DOVER, Del. (AP) -- Delaware would receive about $40 million in a proposed settlement between the nation's attorneys general and five banks over alleged foreclosure abuses, but Attorney General Beau Biden told state lawmakers Wednesday that he's still not ready to sign on to it.
Under the settlement, the nation's five largest mortgage lenders would reduce loans for about 1 million households, benefiting homeowners who are behind on their payments and who owe more than their homes are worth. They also would send checks for about $2,000 each to hundreds of thousands of people who lost homes to foreclosure.
Biden told members of the legislature's budget-writing committee that recent revisions have made the proposed agreement better than it was two months ago or even two weeks ago, but that he still is not comfortable with it.
"We are working as we speak today to make that a better settlement," Biden told lawmakers. "... I'm still not satisfied that the agreement is what it needs to be ... I'm hopeful that I can get there."
Biden said a key concern for him is ensuring that the settlement does not prevent his office from pursuing a lawsuit it filed last year accusing a company that registers mortgages electronically of deceptive trade practices.
The lawsuit alleges that Virginia-based Mortgage Electronic Registration Systems Inc. has sown confusion among consumers, investors and other stakeholders in the mortgage finance system, damaged the integrity of Delaware's land records system and led to unlawful foreclosure practices.
MERS, which was set up by the banking industry to rapidly package and sell mortgages as securities without recording each transaction in county recorder offices, says the allegations have no merit and has asked a judge to dismiss the lawsuit.
While Biden's office did not name the banks as defendants in the lawsuit against MERS, he said after Wednesday's budget hearing that he doesn't want the proposed settlement to interfere with his ability to add the banks if he chooses.
Biden also said that while the proposed settlement involves alleged abuses in servicing mortgages, he doesn't think it should interfere with efforts to try to hold lenders accountable for mortgage-related fraud involving loan originations and securities-related false claims.
"I don't take lightly the amount of money that is being put on the table, but I've got to be sure that I'm able to do my job," he told lawmakers.
According to Biden, $30 million of the $40 million that Delaware currently stands to receive would be "soft money" in the form of credits to the banks for reducing the principal on loans of borrowers who are most at risk of foreclosure and allowing homeowners who are current on their payments but owe more than their homes are worth to refinance at lower interest rates.
Of the remaining $10 million, Biden said about $8 million likely would go to the state's consumer protection unit, and another $1 million to the state banking commissioner's office.
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