Ever since the foreclosure crisis, states have been attempting to reach a deal with banks in regards to their wrongful and negligent actions that inevitably led to the housing market crash. The debates have definitely been tiring, taking both parties a lot longer to reach a deal than desired.
Over the last few months, some people like Kamala Harris, California’s Attorney General, left the negotiation table when it appeared as though banks would be getting off too easy for their significant actions that contributed to the market crash. Despite the continuous battle and seemingly endless attempts at reaching an agreement, it appears as though the settlement talks may be ending in the very near future.
The potential agreement involves banks being required to refinance homes in which homeowners owe significantly more than the market value of their properties, which those engaging in the negotiation talks place the blame for the fall of home prices on the banks. The entire settlement will cost banks close to $25 billion (up from $20 million), but will remove the threat of civil lawsuits against the banks for their robo-signing and other unethical actions.
Throughout the talks, banks have been successful in pushing attorney generals to agree to boarder civil lawsuit protections. At first, the protections would only cover robo-signing; however, now everything from failing to verify borrower income to various other legal errors will be included.
Lately there has definitely been a push to encourage banks to provide refinancing opportunities to struggling homeowners in an effort to help put the real estate market back on a road toward recovery. As foreclosures continue to cloud the real estate market, home prices remain remarkably low throughout the country as homeowners are competing with low foreclosure prices when attempting to sell their homes. Therefore, it is not surprising to see the refinancing option as part of the deal.
However, it appears as though the states may be letting the banks off too easy, which is the exact opposite of their goal from the start. In particular Kamala Harris says the current deal would not provide enough assistance to struggling homeowners throughout California that have suffered greatly as a result of the banks’ actions.
In the end, we are still unsure of when the settlement talks will finally come to an end; however, apparently they are a lot closer to reaching an agreement than they have been over the last few months. The states have to walk a tight line of obtaining relief for their homeowners while also ensuring that banks are not getting away with the robo-signing and illegal actions with an insignificant punishment. All eyes are on the talks as everyone hopes an agreement is reached in the near future so we can move forward with real estate market recovery.