* BofA CEO: Settlement in "everyone's best interest"
* Iowa AG says deal is months off
* Senator Dodd pushes for loan modifications
(Adds details about Thursday's hearings)
By Joe Rauch and Dave Clarke
CHARLOTTE, N.C./WASHINGTON, Nov 16 A quick
settlement of the 50-state probe of the U.S. mortgage
foreclosure crisis would be the best solution for all involved,
the chief executive of Bank of America said on Tuesday.
The call for a settlement by Bank of America CEO Brian
Moynihan was followed by comments from Iowa Attorney General
Tom Miller, who told a Senate hearing that a settlement with
lenders was still months off.
"We're thinking in terms of months rather than a year or
longer but it depends really on how far we get," said Miller,
who is heading up a probe by all 50 state attorneys general.
Banks are accused of having used "robo-signers" to sign
hundreds of foreclosure documents per day without proper legal
review. The allegations that banks' use of shoddy paperwork
resulted in struggling borrowers being illegally evicted from
their homes reignited public anger with banks that received
billions of dollars in taxpayer aid during the financial
In addition to the probe by the 50 states, major lenders
are facing investigations by the U.S. Justice Department and
federal bank regulators.
Miller, testifying before the Senate Banking Committee on
issues concerning mortgage servicing and foreclosures, said the
timeline for a settlement could stretch as attorneys general
consider whether to expand their probe.
Earlier on Tuesday, CNBC reported that Miller was getting
close to a settlement with banks. After the hearing, the Iowa
attorney general denied that was the case, saying "we are a
long ways from an agreement."
Miller said talks with lenders have been "productive." He
said settlements could include financial penalties and a pledge
that banks do away with pursuing foreclosures on an individual
borrower at the same time that efforts at a loan modification
are under way.
Lawmakers, while pressing for more modifications,
specifically urged lenders to get rid of this so-called
"It seems like if there's a good faith modification process
under way, the foreclosure process ought to be shut down," said
Senator Jeff Merkley, a Democrat from Oregon.
But Barbara Desoer, the home loans chief of Bank of
America, said her bank has its hands tied in situations when it
is only the servicer of a loan, not an investor, and therefore
must go forward with foreclosure proceedings against delinquent
Nonetheless, Desoer told the committee that Bank of
America, the largest U.S. mortgage servicer, is working with
state attorneys general on this "dual track" issue.
"We are talking to the state attorneys general under
Attorney General Miller's leadership to try to amend that
process because we understand how confusing it is," Desoer
Moynihan, speaking earlier on Tuesday at the Bank of
America Merrill Lynch Financial Services conference in New
York, said the industry and lawmakers need to look at
streamlining foreclosures, but expressed urgency at wrapping up
the joint 50-state probe. [ID:nN16104232]
"It is in everyone's best interest to get this settled and
behind us," Moynihan said.
U.S. bank regulators, for their part, expect to wrap up
their review of lenders by January. [ID:nN16137403]
But as bankers testified about efforts to resolve the
problems with foreclosure documentation, senators expressed
skepticism that banks had a handle on the foreclosure process,
saying they are inundated with complaints from constituents.
"Montana is not a state where people come to their senator
willy-nilly," Democratic Senator Jon Tester said, adding that
he does not view the complaints as isolated problems.
Bankers also received a bit of a rough reception from the
hearing audience. One protester interrupted the testimony of
David Lowman, chief executive for home lending at JPMorgan
Chase, before being escorted out by security. Witness comments
critical of mortgage servicers drew repeated rounds of
A House Financial Services subcommittee will hold a similar
hearing on Thursday but with a witness list that includes
federal banking regulators and representatives from more
lenders, including Wells Fargo, Ally Financial and Citigroup
Banks have been eager to downplay the impact of the
paperwork mess, saying evictions through foreclosure have been
Desoer acknowledged problems in the bank's foreclosure
practices in her testimony and said the bank is working to
replace previously filed affidavits in as many as 102,000
pending foreclosure cases.
"Thus far, we have confirmed the basis for our foreclosure
decisions has been accurate. At the same time, however, we have
not found a perfect process," said BofA home loans chief
Senate Banking Committee Chairman Christopher Dodd said at
the hearing that he is concerned mortgage servicing problems go
beyond the recent questions about whether paperwork is being
"We need to have more robust loan modifications, including
loan modifications that result in real principal forgiveness
that will finally help put an end to our housing crisis," Dodd
He said foreclosures should proceed quickly when there is
no other option, particularly when home has been abandoned.
"There is no reason in the world to slow down the process
on these homes," he said.
Dodd said he hopes to have another hearing this year with
bank regulators, and said he still wants to explore whether
forecloses pose a larger risk to the economy.
(Additional reporting by Corbett Daly in Washington and
Jonathan Stempel in New York; Editing by Leslie Adler, Gary