The continuing robosigning debacle continues with only partial resolution. Originally, all 50 Attorneys General and over a dozen federal regulators were working together to investigate and collectively penalize banks that improperly foreclosed on homeowners due to their use of robosigning technologies in which no manual review of documents was done, thus speeding up foreclosure processing.
Last month, the little heard of Office of the Comptroller of the Currency (OCC) split with the AGs citing a strained process in which the AGs would not settle without banks agreeing to principle reduction, so they moved forward.
The split gets ugly
The AGs claim this move hampers the ability for homeowners to sue collectively, but in an OCC statement, the agency noted that the AGs are still able to pursue negotiations separately.
Now, the talks between the AGs and the banks are back on and while it appears a settlement is near, the main point of disagreement remains asking banks to reduce principle as a part of negotiating with troubled homeowners. It is rumored that a settlement is coming in the next two weeks, but what the settlement looks like is still up in the air.
Good news for homeowners
The good news for homeowners is that the OCC has gotten eight banks to agree to reform and penalties for falsely foreclosing on homeowners and it appears the AG is about to announce a separate settlement likely outlining reform measures as well as penalties (although the OCC settled with lower penalties, so the original projection for AG penalties is likely too high).
Some analysts point to the robosigning issue as one of the main catalysts in the destruction of the housing sector, but can reform really repair the damage or will it simply stop the hemorrhaging?