt: In many respects, when you look at the diversification of the economy in our state from natural gas to oil. Our employment rate is at 6.1% compared to the national average (8.3%) our economy is much stronger. We didn’t see the high highs nor did we experience the low lows and consequently the activities in our state are likely not similar to those on the coasts.