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Illinois PIRG Released the Following Statement from Consumer Program Director Ed Mierzwinski:
“Today's settlement by the U.S. and 49 state attorneys general with the 5 biggest mortgage servicers – the big banks Citibank, Bank of America, Wells Fargo and JP Morgan Chase – along with Ally Financial, is an important and enforceable first step toward holding the big banks accountable for not only wrecking the economy but using a variety of unfair foreclosure practices to ruin the lives of millions of Americans and, in many cases, taking their homes illegally.
- The settlement will establish a fair mortgage servicing system and end outrageous abuses ranging from fraudulently robo-signing false documents to what is called “dual-tracking,” – the practice of supposedly negotiating loan modifications while at the same time carrying out foreclosures on consumers who thought the bank was working with them in good faith.
- The settlement requires payments of $25 billion by the big banks. This amount includes modest compensation to victims of unfair foreclosures, money for principal reductions to help underwater homeowners (who owe more than their house is worth) stay in their homes as well as funds for state attorneys general to conduct other activities to help homeowners.
Although the settlement is limited, it stops bad behavior, establishes fair servicing standards, modestly compensates victims and takes steps to keep people in their homes all while allowing future investigations to address other violations. This is a good first step to holding bank accountable and we are glad Attorney General Lisa Madigan signed this agreement.
We want to thank Attorney General Madigan for making this settlement as strong as possible, and for her ongoing national leadership throughout the financial crisis to hold banks and other corporate wrongdoers accountable. Through her efforts she has recovered billions of dollars for aggrieved Illinois consumers.
But at the same time, we note that because the settlement is only a good first step that more needs to be done to hold the banks fully accountable. Payments from the big banks should be looked at as a deposit or down payment on what they really owe. Fortunately, the settlement's releases from further liability are narrow and the settlement allows other claims to go forward, including for criminal and other violations by the banks, as well as claims against the Mortgage Electronic Records System (MERS) for its facilitation of the robo-signing frauds.
Going forward, the new Consumer Financial Protection Bureau (CFPB) – the regulator we hired to take over for the regulators who aided, abetted or ignored the banks' unfair practices – will play a critical role in enforcing the new standards and taking other actions to protect homeowners and other consumers.”
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