Harsh Words For Banks On Mortgage Settlement

The numbers in the landmark mortgage scandal settlement certainly are large: $25 billion nationally and more than $200 million in Connecticut.

But members of the state legislature’s banks committee said today they were hardly impressed with at least one part of the agreement: the one-time $1,500 payment to borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011.

“Banks should be embarrassed by that gesture,”  said state Sen. Bob Duff, D-Norwalk, the committee’s co-chair. He added later: “The hell that they put some people through, they should be doing more.”

Duff’s comments came during an informational meeting called by the banks committee with Attorney General George Jepsen, and Assistant Attorneys General Joseph J. Chambers and Matthew K. Budzik, who were instrumental in negotiating the deal.

“It’s frustrating,” Jepsen said. “$1,500 doesn’t sound like very much when you have lost your home…But without the settlement, they would have received nothing.”

Attorney General George Jepsen, at right, and Assistant Attorneys General Matthew J. Budzik and Joseph J. Chambers testify on mortgage scandal settlement. Photo by Kenneth R. Gosselin/The Hartford Courant

Bank of America, the largest of the banks involved in the settlement, had no comment today. The other banks were Wells Fargo, Citibank, JPMorganChase and Ally Bank, formerly GMAC.

Both Duff and state Rep. William Tong, D-Stamford and New Caanan, praised Jepsen’s work in hammering out the deal, but were particularly frustrated with that part of settlement.

Jepsen said the settlement does not preclude borrowers from filing their own lawsuits. But Jepsen has said many of the 7,500 borrowers in Connecticut who may qualify for the payment would have lost their homes anyway because they simply couldn’t afford them.

The agreement, announced Feb. 9, is aimed at keeping homeowners out of foreclosure by providing them with loan modifications through a combination of lower interest rates and reductions in principal. Another component allows borrowers who are current but “underwater” on their loans to refinance to a lower rate even though they do not have equity in their property.