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Weighing in on the DOJ/AGs Mortgage Fraud Settlement

09 Feb

Here’s a run down of the posts worth reading on the ‘historic’ settlement.

Yves Smith gives her top 12 things to hate – we are completely on page with her on every one; especially the first which is very important. Since when does fraud have a simple price association?

David Davey gives a comprehensive look at what to expect in the settlement also very good and important for understanding what is really up here – and finally, Washington’s Blog delivers the sucker punch calling the settlement what it is – a stealth bailout.  As always so well documented there is no argument left.

If you truly want to understand what is happening here, we strongly recommend you read all three articles at their source. We’ve linked them here with excerpts to get you started.

 

Yves Smith at Naked Cap gives a blow by blow rundown of why exactly this settlement is BS; and gives her top 12 reasons here:

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

The Top 12 Reasons Why You Should Hate the Mortgage Settlement

Next for a good thorough read through of the blow by blows, be sure to read this piece by FireDogLake’s David Daven.

49-State Foreclosure Fraud Settlement Will Be Finalized Thursday

Forty-nine states, every one but Oklahoma, as well as federal regulators will participate in a foreclosure fraud settlement that will release the five biggest banks (Wells Fargo, Citi, Ally/GMAC, JPMorgan Chase and Bank of America) and their mortgage servicing units from liability for robo-signing and other forms of servicer abuse, in exchange for $25 billion in funding for legal aid, refinancing, short sales, restitution for wrongful foreclosures and principal reduction for underwater borrowers. The announcement will be made on Thursday.

This settlement arises from multiple abuses found in the servicing of loans and the foreclosure process over the past several years. At the height of the housing bubble, banks sliced and diced mortgages and traded them with little regard for the rules following land recording or securitization to such a sloppy extent that they lost track of the true owner on potentially millions of homes. To cover up for this massive failure, banks and their servicing units have been found to have routinely forged, back-dated and fabricated documents at county recorder offices and state courts across the country. Furthermore, they employed “robo-signers,” who signed hundreds of thousands (if not millions) of documents and affidavits without any knowledge of the underlying mortgages. In addition, investigations uncovered massive servicing abuses, including illegal fees charged to borrowers, putting borrowers into foreclosure at the same time as they were working out loan modifications, failing to honor previous settlements where promises were made on modifications, and countless other errors that maximized servicer profits and gouged homeowners. There are also cases of wrongful foreclosures where homeowners have been turned out of their homes without just cause, and servicer-driven foreclosures, where servicers illegally added late fees and applied payments inaccurately, pushing the homeowner into foreclosure. This is but a smattering of the examples of foreclosure fraud and servicer abuse found in a series of interlocking investigations, court depositions, reviews of documents in registers of deeds offices, and homeowner testimonials.

The deal caps a 16-month process that had several fits and starts, and closed with the final holdouts, New York and California, coming to terms. The deal will release claims from state Attorneys General, but individual homeowners retain private rights of action to sue over foreclosure fraud and other abuses. As part of the settlement, states will get a fixed amount in hard dollars that would go to fund legal aid services. “This will get a lawyer for everyone facing

49 States Foreclosure Fraud Settlement Will be Finalized Thursday

Next we move on to one of most trusted and well researched sources, Washington’s Blog:

 

Mortgage Settlement Is Just Another Stealth Bank Bailout

Yet Another Bailout for the Giant Banks … Homeowners Get Hosed Again

The 50-state settlement with the banks (Oklahoma didn’t sign, but supports letting the banks go scot-free) over mortgage fraud is a stealth bank bailout, according to many top observers. See this, this, this, this, this, this, this and this.

This is par for the course … All of Obama’s previous “mortgage relief” programs have really been stealth bank bailouts which screwed the homeowner. And see this.

For example:

Most independent experts say that the government’s housing programs have been a failure. That’s too bad, given that the housing slump is now … worse than during the Great Depression.

Indeed, PhD economists John Hussman and Dean Baker, fund manager and financial writer Barry Ritholtz and New York Times’ writer Gretchen Morgenson say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.

Many also accuse Obama’s foreclosure relief programs as being backdoor bailouts for the banks. (See this, this, this and this).

Mortgage Settlement is Just Another Stealth Bank Bailout

There’s plenty of noise in the MSM about the ‘historic’ settlement; but until you’ve read these three pieces, we don’t think you have the story by a far cry.

And be sure to read the earlier post here which contains the DOJ press release and notes from LivingLies on protecting your rights as a homeowner in spite of the ‘historic’ settlement.

 
Patti Griffin says it better than all of the specifics…

 

 

 

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