Turn On The Lights, Watch The Roaches Scatter Part 69

The battle over Foreclosuregate continues.  I've mentioned before that the banks are looking for a settlement agreement that gets them off the hook for defrauding millions of homeowners on their mortgages, and while the federal settlement looks to be very much in the banks' favor, the 50 state collective lawsuit is running afoul of the states very, very badly needing the cash and wanting very much to rightfully collect.

Attorneys general negotiating a settlement of a 50-state investigation of foreclosure practices have reached agreements with lenders on some terms while failing so far to reach an accord on potential monetary payments by the banks, said a person familiar with the talks.

The probe was triggered by claims of faulty foreclosure practices following the housing collapse which law enforcement officials said may violate state law. Significant progress has been made on a deal with lenders, which include Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM), with agreements in principle reached on several issues, said the person, who didn’t specify the areas of accord as they may change as talks proceed.

It may take at least two months to reach a final agreement, said the person, who declined to be identified because the talks are private. An accord remains out of reach because states want principal reductions for borrowers, which is more than banks agreed to in deals reached with U.S. regulators last week, said Allison Schoenthal, a lawyer at Hogan Lovells in New York.

“Principal reductions I don’t think are going to be agreed to by banks, and I don’t think the banks see a need for a penalty when, in their view, they haven’t done anything wrong,” said Schoenthal, who represents lenders and servicers and isn’t involved in the talks. 

Nothing wrong except, you know, destroy the economy in a blizzard of fraud and hang the multi-trillion dollar bill for it around the necks of the US taxpayer.  The state AGs aren't stupid, either.  They know that without principal reductions, the banks are going to get the money and the property and actually end up in far better financial shape than they were in 2007...and the states are going to get stuck with the clean up and lost tax base as property values continue to drop.  They want the banks to eat the pile of crap they made so that housing prices can start to recover again.

Little chance of that happening, of course.