Faith4Business

By RUTH SIMON And NICK TIMIRAOS

U.S. banks are resisting efforts by state attorneys general to force them to cut the amounts owed by some borrowers facing foreclosure. Yet mortgage companies already have reduced home-loan balances for more than 100,000 borrowers.

How much larger the number will grow is likely to be at the center of negotiations this week aimed at reaching a settlement to the nationwide investigation of mortgage-servicing practices.

Officials from Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.'s GMAC unit have been summoned to Washington for a Wednesday meeting with state attorneys general and at least three U.S. agencies, according to people familiar with the situation.

It will be the first faceoff since the five companies, the largest home-loan servicers in the U.S., got a 27-page "term sheet" earlier this month from state attorneys general that would require the servicers to consider more borrowers for principal write-downs.

In addition, some of the financial penalties resulting from any settlement are "very likely" to be used for reductions in loan balances for certain borrowers, said Iowa Attorney General Tom Miller, who is spearheading the 50-state investigation. Even among state officials, there are disagreements as to whether shrinking loan balances is a good idea.

The "term sheet's principal reduction proposals may actually foster an unintended 'moral hazard' that rewards those who simply choose not to pay their mortgage," the Florida, South Carolina, Texas and Virginia attorney generals wrote in a March 22 letter to Mr. Miller.

The chief executives of Bank of America and Wells Fargo have questioned the fairness of writing down loans, while claiming the costs could be enormous if widespread principal reductions are triggered by a settlement.

Read More: http://online.wsj.com/article/SB10001424052748703576204576226980831330892.htm...%3Darticle 

Wikipedia:

The Troubled Asset Relief Program, commonly referred to as TARP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector which was signed into law by U.S. President George W. Bush on October 3, 2008. It was a component of the government's measures in 2008 to address the subprime mortgage crisis.

We the American Public saved the banks from their poor investment choices in the subprime mortgage market...  TARP Money...  

100,000 Helped in a nation of 350 Million...  This is exactly why the the TARP bail out did little to restore the economy.  It never got trickled down to the individual.  It just preserved the solvency of the banks.  

How about a percentage reduction for all loans taken out during the time period the predatory loan scams where going on.  After all it was the loose lending tactics that drove the real estate bubble thus causing higher loan balances to begin with...