Experts react to the foreclosure settlement [View all]

[ProSense]

Experts react to the foreclosure settlement

Posted by Sarah Kliff, Ezra Klein and Suzy Khimm

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Elizabeth Warren, Democratic candidate for Senate in Massachusetts (news statement):

“Today’s settlement shows a significant commitment to helping struggling homeowners stay in their homes. But it needs to be the beginning, not the end, of efforts to hold the big banks accountable with meaningful penalties that demonstrate the rules and the law apply to everyone, no matter who your friends are or how many lobbyists and lawyers you can hire. Moving forward, further investigation and prosecution are needed to bring our long national mortgage nightmare to an end.”

Dean Baker, co-director at the Center for Economic and Policy Research:

“I’m not thrilled with the settlement, since it doesn’t accomplish much, but at least it doesn’t preclude further civil or criminal suits. In terms of the commitment of payments in the form of write-downs, we don’t have a clear counterfactual that allows us to gage how much would have been written down anyhow. We also have the peculiar situation where the banks get to pay the penalty with write-downs of debts to MBS investors.

The big plus is that the settlement does not preclude further legal action on securities fraud and other issues. (New York Attorney General Eric) Schneiderman and the other holdouts deserve credit for this.”

Ira Rheingold, director of the National Association of Consumer Advocates:

“There’s a number of pieces that are a good step forward for a lot of home owners but it doesn’t do nearly enough to solve the problem...the part that could end up being most impactful are the new standards for how people will be treated if they wind up in default, what kind of protocol banks have to follow if someone requests a loan modification. Going forward, I think that and the principal reductions will be the most meaningful parts of this. I’m hoping that these new standards, going forward, will help consumers understand and get loan modifications in the future. “

Karen Nussbaum, executive director of Working America:

“The $26 billion is not what we wanted. We were hoping for much more. This is like pocket change. So we hope this is a down payment, and we’re hoping to see more positive action coming out of this federal investigations unit. But only a handful of people are actually going to have their payments reduced, and the people who have already lost their homes will get $2,000. That doesn’t come close to fixing the problem...this just doesn’t add up to the kind of relief that people actually need to stay in their homes.”

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http://www.washingtonpost.com/blogs/ezra-klein/post/experts-react-to-the-foreclosure-settlement/2012/02/09/gIQALQhz1Q_blog.html