NC Plays Prominent Role In $25 Billion Bank Settlement
Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial have agreed to a $25 billion settlement over mortgage problems and foreclosures. North Carolina's attorney general played a key role in negotiations and the state will maintain a high profile as the settlement unfolds. Since Bank of America is headquartered here and Wells Fargo has a big presence, North Carolina has a little extra visibility in deals like this. But Attorney General Roy Cooper went to great lengths to be in the thick of settlement negotiations. He "was the steady hand in all of this," says Iowa Attorney General Tom Miller who led settlement negotiations that stretched beyond a year. Cooper says he worked to keep the five banks, ten federal agencies and attorneys general from 49 states "on the same page." This all started in 2010 when employees at many banks were found to be "robo-signing" foreclosure documents without verifying all the information. North Carolina's slice of the $25 billion settlement is $338 million. Cooper says it will compensate "tens of thousands" of people who lost their homes to foreclosure and reduce the principal owed by many whose homes are worth less than their mortgage. However, the majority of the nation's mortgages are held by government entities including Fannie Mae and Freddie Mac which are not part of Thursday's settlement. Cooper says those homeowners will still benefit indirectly as their own property values improve. "When people are able to stay in their homes and avoid foreclosure then the homeowner is helped, the neighborhood is helped, the actual bank is helped because they end up doing better when someone stays in a home than they do during foreclosure," says Cooper. "And the economy is helped." Cooper admits previous government efforts to have the banks modify loans have not met expectations, but he says this settlement is different. "In the past, these efforts to help homeowners have not had a strong court order or an independent monitor looking over their shoulders, making sure they meet targets," says Cooper. "In the past, these things have not had financial penalties for non-compliance. We got all of these things in this agreement and I think that's why it's going to work." The criteria for homeowners to qualify for settlement funds have not been established. Once they are, payment will happen over the next three years and North Carolina will maintain a prominent role as watchdog. Cooper pressed for the North Carolina Commissioner on Banks to be the national monitor overseeing the implementation of the settlement.