After the first direct meeting between the banks and the government departments carrying on investigations it seems that the settlement will take time. Professor Adam Levitin opines it is to the advantage of the banks if the settlement finalization is delayed.

A report recently released by the regulators could support the cause of the government negotiators. The report founded on probe carried out last winter establishes the fact that banks disregarded legal rules covering foreclosure and increased the pain of millions at a very vulnerable stage in their lives.

The report also exposes the poorly trained staff of the bank and the permission giving to legal firms and other outside contractors to run wild; none had any interest in seeing that the people did not lose their homes.

The lenders are contending that they have solved these problems and that hardly any were foreclosed and evicted wrongfully. But very recently, London based HSBC has suspended foreclosure operations because the regulators found a good number of lapses.

Following the release of this report by Federal Reserve, Office of the Comptroller of the Currency and others it is apprehended that enforcement action will be taken up. These penalties and fines would be separate from the results of the settlement reached at by the attorneys general.

Nearly two million homeowners are facing foreclosure and another lot of two million are severely defaulting. According to the findings of LPS Applied Analytics the banks were somewhat progressing in modification matters but foreclosures have become a permanent feature of the housing segment for the majority of homeowners.

According to the government suggestions the house owners facing foreclosure are to be treated case by case and would be offered multiple measures that would be incentives to the banks to modify the loans rather than opt for eviction.

Jay Speer of Virginian Poverty Law Center said, “I’m really hopeful something comes out of this. It’s starting to like the last chance for real reform. The Virginia legislature still has this amazing allegiance to the big banks”.

It seems the banks are pulling the strings from behind and but openly battling to win popular feelings. The banks want to be the champions of those house owners who are not in default and resenting the idea that those who are, should make gains. The banks are contending that reducing the debt of foreclosed families is not fair on the others; it will set up a precedent for others to follow suit disregarding ethics.