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Update: The terms of the settlement, which was announced this morning, are at the page http://www.nationalmortgagesettlement.com. We are reading it now. Original: If I am reading the overnight news stories correctly (NY TIMES and Politico and Boston Globe), it appears that negotiators have clarified that the well-publicized settlement between HUD and state AGs and the nation's 5 largest mortgage servicers will not release the big banks from claims related to their activities with the mysterious entity known as MERS that aided and abetted their illegal foreclosures. If so, this is a big deal in ultimately holding the big banks fully accountable. MERS and its own actions were never going to be a part of the deal, but the big banks and their cadre of high-priced lawyers always wanted a broad release for their own shenanigans associated with MERS in return for agreeing to pay $25 billion or so for a variety of mortgage servicing violations including reliance on faulty robo-signed documents and, in a sordid practice called "dual tracking," running consumers out of their homes while they were supposedly negotiating to help them modify their loans to avoid foreclosure and stay in their homes. As a lawsuit filed last week by New York Attorney General Eric Schneiderman explains, the MERS problems add a whole new level of unfair practices to those the banks are settling for $25 billion. We'll have more to say after we see the settlement -- maybe as early as today -- but it now appears that it will stop bad behavior and create a fair system for mortgage servicing going forward, modestly compensate consumers for illegal foreclosures, reduce principal for others who are underwater so that they might have a fighting chance to stay in their homes and also allow many additional claims against powerful corporate wrongdoers to go forward. We always knew investor-related and criminal claims against the banks and claims against MERS could go forward, but now it looks as if the clarification that broader claims against the banks for their own MERS activity can go forward has helped bring most of the last few AGs onto the settlement. If all this is true, then the settlement is likely a good first step. More to follow.
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