State attorneys general and federal officials hope to reach a final settlement with banks over their mortgage-servicing and foreclosure practices within two months, a person familiar with the negotiations said.
The officials, who submitted a 27-page settlement proposal last week to start negotiations, aim to reach an agreement with the banks in six weeks to two months, said the person, who didn’t want to be identified because the talks are private.
Attorneys general are meeting today in Washington, where they are scheduled to get an update on the investigation into the mortgage-servicing practices of banks and the efforts to reach a settlement that could overhaul their procedures. The states began the probe last year after complaints that financial institutions submitted faulty paperwork in foreclosure cases.
Homeowner activists protested outside the meeting of the attorneys general, criticizing banks and demanding state and federal officials reach a tough settlement with the companies. They also called for criminal prosecutions.
The proposal given to the banks last week calls for “a binding legal requirement” for how they service loans and conduct home foreclosures, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller. Miller is helping to lead the investigation and settlement talks.
The proposal didn’t include the monetary penalties officials would seek.
Tam Ormiston, a deputy attorney general in Iowa, declined to comment today about the settlement discussions. He didn’t rule out criminal prosecutions.
“The question’s been raised for all regulators and all enforcement officials,” he said. “I don’t know how that’s going to play out.”
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