When the New York attorney general sued three big consumer banks and MERS last week, it seemed like a thumb up the nose of the majority of other states who were on the verge of signing a deal to settle a host of mortgage crimes, such as robo-signing.
In a twist, New York, which had made a noisy exit from settlement talks and said the deal was not tough enough on the banks, now says it just might sign on. California, which had also pulled out the talks, might also end up a signatory. That would be great news for the banks and it would raise the value of the deal to $25 billion from about $19 billion.
The New York Times notes that, “The potential support from California and New York comes in exchange for tightening provisions of the settlement to preserve the right to investigate past misdeeds by banks, and stepping up oversight to ensure that the financial institutions live up to the deal and distribute the money to the hardest-hit homeowners.”
Monday was the deadline for states to vote yea or nay, but it may be several more days before we know the outcome. Still, the fact that California and New York are back at the table is a welcome development and justifies a delay. The industry has suffered from the cloud of uncertainty hanging over the settlement process, which stretched far longer than anyone imagined early on. Hopefully, there’s enough for everyone to ink a deal.
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