Talks to Settle Foreclosure Probes Could Take Months

Talks to settle state and federal investigations into botched foreclosure paperwork will be going on for a long time, according to government officials after holding their first face-to-face meeting with top bank executives, in June of this year. They cautioned that they are looking at months, not weeks or days.

Representatives of the five largest mortgage servicers—Bank of America Corp., JP Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. have been meeting with government officials in Washington. 

But according to the Sunday Wall Street Journal, "Efforts to reach a settlement that would end the long-running probe of foreclosure practices are snagged over whether banks will get broad legal immunity from state officials for mortgage-related claims."

Previously, there was discussion of a settlement of investigations into problems in the foreclosure process, including bank employees signing documents without reading or understanding them, a practice called robo-signing.

Iowa Attorney General Tom Miller, who is leading the negotiations for the states, says that the session was a good first meeting but that no agreement was imminent. Attorneys general of all 50 states and representatives of seven federal agencies are investigating the foreclosure troubles.

The two sides have exchanged draft proposals covering new guidelines for foreclosures and mortgage servicing. Banks could be forced to pay as much as $25 billion in a settlement and might be required to allow homeowners to sell their houses for less than what is owed on their mortgages.

So, what does all this mean to us?  It means that as long as there are no or limited new foreclosures coming on the market, prices should be stable and not continue to decline, good news for sellers for a change!