Banks Offer Own Mortgage-Servicing Plan

Five of the nation’s largest banks sent government officials a proposal Monday that outlines a set of mortgage-servicing standards they would abide by as part of a settlement of abuses in the industry.

The document, reviewed by The Wall Street Journal, is a response to a 27-page term sheet banks received earlier this month from state attorneys general that would require the servicers to consider reducing principal for troubled borrowers. The 15-page bank proposal, dubbed the Draft Alternative Uniform Servicing Standards, includes time lines for processing modifications, a third-party review of foreclosures and a single point of contact for financially troubled borrowers. It also outlines a so-called “borrower portal” that would allow customers to check the status of their loan modifications online.

But the document doesn’t include any discussion of principal reductions. Nor does it include a potential amount banks could pay for borrower relief or penalties. Government officials have discussed a settlement sum of more than $20 billion.

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Now get on the phones and call your Attorney General and demand they do not accept this “offer.”

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