Florida Attorney General Pam Biondi is one of the four voicing her displeasure with the proposed settlement.
A very detailed write-up on the state AG settlement is here...
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Foreclosure Terms May Pose ‘Moral Hazard,’ State Attorneys General
A plan to resolve a nationwide probe of foreclosure and mortgage-servicing practices is being opposed by four more Republican state attorneys general, who say the terms of a deal may foster a “moral hazard.”
In a letter to Iowa Attorney General Tom Miller, a Democrat who has taken the lead in the investigation, the officials objected to new documentation requirements and principal reductions outlined in the proposed settlement submitted to the country’s top mortgage-servicing companies this month.
Yesterday’s letter, a copy of which was obtained by Bloomberg News, was signed by attorneys general Kenneth Cuccinelli of Virginia, Greg Abbott of Texas, Pam Bondi of Florida and Alan Wilson of South Carolina. The attorneys general of Oklahoma, Alabama and Nebraska sent Miller a letter with their objections on March 16.
The settlement offer “appears to reach well beyond the scope of our enforcement role, and, in some instances, far exceeds the scope of the misconduct which was the subject of our original investigation,” according to the letter, which was verified by Brian Gottstein, a spokesman for Cuccinelli.
A key objection is the “moral hazard” created by the proposal to reduce homebuyers’ loans because it “rewards those who simply choose not to pay their mortgage,” the attorneys general said.
Borrowers who are enrolled in a trial loan modification under a federal program and make three loan payments on time would get a permanent loan modification under the proposal. The document would give attorneys general and the Consumer Financial Protection Bureau responsibility to police servicers’ compliance with any settlement.
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Pitchfork here. I agree with the governors. It just wouldn't be right to let people who borrowed too much and own more assets than they can afford to be bailed out by government fiat. The banks who hold second liens on underwater mortgages should take the losses that are coming to them, not get a bailout from unaccountable, rogue bureaucrats. That would constitute a "moral hazard."
Oh wait, I see. They're worried some undeserving pleb might get a mortgage mod. My bad. I thought they were worried about the massive giveaway the settlement will be for the banks and servicers.
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More detail on this story:
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