In a perfect world, state attorneys general and the U.S. Department of Justice would have worked hand in hand with bank regulators to fix foreclosure wrongs. But that's not how the world works.
I've heard there's a multistate settlement between five large mortgage servicers and state attorneys general, but there's no signed agreement or even a term sheet.
An ideal joint agreement would have not only compensated borrowers for past abuses, but also required servicing standards to prevent those crimes in the future.
It would have been great, too, if neither good-faith investors in mortgage-backed securities nor taxpayers had to provide a backdoor bailout for banks by paying for principal reductions and modifications that should be coming out of the pockets of mortgage servicers.
Joseph Smith, the former banking commissioner for North Carolina who was appointed monitor for the AG settlement, has to deal with reality, however. He should start coordinating with the OCC and Fed on their foreclosure abuse agreements now.
Read on.
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