It’s a Start, but Still a Long Way to Go

ESOP Cautious About the Bank Robo-Signing Settlement

For Immediate Release                                                          

February 9, 2011

Cleveland, OH – Today the Justice Department announced a $25 billion dollar settlement agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. 

"While we applaud this victory, we look forward to hearing more about how the millions of  families across this country will receive mortgage reduction assistance,” said Mark Seifert, Executive Director of Empowering and Strengthening Ohio’s People.

“However the devil is in the details. In our experience, the industry has never done anything voluntarily to repair the damage they wreaked over the last decade and we have no reason to believe this settlement will be any different,” said Seifert.

According to HUD Secretary Shaun Donovan the “settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers.” Yet it remains to be seen how these homeowners will be effectively notified they can receive relief, especially those who have already lost their homes.

This settlement only represents a fraction of the damage done by predatory lending, abusive servicing and the foreclosure crisis.  It also does nothing to hold people criminally responsible for fraudulent and/or criminal misconduct.  Moreover, this settlement does nothing for people who have Fannie Mae or Freddie Mac mortgages which represents roughly half of American homeowners.

Seifert says, “It’s a start, but it’s a drop in the bucket.  There is still a long way for banks to go in repairing families, communities and the housing market.”