What makes the robo-signing settlement effective in the eyes of Oregon AG?

John Kroger, Oregon Attorney General ready to sign on the robo-signing settlement draft that was sent out last Monday to each state AG. But he also wants to join the federal task force investigating securitization and other lending mispractices at the largest banks.

This dual statement of the Oregon AG makes the me believe that the settlement negotiated through the last 14 months is ineffective enough for Oregon for its attorney general to decide to prosecute the banks. In other words, Kroger remained at the negotiation table for unknown reasons – which I cannot cover since I have no idea why didn’t he stepped back just like Delaware or California AG –, while he saw that the talks slowly blur the origin of the negotiation: to hold the banks accountable for their illegal activity, which dragged the housing market down and cause poverty, launched the foreclosure crisis, making millions to lose their home.

What Kroger did say: the details of the settlement will be revealed soon. What we know for now is that servicers will have to pay roughly $25 billion to the states that sign. According to a fresh statement from the HUD, $17 billion will be used for principal reductions, another 2 or 3 billion will be used for housing counseling and legal aid.

When asked, Kroger disclosed what Oregon will get from the settlement. According to Kroger’s words, servicers will provide between $100 million to $200 million in relief to underwater borrowers in the state, while another $30 million will go to the state itself.

What we found out from Kroger is that the deal includes “tough new servicing standards” too.

“This agreement penalizes banks that engaged in wrongful foreclosure practices and brings badly needed relief for distressed homeowners,” Kroger said.

However, the deal will not release the banks from securitization and legal claims investigated now be the federal task force. And since the settlement brings only money penalty to banksters, Oregon AG says he is ready to prosecute the banks over their lending practices.