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Foreclosure deal could take months to finish

By Marcy Gordon
AP Business Writer

Washington — Iowa’s attorney general is predicting it will be several months before reaching a deal with five big U.S. banks to change the foreclosure system, compelling lenders to modify more struggling homeowners’ loans.

Iowa’s Tom Miller is a leader of the negotiations with the banks by the 50 state attorneys general and federal regulators. The talks began in fall after the state and U.S. officials launched an investigation into whether big banks cut corners and used flawed documents to foreclose on home borrowers. Anger flared over the disarray stemming from faulty foreclosure documents in the so-called “robo-signing” scandal.

“I’m hoping that we can wrap it up in a couple months,” Miller said.

He wouldn’t discuss specifics of the proposals. Under draft terms submitted to the banks last week, they reportedly would be barred from starting foreclosure proceedings while homeowners are trying to modify the terms of their mortgages.

The lenders could be fined under the final agreement or forced to write down the value of their loans to borrowers who owe more on their mortgages than their homes are worth. The banks are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and GMAC. Together they have 59 percent of all U.S. home mortgages, according to Miller.

Also under the draft terms, a lender’s denial of a mortgage modification reportedly would trigger a review by an independent individual or panel.

“What we’re really trying to do is to change a dysfunctional system,” Miller said. “We’re hopeful that we can reach a resolution that will be good for homeowners, good for banks in the long run” and good for the country as a whole.

About 2 million U.S. households are in foreclosure proceedings. In addition, around 5 million borrowers are at least two months behind on their mortgages, and experts say more people will miss payments because of job losses and loans that exceed the value of the homes in which they are living. Foreclosure listing firm RealtyTrac predicts 1.2 million homes will be repossessed this year.

Letting struggling borrowers stay in their homes longer could delay the recovery of the housing market by making potential buyers wary of buying homes in foreclosure, market observers say. They contend the housing market won’t fully recover until banks find buyers for those properties.

The draft proposal is supported by the Treasury Department, the Justice Department, the Department of Housing and Urban Development and the Federal Deposit Insurance Corp.

Revelations surfaced last fall of bank employees testifying in court cases that they signed, and in some cases backdated, thousands of certifying documents for home seizures. Financial companies that service a total $6.4 trillion in mortgages were involved.

Officials from big banks say they have made changes to their foreclosure process to correct problems. They have maintained that most of the problem of flawed foreclosure documents was technical.

In a related development Monday, a Florida law firm that once handled tens of thousands of foreclosures annually reported it is shutting down amid the nationwide investigation by state and federal officials. A regulatory filing by David Stern’s law practice indicated it will end operations March 31. The firm, based in Plantation, Fla., once had more than 1,200 employees. It is one of several firms under investigation by Florida Attorney General Pam Bondi.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


  1. You have to be ware of AHMSI. They are also one of the top scandleous preditors out there.
    Texas has filed a suit against them, but I live in Minn, we want to be included.
    I never even heard of AHMSI, and they said I was in foreclosure.
    I then was scammed by one of there biggest supporters Feldman Law center in CA.
    My house was sold, even though the mod docs were there at least 8 times.
    Feldman got me a sloppy Mod in Feb 09. AHMSI nullified it in May 09. So I have been in foreclosure 3 times. I am supposed to be out in May.
    This has cause tremendous health and emotional problems.
    Terri Bruynes
    Luverne, mn
    I have made contact with ***. attorney General Scott Ikeda.
    Thank you

  2. terri, u are an idiot, you cannot blame everybody for your emotional problems.
    try to be reasonable instead.
    you never heard of a lot of things, as many ignorants out there. that does not allow you to be judgemental and to bother other people with you pshycho’s issues

  3. Jim, Jim, Jim. Crack a dictionary much? Telemucho props for the faux text message attempt bro.

  4. I have heard of AHMSI rip off claims, but I have had a positive experience with AHMSI. I was having financial difficulties, and I communicated that to them openly and honestly. They were able to work with me and help me keep my home.

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