The Wall Street Journal reported today that large US banks were in talks with state attorney generals and were putting a refinancing carrot on the table, presumably as a quid pro quo to settle charges of abusive foreclosure practices.
The details are murky and the California Attorney General Kamala Harris, a key player in any kind of comprehensive settlement, denies even being aware of the proposal. That said, the idea being floated is that banks would offer to refinance borrowers on bank owned mortgages (i.e. have not been securitized and sold off) and where the borrower is current on their payments. These borrowers would normally not be able to refinance because they are upside down on their mortgage.
Separately (see 9/8/2011 blog post), there is continued discussion on FannieMae and FreddieMac relaxing their underwriting criteria on mortgage loans they already guarantee to enable borrowers to refinance. As reported by the Wall Street Journal, Treasury Secretary Geithner suggested back on October 6 that some meaningful proposals would be forthcoming in the weeks ahead.
Stay tuned.
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