There was a settlement in various matters between the real estate industry lenders and the federal government. The lenders were to provide an action plan for handling loan modifications and foreclosures. The plan was due this week, However, the lenders received a 30-day extension for submitting their plans. The extension was the result of a decision made by the federal justice department. Mortgage servicers were supposed to submit their plans for dealing with contacting struggling home owners, handling loan modifications in good faith and adjusting other problematic aspects of the foreclosure process.
However, the Office of the Comptroller of Currency (OCC) and the Federal Reserve – key players in the bank settlement in mid-April that was met with so much criticism after the robo-signer fiasco – have said that the lenders can have another 30 days. The extension comes at the request of the Justice Department. The Justice Department is currently working with state attorney generals and several other federal agencies to reach a separate settlement with more severe terms than that of the OCC’s settlement. The OCC has insisted from the beginning that its settlement and that of the Justice Department would “dovetail” rather than be in conflict or undermine each other.
Lenders will have until July 13 to submit their plans now, which the attorneys general hope will lead to an advantage for their side in negotiations. Tom Miller, state attorney general of Iowa and leader of the Attorney General probe, has stated multiple times that the settlement will include billions of dollars in fines and, ideally, principal reductions as well. Any movement in loan modifications and/or foreclosure policies will be much needed relief in the industry. Loan modifications have slowed to a crawl and frustration levels with the process are high. Foreclosure relied has been inconsistent at best. Hopefully, mid-July will provide some relief for home owners in distress.