As Iowa Attorney General Tom Miller testified at a hearing of the Senate Banking Committee, senators also insisted that focusing solely on the so-called "robo-signing" is a mistake. And the banking industry was criticized for maintaining that the problem was mainly technical.
That view "shows a certain type of arrogance," Miller said.
"There's so much at stake," he told the panel. The entire system of servicing and modifying mortgages, and foreclosing on borrowers must be changed "so that it works productively," he said. A resolution could involve penalties for mortgage companies that don't comply with required practices, Miller said.
"We'll need ultimately agreement from the banks and so far our discussions have been productive," he said.
CNBC reported that Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. are nearing a settlement with the 50 attorneys general in which they would compensate borrowers whose homes were improperly foreclosed upon.
But Miller said after the hearing that a settlement wasn't close. "That's totally wrong. We're a long way from an agreement," he told reporters. "We're at the beginning stages of a negotiation."
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