Banks Offer Own Mortgage-Servicing Plan

Five of the nation's largest banks sent government officials a proposal yesterday that outlines a set of mortgage-servicing standards they would abide by as part of a settlement of abuses in the industry, the Wall Street Journal reported today. The document 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. However, the document does not include any discussion of principal reductions. Nor does it include a potential amount banks could pay for borrower relief or penalties
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