Financial & Corporate Services
April 2014 Issue
Content is updated daily

More Settlements Seen Coming From Robo-Signing Crisis

In the wake of the foreclosure crisis and housing market meltdown, state and federal officials continue to press for financial settlements with banks, mortgage servicers and industry vendors.

State Attorneys General are currently negotiating a legal settlement with four regional banks over their actions during the “robo-signing” crisis. The agreement would be similar to the $25 billion National Mortgage Settlement brokered with five national lenders in February. That agreement included sweeping compliance mandates to prevent the widespread improper notarization and document signing practices at the heart of the foreclosure crisis.

The banks have had preliminary talks with state and federal officials who are investigating claims that loan servicers mishandled foreclosure documents. However, the timing of the settlement is not yet known.

If a settlement is reached, the banks will face a financial obligation and likely will have to comply with the servicing standards. The NNA has established a Trusted Notary program to help lending institutions reach compliance with the new mortgage industry regulations.

The latest negotiations come as New York Attorney General Eric T. Schneiderman announced a $7.8 million settlement with one of the nation’s largest real estate appraisal companies and its parent corporation for inflating the value of homes during the housing boom, a clear violation of appraisal law. The settlement stipulates that the defendants will pay $4 million in civil penalties and $3.8 million in costs and fees arising from the litigation.

The case, which was heard before the New York Supreme Court, involved some 10,000 over-inflated appraisals performed for one of the national lenders named in the $25 billion National Mortgage Settlement brokered last February.

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