California did. New York did. Now Nevada, Massachusetts and Delaware may follow suit.
And today, citizens of Chicago are calling on Illinois Attorney General Lisa Madigan to join the growing number of states that have pulled out of a legal settlement that attorney generals from across the nation struck with banks as punishment for improperly “robo-signing” foreclosure documents.
Why? Even though the settlement would bring $25 billion in mortgage relief to states–along with a commitment by lenders to reform some of their practices–a handful of attorney generals say the agreement would let banks off the hook too easily for the thousands of documents they fraudulently signed.
“We call for [Madigan] to support a full investigation into fraud in the mortgage industry, and a settlement that addresses the full $700 billion of underwater mortgage debt,” the group Northside People Organized to Work, Educate and Restore said today in a press release.
The group is marching on Bank of America’s downtown headquarters this morning to demand that the bank adjust the mortgage of an Evanston woman, Rita Pope, who the group says has been denied help to modify her mortgage terms and will soon be evicted. Then they will continue to Madigan’s office to ask that Illinois be pulled from the robo-signing settlement.
California’s attorney general, Kamala Harris, withdrew her state from the settlement Sept. 30.
“Despite your diligence and our good-faith effort to reach reasonable terms with the banking industry, there now exists a proposed settlement that is inadequate for California homeowners,” she wrote in a letter to government officials in charge of the settlement process. “I have concluded that this is not the deal California homeowners have been waiting for.”
Instead, California is teaming up with Nevada to pursue an investigation of banks that carelessly and fraudulently signed documents. New York Attorney General Eric Schneiderman is doing the same.
A June investigation by the Associated Press showed many banks were still “robo-signing” documents, although the majority of the current documents being fraudulently signed didn’t involve foreclosures but rather applications for new mortgages. Thousands of signatures with the same name in different handwriting were found–many that couldn’t even be attributed to an actual bank employee.
What is robo-signing? Here’s a great explanation by the AP:
Robo-signing refers to a variety of practices. It can mean a qualified executive in the mortgage industry signs a mortgage affidavit document without verifying the information. It can mean someone forges an executive’s signature, or a lower-level employee signs his or her own name with a fake title. It can mean failing to comply with notary procedures. In all of these cases, robo-signing involves people signing documents and swearing to their accuracy without verifying any of the information.
Without California, the settlement amount may dwindle to something near $18.5 billion dollars, and even less if more states pull out from the talks.
What do you think? Should Illinois also withdraw from the settlement talks to pursue its own investigation? Is it important that banks face criminal repercussions for the way they handled documents? Or is getting money to help homeowners and neighborhoods that are struggling more important than the criminal case? Take our poll or leave us a comment and tell us what you think.