50 State Attorneys general are in the final rounds of settlement negotiations over the Robo signing fiasco of 2010. The Robo signing was brought to light through a deposition taken by Maine attorney Tom Cox against GMAC. According to the NY Times, GMAC the mortgage lender was bailed out to the tune of 17.2 billion. A GMAC employee admitted under oath to signing 10,000 affidavits a month which led to foreclosures.
This employee admitted that he had no personal knowledge (a prerequisite to the legality of the document) of what he was signing. The result was all 50 state Attorneys General launched an investigation, along with the Office of Comptroller of Currency into the matter, halting foreclosures in 50 states for nearly a year. The foreclosure rates are set to rise significantly
These practices resulted in 11 Mortgage Banks signing a consent order which includes an agreement to cease and desist from fraudulent and shoddy business practices. Recent Attorney Generals have said that common practice in the industry saved the banks 20 billion.
The Attorneys general has worked for the past year with the 11 major banks and now have a proposal that:
- Pay into a fund used to compensate borrowers who have claims after their home has been sold in foreclosure.
- Includes principal reductions for homeowners absolves lenders of Deceptive Trade litigation by homeowners.