Banks, regulators reportedly nearing a deal

WASHINGTON - Banks could reach a settlement with state and federal regulators over foreclosure practices and shoddy paperwork in as a little as two weeks, a key negotiator said Monday.

Iowa Attorney-General Tom Miller, speaking at a meeting of the National Association of Attorneys General in Washington, said a deal could be struck in a "soft" two weeks.

"We don't want uncertainty to linger," added North Carolina Attorney General Roy Cooper at the same event.

Miller confirmed reports that a 27-page term sheet, representing both the state attorneys general and most federal regulators, was sent to lenders.

Published reports indicate that a settlement offer from both the state attorneys general and most federal regulators would prohibit banks from starting foreclosure proceedings while a borrower was actively seeking to modify his or her mortgage.

The terms also would prescribe the steps lenders have to make, such as acknowledging mortgage-modification requests within 10 days; boosting oversight of foreclosure law firms and third-party vendors; and limiting fees. Though not in the settlement offer made last week, reports suggest a $20 billion fine also may be meted out.

Miller didn't confirm those details, pointing out negotiations were about to start, but he didn't dispute them either.

He also acknowledged that what the attorneys general proposed won't necessarily make it into the final settlement. "Not everything in the 27 pages will be agreed to," he added.

The nation's largest banks -- Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. -- are also among the country's top mortgage servicers, which were caught up in the "robo-signing" scandal last year. Thousands of foreclosures, often with faulty or missing documentation, were pushed through with only a brief review. Ally Financial, formerly called GMAC, also is part of the talks.

Together, the lenders account for 59 percent of mortgages made.

The news on settlements comes as DJSP Enterprises, which performed services for the law offices of David J. Stern, on Monday announced it would close at the end of the month. Stern is under investigation in Florida for allegedly fabricating and presenting false documents in foreclosure cases.

One element that hasn't been agreed among the regulators themselves is what the threshold would be for modifying mortgages.

"There's a great difference of opinion on how mortgage modification should work," according to Cooper.