Conway among last batch of AGs to join in settlement with mortgage firms; leaves open future action
02/09/2012 05:42 PM
Kentucky will get $58.8 million for homeowners facing foreclosure and underwater mortgages after Attorney General Jack Conway was among the last batch of attorneys general to join a national settlement with banks and lenders.
The federal government and 49 states negotiated a $25 billion dollar settlement with five of the nation’s largest banks to provide relief to consumers who were foreclosed upon. Some of the money will be used for states’ ongoing consumer protection programs.
Conway and other attorneys general, including those in California, Delaware and Florida, had been holding out from the lawsuit because they were uncomfortable with a proposed provision that would have given the lenders immunity from further suits or prosecution related to their roles in the housing bubble bust.
Kentucky Attorney General Jack Conway said this is the largest joint action by the attorneys general in terms of relief and money since the tobacco settlement in 1998.
The five banks: Bank of America, JP Morgan Chase, Wells Fargo, CitiBank, and Ally Financial — formerly GMAC — are responsible for 5,400 foreclosures in the commonwealth over the last four years. In order for consumers to receive direct assistance from this settlement, they must have a mortgage that is or was held by one of these banks.
Conway stressed to reporters that the settlement preserves the right of the states to pursue criminal and civil actions against the banks saying, “If it did not preserve those actions, I would not be signing it.”
General Conway subpoenaed MERS (Mortgage Electronic Registration System Inc.) which he believed may have circumvented Kentucky law by failing to properly record mortgage assignments and pay filing fees with county clerks throughout the Commonwealth. Delaware Attorney General Beau Biden also has been pursuing MERS.
Of Kentucky’s share of the settlement, which amounts to less than a quarter of a percent of the total pot:
- $15.9 million will go toward refinancing loans for underwater borrowers. – $12 million will go toward direct borrower relief – $10.8 million will go to pay back borrowers for mortgage service abuse. – $20 million goes to the state.
The national plan requires Kentucky to come up with a plan for the $20 million, and submit it to federal court to approve and enforce the $20 million is going to benefit homeowners.
Conway explained on Pure Politics in October that he had reservations about joining in the settlement unless it preserved the states’ ability to pursue additional criminal or civil investigations.
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