An exclusive report from Reuters said that under the said proposed settlement mechanics now being reviewed will broaden the powers of the state and could enforce monetary penalties of as much as $5 million per violation.
Each state will create a “monitoring committee” to detect the violations of banks servicing home loans.
This proposal has been devised to heed calls from left-leaning activist groups that the states and the federal government led by the Obama administration are too lenient to the private banking institutions.
Nevertheless, the federal authorities needed to negotiate with all the state governments to have single policy to follow because others want to enforce higher penalties. The agreement will also make sure state government reserve their ability to file more mortgage-related suits.
The deal brokered between the states and the federal government to appease the general public had reached its second year, thus a settlement must be made this week.
The core group of banks involved in settlement talks are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc. and Ally Financial Inc.
U.S. Housing and Urban Development Secretary Shaun Donovan said in a briefing last week at the White House, the state governments only have a few days to sign in the agreement.