It started with questionable loans to questionably-leveraged homeowners during the height of the housing bubble; it resulted in hundreds of thousands of foreclosures, part of the fallout of the financial crisis of 2008 and a big reason why the economy continues to struggle; it might end in immunity for banks doing the foreclosing. At the end of last year several of the country’s biggest banks halted all foreclosures while they investigated charges of “robo-signing,” where foreclosure documents were processed in a sloppy and occasionally fraudulent manner. Attorneys general in all 50 states joined forces to investigate how banks were processing foreclosures and whether they were using shoddy paperwork and fudged documents to justify kicking homeowners out of their homes, threatening a massive civil suit against the five biggest banks. Reuters has been closely following the investigation of foreclosures and reports some troubling news for homeowners: not only has robo-signing activities continued but a possible settlement deal would include immunity from criminal prosecution for Bank of America, Wells Fargo, CitiGroup, JPMorgan Chase and Ally Financial. Reuters reports that the settlement deal would include payment of up to $25 billion in penalties and commitments to follow new rules and in exchange banks would get immunity from civil lawsuits from the states.
Scot J. Paltrow, senior enterprise correspondent for Reuters