SIFMA Pushes Back on Mortgage Settlement Proposal

The leading U.S. securities industry trade organization expressed strong reservations about a settlement proposal that state attorneys general have presented to five banks over allegations of widespread wrongdoing in servicing mortgages, Reuters reported yesterday. The draft proposal could lead to "unintended consequences" for the housing market and potentially harm investors in mortgage backed securities, the Securities Industry and Financial Markets Association (SIFMA) reported yesterday. In recent weeks the state attorneys general have circulated a 27-page proposal intended to be the basis of settlement talks with the five biggest U.S. loan servicers that include Bank of America Corp., Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial. The proposal omits many details, but calls for an increase in loan modifications based on reductions in principal and for new rules of conduct for servicers when dealing with homeowners.

http://www.reuters.com/article/2011/03/16/financial-regulation-mortgages-sifma-idUSN1611728320110316