PROVIDENCE – Two Republican lawmakers, Cumberland Sen. Bethany Moura and Portsmouth Rep. Dan Gordon, attacked the 49-state settlement agreement with the nation’s five largest mortgage service providers that Democratic Attorney General Peter Kilmartin signed onto last week, calling the $25 billion the financial institutions agreed to pay “a drop in the bucket.”
“What an insult to the American people,” Gordon declared at a Statehouse press conference Tuesday. “What an insult to the people of Rhode Island. The people should be inflamed.”
Moura struck a similar tone, telling reporters, “This settlement values the American Dream at $2,000,” the amount she estimates an aggrieved homeowner will receive. “It’s an insult and it is egregious.” Moura, who works as a loss mitigation specialist in the office of Pawtucket lawyer George Babcock, one of the leading Rhode Island attorneys in the recent spate of foreclosure cases, loudly dropped several large piles of documents on the polished table in front of her, saying they were the paperwork from real cases of Rhode Islanders who have been foreclosed upon.
“I’ve seen doctors, dentists, educated people who can not apply for a loan modification that has been promised to them,” she said. “When you are promised principal reduction in this deal, get over it, it’s not going to happen.” She said the principal reduction the lending institutions are offering consists of the fees and other amounts they added to the homeowners’ balance during the default process.
Saying “we don’t come to the table complaining about a problem without having a solution,” Gordon revealed that he and Moura are going to petition the federal court to intervene in the case under Rule 24 of the Federal Rules of Civil Procedure. Gordon said a nationally-known attorney, Judson Witham, who he said “helped expose” the Madison Guarantee and Whitewater scandals involving then-President Bill Clinton and his wife, Hillary, pledged Tuesday to work on the case to “assure justice is served for the victims in Rhode Island.”
Moura and Gordon live streamed the press conference on the Internet so it could be seen nationwide.
Gordon called on Kilmartin to “pledge we won’t go the same way as the tobacco settlement (several years ago) and dump (the money) into the general fund, to try to plug that swirling black hole, that vortex that is sucking the money out of every taxpayer’s pocket in this state.” He said the money should “go to the victims to whom it is rightfully due.”
Kilmartin spokesperson Amy Kempe told The Times after the press conference said that for Gordon to even think the $172 million coming into Rhode Island from the deal could be diverted to the general fund “shows just how little he understands about the mortgage foreclosure settlement.”
Of the $172 million that is Rhode Island’s estimated share of the settlement, Kempe said, Ocean Staters who fell victim to the foreclosures included in the deal will receive an estimated $152 .6 million in benefits from loan term modifications, including principal reduction and other relief.
Rhode Island borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse would qualify to share $3.1 million in cash payments.
Borrowers who are current on their payments, but who owe more than their property is worth would be able to refinance their loans at a lower, 5.25 percent rate, Kempe said.The value of refinanced loans to Rhode Island’s underwater borrowers would be an estimated $7.3 million.
The RI Department of Business Regulation will receive a direct payment of $8.9 million to help fund consumer protection and state foreclosure protection efforts.
When he joined the settlement on behalf of Rhode Island last week, Kilmartin said, “This agreement provides much needed relief to Rhode Island borrowers, and also puts a stop to many of the bad behaviors that contributed to the mortgage mess in our state and across the country.”
But, he added, “This does not end our work. The settlement is only one of many steps we need towards a comprehensive, nationwide solution. Today we need to start utilizing the relief we have obtained to provide maximum benefits through Rhode Island. I intend to work with our governor, our General Assembly and with other agencies that can assist our citizens in obtaining their rightful shares of the substantial money we bring into Rhode Island today.”