Iowa AG says servicer settlement study flawed

A study concerning the impending settlement between state attorneys general and mortgage servicers was deemed flawed and inaccurate by the man leading the investigation into servicing practices. The study in question was conducted by three academics from universities around the country that found the settlement, which could reportedly force lenders to accept principal writedowns, mandatory modifications and fines totaling as high as $25 billion, would entice more borrowers to strategically default and simultaneously extend foreclosure timelines. Foreclosure timelines could potentially be stretched an extra 280 days, according to the study. Iowa AG Tom Miller released a statement late Tuesday afternoon saying that figure is “off the mark.” “This is a flawed study based on inaccurate assumptions, and it reaches grossly inaccurate conclusions,” Miller said. “This study was bought and paid for by the industry, and that fact is reflected throughout. “Our proposal, if properly implemented by the servicers, should not increase the duration of foreclosures. By making foreclosures functional, servicers will make up time they’re losing now. The current dysfunctional system prolongs foreclosures,” Miller said. The final settlement from the 50 state AGs could still be months out, although a different agreement between federal regulators and servicers is due out this week, according to the Office of the Comptroller of the Currency. Miller commented last week that this settlement is separate from his investigation and will in no way affect ongoing procedures. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.