AG Settlement a Drop in the Bucket
Massive principal reduction beyond the scope of Miller's settlement is needed
Iowa AG Tom Miller announced today the end of his investigation into the mortgage and foreclosure practices of the largest mortgage servicers. This settlement is the first step in what is shaping up to be a long fight to stabilize the economy through massive principal reduction.
While many are giving this settlement a glowing review, we know it is a drop in the bucket compared to the ongoing mortgage crisis - and is chump change compared to the excessive bonus pool of these same big banks.
Despite its flaws, the settlement announced today is stronger than it would have otherwise been thanks to direct pressure from grassroots groups across the country - like you.
Here’s our breakdown of the AG settlement, agreed to by 49 out of 50 state Attorneys General (Oklahoma being the only holdout):
The Good:
The settlement does not release the banks from criminal prosecution, and NY Attorney General Eric Schneiderman’s investigation into financial fraud will be able to move forward. Iowa CCI and the New Bottom Line have been fighting to keep options for future investigations open for a long time.
The Bad:
Homeowners who were victims of wrongful foreclosures will receive just $2,000. Compared to what these families lost and continued to struggle with today, this really isn’t much.
The Ugly:
The principal reduction piece of this settlement is very, very small. The banks here have committed to just $17 billion in principal reduction. Compared to the $700 billion underwater mortgage problem, this is absolutely minuscule.
What comes next?
The housing market isn't going to reset itself, and if the housing market isn't reset we won't see any real economic recovery for a long time. We will continue to:
Be a part of the nationwide fight for massive principal reduction - at least $300 billion. Read our Iowa Underwater report to learn how principal reductions are a win/win for everyone.
Confront corporate power at the big banks' shareholder meetings this spring.
Keep pressure on President Obama and AG Schneiderman's investigation to make sure they do the right thing as well.
This is an important fight, and the future of homeownership in America and the stability of our local economies will depend on what happens in the next few months.