Attorney General Tom Horne said Tuesday he hopes to settle a lawsuit with Bank of America "within days," clearing the way for Arizona to become part of a nationwide deal with that institution and four other banks.
Horne acknowledged that Arizona has been one of a handful of states that has so far refused to join in the tentative pact designed to settle claims that the five banks were guilty of abuse in the foreclosure process. That deal would force the lenders to reduce loans for about a million homeowners who are "upside down" on their mortgages, owing more than the property is worth.
And some who already lost their homes to foreclosure would get checks.
Horne told Capitol Media Services he has no specific problem with what attorneys general in other states had worked out, which could be worth up to $25 billion.
But he pointed out that the deal would require states to agree not to bring further lawsuits against the five banks. And it would also require Arizona to absolve them of any other liability, including in pending litigation.
That, said Horne, is not acceptable. He first wants Bank of America to settle Arizona's own claims - and give homeowners here more money than is required in the nationwide pact.
In its 2010 lawsuit, the state charged Bank of America with practices that led to hundreds of people being ousted from their homes even as they were told their mortgages were being modified.
Specific allegations include:
• Inconsistent statements given by bank personnel to homeowners about the status of their loan or refinancing.
• Shuffling homeowners among many people rather than a single point of contact.
• Failing to provide reasons why a loan modification request was rejected.
Terry Goddard, who was attorney general at the time, also said the bank, the largest servicer of home loans in Arizona, used a "dual track" process, getting homeowners to keep making mortgage payments with assurances their loans were being modified even as the bank was starting foreclosure proceedings. Goddard said if the homeowners knew the real story they would have stopped making payments and put their cash into finding alternative housing.
Goddard said investigators even found situations where the bank continued to demand and accept mortgage payments even after the home had been sold, but before the original owner was evicted.
"We're working up some language" to settle the case, Horne said Tuesday.
"I expect that to happen in a day or two," he continued. "Assuming that does happen, we'll be joining the settlement."
Horne said Arizona - and its residents - are entitled to more than their pro-rata share of the national settlement, at least from Bank of America.
"A lot of work went into it and we've proven a lot of stuff," he said. "I'm trying to get some more money for you as a taxpayer."
The allegations against the five banks are based on broader abuses of the foreclosure process.
When the real estate market went belly up and banks began foreclosure, the charge is that many did not properly verify the loan documents and some even used forged signatures.
Aside from Bank of America, the other banks that have agreed to the nationwide deal include JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
Even if Arizona joins, there may be other holdouts.
Last month, California Attorney General Kamala Harris called the deal "inadequate."
"Our state has been clear about what any multistate settlement must contain: transparence, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability," Harris spokesman Shum Preston said. "At this point, this deal does not suffice for California.''
• The Associated Press contributed to this report.