After the "robo-signing" scandal broke, and the world discovered how much foreclosure fraud the mortgage banks were perpetrating on homeowners and on courts in California and across the country, there was an understandable outcry. State attorneys general from California and all 49 other states entered into negotiations with the biggest mortgage banks about what the penalties for the banks should be. Why negotiate with the banks, why not prosecute them? Because there were so many cases of fraud, it would have tied up the courts and the prosecutors' offices for years. Since the main penalty was bound to be a massive fine, it seemed like a better course of action to all concerned to simply work out what the fine, and other penalties, should be.

Then negotiations dragged on and on and on. Frequent rumors have said that a deal was near, but been wrong. Now a new rumor says that a deal might be reached by the end of October.

San Diego debt negotiation attorneys have noted that the latest rumors in the news say that part of the deal will be that homeowners with underwater mortgages will get assistance with refinancing. Homeowners are considered underwater when the value of their home is less than the balance remaining to be paid on the mortgage.

The rumors have not included details about how eligibility for refinancing will be determined, nor about how many homeowners are expected to be helped. More than a fifth of homeowners with mortgaged homes are estimated to be underwater across the country.

The banks would also pay around $25 billion in fines, according to sources close to the negotiations.

Source: Reuters "States near foreclosure deal with banks" Oct. 19, 2011