Today, news outlets are reporting that roughly 42 states have agreed to an arrangement for banks to pay a purported $26 billion to settle alleged misdeeds such as improper foreclosures based on “robosigning” and property seizures made without proper paperwork.
In return, banks would get immunity from future state servicing and originating claims. One can only imagine the liability penalties at stake to be able to get this kind of massive settlement agreed to.
Key players like Iowa’s Attorney General Tom Miller, HUD Secretary Shaun Donovan and Wells Fargo’s Mike Heid should be commended for finding consensus and getting this done. Consumers were really hurt by this debacle and what they’ve crafted is not some kind of meaningless, window dressing solution. $26B will provide real help to real people
It also doesn’t take a genius to see the same dynamics at play with banks debt collection practices. Tens of thousands of “robosigning” and other violations of the Fair Debt Collection Practices Act (FDCPA) have already been reported. Who knows what lurks unreported, beneath the surface? And, when you consider Attorney Generals are now pursuing banks for violations incurred by the debt collectors they have sold their delinquent debt to….talk about opening the proverbial Pandora’s box.
Once this foreclosure deal is put to rest, unfortunately for banks, it might be “back to the future” all over again.
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