Thousands of people in Milwaukee are struggling to keep their homes as the city's Common Council calls for drastic action -- a nationwide moratorium on foreclosures.

Officials said more than 6,000 people are in the foreclosure process.

"There are about 5,000 homes currently now in foreclosure that are actually in the city's hands," said Urban Economic Development Association Executive Director Bill Johnson.

WISN 12 News spoke with a homeowner who is facing foreclosure after her husband lost his job.

The woman said the couple contacted their bank to see if they could work out a solution to no avail. She said they eventually had to file for bankruptcy as they desperately tried to modify their home loan.

The woman said the process took about a year, created mounds of paperwork and the couple received no communication from the bank.

Eventually, she said the bank told them they could modify the loan but the end result would cost them more than what their mortgage already was.

Participants in an ERISA plan associated with National City Corporation (National City) will benefit from a proposed $43 million settlement in a class action lawsuit alleging those defendants responsible for administering the National City Savings and Investment Plan (Plan) breached their fiduciary duties under ERISA by making imprudent investments not in the best interests of Plan holders.

ERISA denotes the Employee Retirement Income Security Act of 1974, an Act designed to protect participants of investment plans and 401(k) plans by ensuring those responsible for managing such plans and investing on behalf of plan participants do so with the best interests of participants.

It was alleged that the defendants responsible for the employee stock plan allowed the investment of Plan assets in National City common stock or National City Stock Fund units during a time when they knew, or should have known that the investments they were making were imprudent. Further, according to a release from the US District Court for the Northern District of Ohio, Eastern Division, the defendants are alleged to have breached their fiduciary duties by allowing the Plan to invest in Allegiant Funds in violation of ERISA.

The defendants deny any wrongdoing.

The announced settlement of $43 million in the employee savings plan case, as proposed, will be less court-approved legal fees, various other expenses and case contribution awards to named plaintiffs. The remainder, according to the release, will then be allocated to the accounts of Plan participants who saw portions of their Plan accounts invested in National City common stock or fund units in the National City Stock Fund at any time from September 5, 2006 to December 31, 2008 and to Plan participants who held Allegiant Funds in their Plan accounts at any time from March 25, 2002 through December 31, 2009.

A hearing is scheduled for November 30th in the US District Court for the Northern District of Ohio (Eastern Division) before US District Judge Solomon Oliver, Jr.

Any employee investing in an employee 401(k) plan or other ERISA pension plan (that is, protected under ERISA provisions) does so with the hope that prudent investments and management will yield the necessary funds for a comfortable retirement. Beyond that hope is the expectation, regardless of what the market does, that the plan will be managed prudently—with the confidence that if it is not, then ERISA benefits under the 1974 ERISA Act will prevail.

It's been almost two years since the Federal Reserve set interest rates to the current near-zero levels. The Fed has kept the target range for the federal funds rate (the interest rate at which banks lend to each other) between zero and 0.25 percent since December 2008 and has, since March 2009, repeated its pledge to keep rates low for an "extended period." That's a signal that it doesn't plan on changing its tune any time soon, experts say.

On top of record-low interest rates, the Fed has also pursued a strategy called quantitative easing, which involves buying up government securities like treasuries to push interest rates even lower in hopes of stimulating more lending to spur economic activity. The first round of quantitative easing started in 2008, and many experts believe the Fed will announce plans to begin another asset-buying program (referred to as QE2) in its next rate announcement in November. Here are four reasons why another round of asset purchases could be problematic:

Savers are hurting. The yield on the 10-year treasury note has hovered around 2.5 percent for most of the latter half of 2010. Historically, rates have been much higher. In mid-2007, when economic growth was much more robust and demand for treasuries was much lower, 10-year treasuries were yielding as much as 5 percent. Many older investors depend on the income they receive from their investments in high-quality bonds like treasuries, and faced with paltry treasury yields, many are considering whether they should take on more risk. "It forces people out the risk spectrum in order to get yield, and a lot of people that are forced out the risk spectrum shouldn't be forced out the risk spectrum," says Liz Ann Sonders, chief investment strategist at Charles Schwab. Rates can only move higher, and when they do, investors that have moved farther down the duration scale (a measure of interest-rate sensitivity) will feel the pain. When interest rates rise, the price of bonds falls--and longer duration bonds will be hit harder than others.

Officials in 50 states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.

The states' attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly.

Alabama initially did not sign on to the investigation. It reversed course after the joint statement was released.

Attorneys general have taken the lead in responding to a nationwide scandal that's called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes. Employees of four large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them.

The allegations raise the possibility that foreclosure proceedings nationwide could be subject to legal challenge. Some foreclosures could be overturned. More than 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc.

The state officials said they intend to use their investigation to fix the problems that surfaced in the mortgage industry.

Investors with failed agribusiness provider Great Southern have launched a class action against Bendigo and Adelaide Bank (BABL), in an attempt to recover losses from the venture.

A statement of claim issued by DC Legal on behalf of investors against BABL, which currently holds the loans, alleges that the Great Southern Group made false and misleading claims in its product disclosure statement (PDS) such as promoting unattainable woodlot yields and failing to report the true position of the managed investment schemes (MISs).

The group also offered investment in the schemes and loans in order to invest up until the month of receivership, according to the statement.

DC Legal solicitor Bruce Dennis encouraged other Grout Southern investors to join the class action.

Since at least 2004, the Great Southern Group was relying on sales from the following year’s MIS sales, which Dennis described as having a ponzi-like character, where new capital is constantly required to prop up previous projects.

Investors were unable to make an informed decision regarding the investments and would not have taken out the loans and invested in the schemes if the true position had been stated, Dennis said. About 260 investors are asking the Federal Court to set aside loans and to be reimbursed for all costs.

“BABL has threatened to commence action against borrowers from GSF having acquired these purported loans. BABL has even threatened the investors with bankruptcy,” Dennis said.

This is the only nationwide class action on the Great Southern matter, Dennis said, although a smaller class action was filed by Macpherson + Kelley lawyers in the Victorian Supreme Court in May this year.

Along with the Great Southern Group, three formers directors have also been named as respondents in the action. They are John Young, Cameron Rhodes and Phillip Butlin. The matter is due to go before the Federal Court on 22 October.

A response from BABL said there was nothing new in the statement of claim, which the bank described as “hopelessly inadequate”.

It covers the same ground as the Macpherson + Kelley action, and BABL has always acted within the letter and spirit of the law relating to loans provided to investors in Great Southern MIS and will vigorously defend the new action, according to BABL managing director Mike Hurst.

Although DC Legal claims to be acting on behalf of up to 2,000 investors, only 230 of its clients have Great Southern loans with BABL, Hurst said.