Federal probe into robosigning reaches initial negotiation

The federal investigation into the robosigning scandal has reached an initial settlement. The controversy stems from the nation’s largest mortgage loan providers having improperly foreclosed on people by not making sure that foreclosure paperwork was correctly done. The initial terms of a settlement between the banks that committed said offenses and the government has been hammered out.

Details on JPMorgan deal

Chief Executive Officer of JPMorgan Chase Jamie Dimon recently disclosed the government probe into the robosigning controversy had come to an agreement with the mortgage loan providers being investigated, according to Reuters. There will most likely be fines soon even though Dimon explained there hadn't been any made yet. The nation's largest mortgage loan companies and servicers were the subject of a sweeping investigation by nearly a dozen federal agencies and the attorney general of every state in the union. The agreement is not complete; it is only the settlement between the financial institutions involved and the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. A negotiation with all 50 state attorneys general has not been reached.

It will not be long before state settlements happen

The controversy stemmed from the discovery that a lot of foreclosure proceedings started when paperwork to begin foreclosures was approved in a robotic fashion, or "robo-signed," without proper review. The resolution of the robosigning foreclosure ordeal is essential, as foreclosure practices may change. JPMorgan, for instance, expects to hire at least 3,000 more employees to ensure compliance with the settlement agreement, according to Bloomberg. The mortgage lenders are likely to end up needing more money to make the loans with all the increased regulation that are likely to occur in the mortgage industry. Eventually the banks have to pass those costs on. The consumers are likely to have to bear them. On the books, there are a ton of foreclosures just waiting to happen. The loan companies are worried about simply foreclosing now.

Failing with the mortgage modification program

The mortgage modification programs were some of the biggest failures in all of the stimulus programs that the Obama administration put together. Anybody could apply for a modification if they were about to be foreclosed upon and were behind on mortgages. The distressed homeowner's lender would receive an incentive payment from the government if it modified the borrowers' mortgage on a trial basis. USA Today states that few individuals actually used it. The goal was to keep 3 million to 4 million individuals in their homes; instead only about 630,000 individuals had their mortgages permanently modified.

Details from

Reuters

reuters.com/article/2011/04/13/us-financial-regulation-foreclosures-idUSTRE73C3DV20110413

Bloomberg

bloomberg.com/news/2011-04-13/jpmorgan-says-foreclosure-accord-with-federal-reserve-occ-may-come-today.html

USA Today

usatoday.com/money/economy/housing/2011-04-12-mortgage-borrowers-letters.htm?loc=interstitialskip