The Rise and Fall of a Mortgage Settlement

October 4, 2011 10:37 AM

Tom Miller

State attorneys general banded together in October 2010 to investigate charges that servicers improperly submitted affidavits and other documents in the foreclosure process. Iowa Attorney General Tom Miller led the investigation and subsequent settlement talks. (Image: Bloomberg News)

Term Sheet Released

In early March, the state attorneys general presented a 27-page term sheet to the largest servicers, which was seen as an aggressive starting point to negotiations. It did not include a monetary penalty because of disagreements between regulators about the fine's proper size.

Richard Shelby

Later in March, several prominent Republicans sharply criticized the 27-page term sheet, including Sen. Richard Shelby, who called the proposed settlement a "regulatory shakedown" to "advance the administration's political agenda." (Image: Bloomberg News)

Virginia Attorney General Kenneth Cuccinelli

Also in March, attorneys general from Virginia, Oklahoma, Alabama, Nebraska, Texas, Florida and South Carolina sent letters to Miller opposing his push to include principal write-downs in a settlement. Four of the attorneys general argued that some of the proposed terms could delay the recovery of the housing market. (Image: Bloomberg News)

John Walsh

On April 13, with settlement talks stalled, federal bank regulators moved ahead with their own consent orders against the top 14 mortgage servicers. The orders required the servicers to improve their loss mitigation efforts and to create a single point of contact for troubled borrowers. But the orders were largely seen as a positive development for the servicers, since they provided leverage for the settlement talks with the states. (Image: Bloomberg News)

Elizabeth Warren

On May 24, the nascent Consumer Financial Protection Bureau's role in the settlement talks became the subject of an ugly spat on Capitol Hill. The dispute centered around whether the CFPB was improperly seeking to influence the process, or simply providing advice when asked. (Image: Bloomberg News)

Eric Schneiderman

On Aug. 23, New York Attorney General Eric Schneiderman, who'd been warning that a narrow release of the servicers could let them off too easily, was kicked off the executive committee of the coalition led by Miller. With New York out of the talks, and pursuing its own separate investigation, the possibility of a settlement looked less attractive to the servicers.