State AG Robosigning Settlement in the Works

Sources on both sides of the 50-state attorney's general investigation into so-called "robo-signing" foreclosure practices tell me they are nearing a settlement, reports Diana Olick.

Here's more from Olick:

Sources on both sides of the 50-state attorney's general investigation into so-called "robo-signing" foreclosure practices tell me they are nearing a settlement...While sources say there is no universal solution to shoddy foreclosure practices at some of the nation's largest mortgage banks/servicers, the three largest, BofA, JPM and Wells Fargo may be agreeing to the same solution.

Hah! A universal solution by any other name is still a universal solution---especially when BofA, JPM and Wells Fargo are all in.

Here's more from Olick:

...banks would pay into a fund used to compensate borrowers who have claims after their home has been sold in foreclosure. The borrowers would have to prove they were wronged in the process, and the attorney's general would allocate the funds. In other words, the AGs would be the administrators. The amount of said fund is still undetermined, and likely still in negotiation.

Of course, if you have been reading the EPJ Daily Alert, you would expect this. This is what I wrote on November 4:

Here's the latest on foreclosuregate:

According to S&P, U.S. banks face $31 billion in loan-buyback losses.

Fitch has put the entire US residential mortgage servicer space on negative outlook over foreclosuregate.

Here's what this means:

There may be a huge buying opportunity in this sector. The U.S. government will come to the rescue of the banking sector, again. It won't be an obvious bailout, the masses are too on alert, but it will happen.

Expect to hear a lot about a "universal settlement". What this means is that the government will throw contract law out the window under the guise of punishing the banks. Instead of each case going to court that should be in court, a" universal settlement" will be reached that will screw the average homeowner facing foreclosure, for the benefit of the banks.

The details all aren't set yet, but that is what is being designed. It will protect the banks and limit their exposure from multi-billions to perhaps a billion each. Any major scare that any forclosuregate banks are in trouble, where their stock prices drop, should be considered a buying opportunity.

Naturally, because this is the EPJ Daily Alert you aren't left hanging and instruments are discussed that could have a fun ride up far beyond what the stocks will do.

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