Oklahoma City, Oklahoma — Oklahoma will not sign off on a $25 billion settlement agreement between five of the nation's largest mortgage lenders and 49 other states over foreclosure abuses but has reached a separate agreement in which the lenders will pay $18.6 million to the state, Attorney General Scott Pruitt said Thursday.
Pruitt said the state-specific agreement will compensate homeowners who have been harmed by mortgage practices that violate state law and will "make sure the harm that Oklahomans incurred are addressed."
"We believe we have struck the balance," he said. "This is a good thing for Oklahoma."
The settlement involves the same five lenders involved in the national agreement: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and GMAC. Pruitt said the state will receive the same amount of money in the separate settlement as it would have received in the national one.
Pruitt said the state reached a separate agreement with lenders over concerns that the national settlement had broadened into an attempt by President Barack Obama's administration to restructure the mortgage industry rather than compensate victims of lending abuses.
"It began to morph into something that was bigger and grander than that. That's not the role of the attorney general," said Pruitt, a frequent critic of federal government policies who last year filed a federal lawsuit to overturn the federal health care overhaul law supported by Obama.
"I have a role to play as attorney general and that role is to enforce state law," Pruitt said.
Pruitt, a Republican, said his decision to reach a separate agreement was based on legal principles and not political differences with the Democratic president.
"I think it became more political because of the federal involvement. That's something we weren't comfortable with," he said.
The settlement agreements are the result of an 18-month investigation by attorneys general in all 50 states and the Department of Justice into mortgage servicing practices by the five lenders that contributed to the nation's mortgage and foreclosure crisis.
Pruitt's office said it has received 86 complaints since October 2010 involving mortgage practices that violate Oklahoma law. Most of them involve a process called dual-track, where homeowners are told they are on track to modify their loan to avoid foreclosure while their bank has them on a separate track to foreclose, and robo-signing, which involves putting computer signatures on foreclosure documents that require personal knowledge and verification.
"We have some examples of some very egregious conduct," he said.
Pruitt said the abuses were the result of the nation's financial crisis when home values sank and millions of homeowners faced foreclosure
"There was an overwhelming amount of foreclosures," he said. "They were overwhelmed and they engaged in practices that are wrong."
Pruitt said he began to have misgivings about the national settlement a year ago when negotiators announced the settlement had expanded beyond unlawful practices and had moved to loan modification and principal reduction. He said he believes that exceeded his authority as attorney general.
"My focus was rather myopic," He said.
Pruitt also said he is disappointed the national settlement does not include Fannie Mae and Freddie Mac, whose practices he said played the biggest role in the mortgage housing crisis.
Copyright 2012 The Associated Press.
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