Nevada’s attorney general said Friday this week’s settlements with banks over foreclosure abuses are just one part of a process aimed at stabilizing home prices and investigating wrongdoing in the field.
Critics say the deals valued at $1.5 billion between the state, Bank of America and other loan servicers won’t do much to help struggling homeowners or those who were wrongly foreclosed on.
But Attorney General Catherine Cortez Masto said during a news conference that the settlements were never intended to solve every issue in Nevada’s troubled residential real estate market, which during the recession has led the nation in foreclosures.
“This is one piece of a broader focus for my office,” Masto said, adding her staff is involved in several lawsuits and civil and criminal investigations targeting mortgage fraud and foreclosure abuses.
Among those targeted are Fannie Mae and Freddie Mac, government-sponsored mortgage companies that didn’t participate in the national settlement.
Besides signing on to the national settlement, which is valued at up to $40 billion, depending on how many additional banks sign on, Masto this week settled a 2010 lawsuit she filed against Bank of America accusing it of foreclosure abuses.
“This settlement (the two settlements) should not be looked at as global relief for all of the homeowners and what we’re seeing in the economy,” she said. “That’s not going to happen, nor is litigation alone going to take care of this.”
The settlement for Nevada includes about $1.3 billion in commitments from banks to lower principal amounts on mortgages and to refinance loans for struggling homeowners.
It’s unknown how many homeowners will be helped and what the average dollar amount of assistance will be — Masto’s office said it’s early in the process and all that is known now is that thousands will be helped.
Another $57 million is to be paid to borrowers who were foreclosed on, and banks will make $90 million in payments to the state.
Importantly, banks agreed to new service standards in which robosigning practices will end; homeowners will receive plenty of notice about foreclosures against them and their options to keep their homes; and banks will establish a single point of contact so homeowners don’t get the run-around dealing with multiple people.
In addition, the settlement preserves a “private right of action,” meaning homeowners still have the ability to sue banks over loan and foreclosure issues.
Masto said she’ll talk with Gov. Brian Sandoval and legislators about how the $90 million in direct payments to the state will be spent.
Tentative plans include using some of the money for homeowner outreach, assistance and counseling programs and to pay attorneys in Masto’s office who will prosecute current and future mortgage fraud cases.
In addition, some money may be set aside for nonprofit groups so they can assist homeowners who need legal help as they battle banks.
“Because the private right of action is retained, we’re going to seek proposals from Legal Aid to see if this money would benefit them in aiding the homeowner,” Masto said. “There’s also a self-help center in the Regional Justice Center. We’re going to see if any of this money would be feasible to help individuals who want to go into that center to understand their rights and what forms they would need.”
Besides Masto’s comments Friday, politicians weighed in on the settlements for Nevada and praised them.
The “settlement is a welcome step forward in our efforts to help struggling homeowners and hold big banks accountable for their abusive foreclosure practices across the country, especially in Nevada. But we still have much more work to do to help homeowners get back on their feet. When Wall Street greed caused the economy to collapse, the housing market collapsed along with it, and no state has been hit harder than ours,” Senate Majority Leader Harry Reid said.
“With the highest foreclosure rate in the nation, I hope that this settlement achieves the intended result for Nevada: providing relief for responsible homeowners and holding the Wall Street banks accountable for their reckless behavior,” Rep. Shelley Berkley said.
For more details on the national mortgage settlement, see the website.