Although an agreement on fixing the mortgage mess between state attorneys general and mortgage lenders was nearly crystallized, Obama’s new Financial Crimes Unit, revealed in the State of the Union address yesterday evening, could throw a wrench into the works, CNBC reported.
“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said.
Now critics say the announcement of the unit will complicate talks with banks because their incentive to agree to a multi-billion dollar payout will be lessened if they know the federal government will be prosecuting them for securitization issues as well.
Mortgage rates are finally inching up, according to data from the Mortgage Bankers Association released today.
“We believe industry is worried that this new task force will go after the banks for the origination of many of the mortgages that have defaulted or are now underwater,” Jaret Seiberg, a financial services industry policy analyst, told CNBC. “Either way, this further adds to the litigation mess that is hurting the housing market by forcing banks to keep underwriting standards tighter than warranted.” [CNBC]