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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Soul Crusher on December 21, 2011, 03:05:39 PM
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BofA settles unfair lending claims for $335 million
CNN ^
Attorney General Eric Holder said a federal probe found discrimination against at least 200,000 qualified African American and Latino borrowers from 2004 to 2008, during the height of the housing market boom. He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.
(Excerpt) Read more at money.cnn.com ...
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How utterly absurd is this?
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BofA settles unfair lending claims for $335 million
CNN ^
Attorney General Eric Holder said a federal probe found discrimination against at least 200,000 qualified African American and Latino borrowers from 2004 to 2008, during the height of the housing market boom. He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.
(Excerpt) Read more at money.cnn.com ...
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How utterly absurd is this?
Its absurd that the banks did this and quite frankly, its been happening for quite some time. Good for Obama and I hope they get more of these banks
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what kind of lawyer doesn't know it's illegal to steer qualified borrowers (of any race) into higher interest rate products
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what kind of lawyer doesn't know it's illegal to steer qualified borrowers (of any race) into higher interest rate products
Oh please - without interviewing the person themself how do they know why this occurred? Many people went in to those loans since it was less downpayment or lower initial payments etc.
And guess who mostly the loan originators were in this? 99% chance they were other blacks or hispanics.
And this did not occur to white people?
Fucking please - this is more redistribution of wealth to "Holders' People" according to his words.
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Oh please - without interviewing the person themself how do they know why this occurred? Many people went in to those loans since it was less downpayment or lower initial payments etc.
And guess who mostly the loan originators were in this? 99% chance they were other blacks or hispanics.
And this did not occur to white people?
Fucking please - this is more redistribution of wealth to "Holders' People" according to his words.
you are really dumb aren't you
it's quite easy to look a loan file and review credit reports, debt ratios etc.. and see a pattern where people who would have been eligible for an a "A Paper" loan were given sub-prime or Alt A product for no reason
This was a very common abuse by lenders like Countrywide and others and quite simple to prove by simply reviewing documents
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you are really dumb aren't you
it's quite easy to look a loan file and review credit reports, debt ratios etc.. and see a pattern where people who would have been eligible for an a "A Paper" loan were given sub-prime or Alt A product for no reason
This was a very common abuse by lenders like Countrywide and others and quite simple to prove by simply reviewing documents
Absolutely not true - i know many people who went in to those loans because they required less up front money and less monthly payment amounts for a the first few years.
And these people were so stupid they did not realize what was going on? They did not shop around? All all blacks and hispanics presumed to be so stupid and incompetent? I guess so.
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Absolutely not true - i know many people who went in to those loans because they required less up front money and less monthly payment amounts for a the first few years.
And these people were so stupid they did not realize what was going on? They did not shop around? All all blacks and hispanics presumed to be so stupid and incompetent? I guess so.
I obviously cant comment on each case but the above is true. Mnay people didnt even bother looking into or thinking about the changes in the near future. Now, its everyones fault without any form of responsibility for their own short sighted choices. This isnt an excuse for the bank but you need two to tango.
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Absolutely not true - i know many people who went in to those loans because they required less up front money and less monthly payment amounts for a the first few years.
And these people were so stupid they did not realize what was going on? They did not shop around? All all blacks and hispanics presumed to be so stupid and incompetent? I guess so.
and those would be legitimate Alt A borrowers
again, you're simply too stupid to waste time with
If everything in their file (required down payment, debt ratio, credit profile, etc..) made these borrowers eligible for "A Paper" products and they were steered to Alt A or SubPrime then Countrywide broke the law. In this case the pattern was to steer qualified minority borrowes to sub prime products
Go google ECOA and stop being so fucking stupid
This is simple stuff that even a moron like you should be able to understand
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and those would be legitimate Alt A borrowers
again, you're simply too stupid to waste time with
If everything in their file (required down payment, debt ratio, credit profile, etc..) made these borrowers eligible for "A Paper" products and they were steered to Alt A or SubPrime then Countrywide broke the law. In this case the pattern was to steer qualified minority borrowes to sub prime products
Go google ECOA and stop being so fucking stupid
This is simple stuff that even a moron like you should be able to understand
LOL. So these people couldnt shop around? They could not compare? Every real estate closing I ever handled the borrower shopped around the loan to two or three people before going with one bank or the other.
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I obviously cant comment on each case but the above is true. Mnay people didnt even bother looking into or thinking about the changes in the near future. Now, its everyones fault without any form of responsibility for their own short sighted choices. This isnt an excuse for the bank but you need two to tango.
there is definitely and element of "caveat emptor" but we have laws in place for this specific type of activity.
There is nothing nefarious about this fine. It's not re-distrubution of wealth etc.. The lenders have a fiduciary responsibility to the public to lend based on established criteria and not to steer people into higher rate products (which are priced higher based on "risk factors") when they are eligible for better rates and when borrowers with similar credit profiles were receiving those rates.
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LOL. So these people couldnt shop around? They could not compare? Every real estate closing I ever handled the borrower shopped around the loan to two or three people before going with one bank or the other.
again, you are so fucking dumb you're not worth the effort
it's got NOTHING to do with being able to shop around
these lenders violated the law .....period
It's illegal to steer qualified borrowers to higher "risk based products" when they are qualified for better priced products
I swear you'd think even a low level lawyer such as yourself would understand that
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again, you are so fucking dumb you're not worth the effort
it's got NOTHING to do with being able to shop around
these lenders violated the law .....period
It's illegal to steer qualified borrowers to higher "risk based products" when they are qualified for better priced products
I swear you'd think even a low level lawyer such as yourself would understand that
Ha ha ha - n ot true - I know of three personal circumstances tio where people went with those loans based on lower paymenrs and downpayment because they intended to either flip the house or use their existing savings for furnishings, etc instead of a higher deposit.
many of these people had no intention of staying there for longer than 5 years. i'm sure a few people were ripped off, but many ripped off the banks as well. it was a mutual situation.
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Ha ha ha - n ot true - I know of three personal circumstances tio where people went with those loans based on lower paymenrs and downpayment because they intended to either flip the house or use their existing savings for furnishings, etc instead of a higher deposit.
many of these people had no intention of staying there for longer than 5 years. i'm sure a few people were ripped off, but many ripped off the banks as well. it was a mutual situation.
again idiot
a lower down payment (or no down payment) would be a LEGITIMATE REASON for an Alt A or even in some cases a Sub Prime loan
That is not what this case was about
your stupidity is just stunning sometimes
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again idiot
a lower down payment (or no down payment) would be a LEGITIMATE REASON for an Alt A or even in some cases a Sub Prime loan
That is not what this case was about
your stupidity is just stunning sometimes
Without interviewing the people themselves and their circumstances there is no way to make these determinations. I'm sure there was some bogus shit going, no doubt - but was it only contained to blacks and hispanics?
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Without interviewing the people themselves and their circumstances there is no way to make these determinations. I'm sure there was some bogus shit going, no doubt - but was it only contained to blacks and hispanics?
again IDIOT
you can easily make this determination by looking at the documents in the loan file (credit report, loan app, income/asset docs) without having to talk to anyone.
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again IDIOT
you can easily make this determination by looking at the documents in the loan file (credit report, loan app, income/asset docs) without having to talk to anyone.
And? Often times those loan apps and appraisals were all based on fraud. i'm not saying this did not occur in some cases, but many of the borrowers were complicit in falsyfying loan docs.
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And? Often times those loan apps and appraisals were all based on fraud. i'm not saying this did not occur in some cases, but many of the borrowers were complicit in falsyfying loan docs.
When was fraud ever mentioned ?
If verafiable eligible minority borrowers were steered toward higher rates than white borrowers with the same credit profile this is a violation of ECOA
how the fuck can you not know this?
Again, your stupidity on this simple issue is profound
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When was fraud ever mentioned ?
If verafiable eligible minority borrowers were steered toward higher rates than white borrowers with the same credit profile this is a violation of ECOA
how the fuck can you not know this?
Again, your stupidity on this simple issue is profound
And by who? The bank itself? Mortgage brokers in the neighborhoods? If it was so illegal - why not refer this for criminal prosecution?
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And by who? The bank itself? Mortgage brokers in the neighborhoods? If it was so illegal - why not refer this for criminal prosecution?
ECOA
go look it up
btw - you know banks are usually fined and no one goes to jail (which is unfortunate)
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ECOA
go look it up
btw - you know banks are usually fined and no one goes to jail (which is unfortunate)
My experience is that most of these borrowers started out with a mortgage broker who shopped the loan to various banks. Did mortgage brokers shop around to the bank who would pay them the most? Absolutely! Was it based on race alone? I dont think so. Most of the worst practices were going on in the inner city like in Brooklyn, Queens, So Bronx around here. I would cringe when I saw the compensation of the mortgage Broker on the HUD1 form for some of these thiungs. .
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My experience is that most of these borrowers started out with a mortgage broker who shopped the loan to various banks. Did mortgage brokers shop around to the bank who would pay them the most? Absolutely! Was it based on race alone? I dont think so. Most of the worst practices were going on in the inner city like in Brooklyn, Queens, So Bronx around here. I would cringe when I saw the compensation of the mortgage Broker on the HUD1 form for some of these thiungs. .
Steering any eligible borrower toward a higher priced product (i.e. higher risk based pricing) should also be a crime but it's harder to prove.
this case was about a pattern of eligible minorities given higher priced products when they qualified for better terms
this practice used to be rampant which is why the ECOA was enacted
this has NOTHING to do with SHAKING DOWN a bank or REDISTRUBTION of wealth
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Steering any eligible borrower toward a higher priced product (i.e. higher risk based pricing) should also be a crime but it's harder to prove.
this case was about a pattern of eligible minorities given higher priced products when they qualified for better terms
this practice used to be rampant which is why the ECOA was enacted
this has NOTHING to do with SHAKING DOWN a bank or REDISTRUBTION of wealth
WELL - WHERE IS THE MONEY GOING?
And personally? Dealing with mortgage brokers to me is little or no different than sdealing w a car salesman. You never really know what they are hiding from you.
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WELL - WHERE IS THE MONEY GOING?
And personally? Dealing with mortgage brokers to me is little or no different than sdealing w a car salesman. You never really know what they are hiding from you.
are you really this fucking stupid
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are you really this fucking stupid
Yes - educate me oh wise one.
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Yes - educate me oh wise one.
I'm sure Obama and Holder kept the money for themselves and probably shared some of it with Obama's cronies
No doubt Bill Ayers got some juice and probably Jeremiah Wright got a taste too
Seriously dude, where do you think fines like this go.
You're the one with the "redistribution" CT who doesn't even understand what the ECOA is
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DOJ Steers Countrywide Settlement Cash to Leftist Groups With Dem Ties
by Tom Fitton
http://biggovernment.com/tfitton/2012/01/06/doj-steers-countrywide-settlement-cash-to-leftist-groups-with-dem-ties
The untold story of the Obama Administration’s widely reported, $335 million discrimination settlement with Countrywide Financial Corporation is that, under a secret Justice Department program, a chunk of the money won’t go to the “victims” but rather leftist groups not connected to the lawsuit.
The Department of Justice (DOJ) will determine which “qualified organizations” get leftover settlement cash and Democrat-tied groups like the scandal-plagued Association of Community Organizations for Reform Now (ACORN) and the open-borders National Council of La Raza (NCLR) stand to get large sums based on the hastily arranged deal which got court approval in just a few days.
Judicial Watch has investigated this controversial arrangement and in 2010 sued the DOJ to obtain information about the policy directing big portions of cash settlements from its civil rights lawsuits to organizations not officially connected to the cases. In response to JW’s lawsuit, the DOJ was forced to acknowledge that it has no official guidelines regarding “qualified organizations” that get leftover settlement funds and that it doesn’t monitor how the money is used.
In the Countrywide case, details of the unscrupulous arrangement are buried deep (page 10 of the 17-page settlement) in the court document where Bank of America’s Countrywide Financial Corporation agrees to pay to resolve allegations that it discriminated against qualified black and Hispanic borrowers. The lender denies all of the charges, but wanted to end the case and caved into the government’s terms.
Here’s a synopsis straight out of the court settlement; all money not distributed to allegedly aggrieved persons within 24 months shall be distributed to qualified organizations that provide services including credit and housing counseling, financial literacy and other related programs targeted at African-Americans and Hispanics. Recipients may include “non-profit community organizations that provide education, counseling and other assistance to low-income and minority borrowers…”
This language essentially comes from ACORN’s mission statement. The famously corrupt group has raked in tens of millions of taxpayer dollars over the years but a series of scandals involving misuse of public funds, embezzlement, intimidation tactics, employee abuse, questionable hiring tactics and fraudulent voter registrations led Congress to pass legislation prohibiting the federal government from funding ACORN. The group simply transformed into various “spinoffs” and affiliated organizations and continues to get public money. Read all about it in a special JW investigative report, “The Rebranding of ACORN.”
The NCLR also stands to get money under the Countrywide settlement because the influential Mexican La Raza group is tight with the president and offers Latinos “housing counseling” that’s previously been funded by Uncle Sam. A JW probe uncovered documents in June that reveal federal funding for the group has skyrocketed since one of its top officials— Cecilia Muñoz—got a job in the Obama White House. Keeping with the mutual praise, the NCLR quickly issued a press release commending the administration for holding Countrywide “accountable for targeting communities of color.”
The landmark deal is the largest residential fair-lending settlement in history and has been widely celebrated by liberal groups as well as various media outlets, some of which believe the punishment wasn’t harsh enough. One newspaper editorial called it a “pittance compared to the grievous harm the lender brought to families across the nation.”
The money is supposed to be distributed to more than 200,000 minority victims—nearly one-third of them in California—who took out home loans between 2004 and 2008. According to the DOJ they were charged higher interest rates and fees than white borrowers based on their race not their credit. Thomas Perez, head of the DOJ’s bloated civil rights division, called it “discrimination with a smile” because victims had no idea they were being victimized and instead were thrilled just to get a home loan and realize the American dream.
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Foreclosure Settlement With Major Banks Close To Completion
The LA Times ^ | February 9, 2012 | 1:25am | Alejandro Lazo
Posted on Thursday, February 09, 2012 8:16:36 AM by kiryandil
A nationwide plan to help nearly 2 million homeowners hit by the mortgage meltdown and improper foreclosure practices could be announced as early as Thursday under a multi-state settlement hammered out by states' attorneys general and the nation's major lenders.
The proposed $25-billion deal would be the largest since the $206-billion settlement with the tobacco industry in 1998. Much of the bank settlement is expected to go to people who are having trouble paying their mortgages or have lost their homes to foreclosure.
(Excerpt) Read more at latimes.com ...
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GUESS WHO IS GOING TO PAY FOR THIS MORONS?
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A ‘deadbeat’ bailout
By CHARLES GASPARINO
Last Updated: 12:03 AM, February 10, 2012
It’s hard to imagine a less-deserving group of victims: people who gambled during the housing bubble by purchasing homes with borrowed money that they knew or should have known they couldn’t afford, but who are now able to stay in the homes they should have never bought because of what amounts to paperwork errors on the part of the nation’s big banks.
But that’s essentially what went down yesterday, thanks to the Obama administration’s latest re-election gimmick — the nationwide mortgage-foreclosure settlement.
Everyone — from the president, to officials at the Department of Housing and Urban Development, to at least some of 49 state attorneys general who cobbled together the pact, including New York’s Eric Schneiderman — took the all-too-familiar class-warfare route in selling the deal to the public and national media. They’d like us to believe that the nation’s largest banks are finally paying for their bad behavior during the housing bubble and its aftermath, when millions of Americans either lost or were in jeopardy of losing their homes.
That’s because the banks will cough up $26 billion for various abuses, including illegal foreclosures. Many “victimized” home-owners will get relief, mostly in the form of refinancing of underwater mortgages. So, they can stay in their homes, at least for a while.
It’s such a win-win, the administration is boasting, that even those people not part of the specific victimized class will benefit because the deal creates a stronger housing market. If banks can’t foreclose on properties, the theory goes, they can’t depress housing prices more by selling these properties on the cheap.
Problem is, almost all of the “logic” behind the deal isn’t logic, but a combination of half truths and outright lies. Even worse, the settlement will likely prolong the housing slump and set the stage for it to happen again.
Take the “victims,” who faced eviction from their homes because of the banks’ supposedly corrupt foreclosure practices. These home-owners didn’t really own their homes; many, in fact, barely plunked down a downpayment for a mortgage.
By borrowing far more heavily than what they could afford, they were also gambling that housing would keep rising in value, defying basic rules of economics.
Now they’re being rewarded for their mistakes. Ironically, even the government officials who were part of the deal have privately conceded that, with few exceptions, more than 95 percent of the so-called victims weren’t victims at all; they faced imminent foreclosure because they were delinquent on their mortgage payments — often for a year or more.
Or as banking analyst Dick Bove put it: “What this settlement did was to help 1 million people who were deadbeats.”
Why are these deadbeats getting bailouts? Aside from election-year politics, at issue is the foreclosure practice known as “robo signing” — a procedure in which low-level bank employees, without direct authorization, approve perfectly legal foreclosures on a bank’s behalf.
The foreclosures themselves were legal; the only apparent illegality is that the banks streamlined the foreclosure process, with clerks signing the bank officer’s name on legal documents.
But the worse part of the deal is that it will prevent the housing market from recovering anytime soon while sowing the seeds for another bubble. Much of the $26 billion will be used to refinance underwater mortgages, in which borrowers are either being forced out of their homes or face possible eviction because they owe more than their homes are worth.
All of which sounds harmless — until you realize that foreclosures are a necessary ingredient to the housing market’s recovery, because they allow prices to hit bottom and entice people who can afford homes to buy them and bid up prices again.
So, the bailout does little more than delay the pain because housing prices at some point must reflect the market, with its glut of inventory in many areas.
We’re also teaching a generation of home-owners that there are no risks to their decisions because the government will bail them out. If there are no consequences to risk, why not just roll the dice again and again?
It’s tempting to see the mortgage settlement in the broader context of the bailout mania that has swept the country since the 2008 financial crisis. The auto companies and the big banks got bailouts, so why shouldn’t homeowners?
But when will it end? Probably when it isn’t an election year.
Charles Gasparino is a Fox Business Network senior correspondent.
Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/deadbeat_bailout_LBRdYWq9BHXu4kIFTgHL1M#ixzz1lzm6DE4Z
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BofA settles unfair lending claims for $335 million
CNN ^
Attorney General Eric Holder said a federal probe found discrimination against at least 200,000 qualified African American and Latino borrowers from 2004 to 2008, during the height of the housing market boom. He said that minority borrowers who qualified for prime loans were steered into higher-interest-rate subprime loans.
(Excerpt) Read more at money.cnn.com ...
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How utterly absurd is this?
you see this as bad? the banks that risked your money, failed lied to you, sold you fucked up mortages and when told they were failing took more tax payer money to stay afloat. You are mad that people who were wrong are getting justice? what kind of fucking lawyer are you?
you are a scumbag dude, you are. you have to be a shitty defense attorney, because you lie constantly.
oh no the blacks want the money back that is owed to them because they were lied to, fucking lazy blacks.
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Foreclosure Settlement With Major Banks Close To Completion
The LA Times ^ | February 9, 2012 | 1:25am | Alejandro Lazo
Posted on Thursday, February 09, 2012 8:16:36 AM by kiryandil
A nationwide plan to help nearly 2 million homeowners hit by the mortgage meltdown and improper foreclosure practices could be announced as early as Thursday under a multi-state settlement hammered out by states' attorneys general and the nation's major lenders.
The proposed $25-billion deal would be the largest since the $206-billion settlement with the tobacco industry in 1998. Much of the bank settlement is expected to go to people who are having trouble paying their mortgages or have lost their homes to foreclosure.
(Excerpt) Read more at latimes.com ...
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GUESS WHO IS GOING TO PAY FOR THIS MORONS?
too late moron they already have your money, you fucking people will always be the ones to pay, at least obama is getting money from the banks and giving it to the people it is owed to. The case was tried was it not? you disagree with the ruling or the outcome?
everything looks great to me, financial education, mortgage help due to the shitty interest rates they were lied into buying.
you are a fascist, the GOP are fascists.
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Getting justice? WTF is that?
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too late moron they already have your money, you fucking people will always be the ones to pay, at least obama is getting money from the banks and giving it to the people it is owed to. The case was tried was it not? you disagree with the ruling or the outcome?
everything looks great to me, financial education, mortgage help due to the shitty interest rates they were lied into buying.
you are a fascist, the GOP are fascists.
I'm the facsist? You are an illiterate and incompetent at best, and that is being nice. The banks are not paying anything. The customers with savings and checking accounts are going to pay for the deadbeats.
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Buffett’s Bank of America
Warren Buffett’s Net Worth Jumps $154M Thanks to Mortgage Settlement
BY: Patrick Howley - February 10, 2012 12:50 pm
Warren Buffett’s stake in Bank of America Corp. increased in value by $154 million after President Obama and the U.S. Justice Department announced a $25 billion foreclosure abuse settlement with the five largest U.S. banks Thursday, records show.
Buffett invested $5 billion in Bank of America (BofA) on Aug. 25, 2011. As part of his investment deal, Buffett gained warrants that allow him to buy 700 million shares of Bank of America stock at a strike price of $7.14 a share. However, on Dec. 19, 2011, it was reported that Buffett was $1.5 billion underwater on his stock warrants, with shares of BofA stock trading at $4.94. But on Thursday, after President Obama personally announced the details of the settlement, BofA stock closed at $8.13 a share. The stock opened Friday morning at $8.31 and reached as high as $8.35 a share.
If Buffett had exercised his warrants Friday morning, he would have made $847 million. $154 million of that profit would have been related to the foreclosure deal.
This is not the first time Buffett has profited from Obama administration policies. In November 2011, it was reported that President Obama’s two-year postponement of the deadline to determine the future of the proposed Keystone XL pipeline would force North Dakota oil producers to rely more heavily on the Burlington Northern Santa Fe Railroad. Buffett’s Berkshire Hathaway Inc. holding company purchased the Burlington Northern Santa Fe Railroad Corp. in a total package worth $44 billion in 2009.
Buffett has personally contributed $5,000 to Obama this election cycle, while Berkshire Hathaway has contributed $30,800 to the Democratic National Committee.
This summer, Obama will accept the Democratic Party’s 2012 presidential nomination with a speech at Bank of America Stadium in Charlotte, N.C.
This entry was posted in Cronyism, Democratic Donors and tagged Bank of America, Berkshire Hathaway, Burlington Northern Santa Fe, Warren Buffett. Bookmark the permalink.
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I'm the facsist? You are an illiterate and incompetent at best, and that is being nice. The banks are not paying anything. The customers with savings and checking accounts are going to pay for the deadbeats.
wait so the people are being sued then not the bank, sorry i was confused. I thought it said bank officials, didnt realize the customers were suing other customers.
pretty cool that banks can pay the money their clients sue them for with said clients money. Pretty neat loop hole there.
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I'm the facsist? You are an illiterate and incompetent at best, and that is being nice. The banks are not paying anything. The customers with savings and checking accounts are going to pay for the deadbeats.
ok so suing them or these deadbeats and winning the case apparently isnt the answer according to the above lawyer. What other options do they have? shut up and accept that these fucks are breaking the law and profiting off their backs?
can someone help me, is this guy trolling or is he retarded or something, serious fucking question because im gonna be honest i really don't fucking know anymore. I use to think he was trolling, but he is so relentless and absurd for such long periods it has to be his character and despite being a troll he is still super dumb, but isn't aware of it.
good job on catching the spelling mistake there homo
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No one is being held accountable. All this is doing is sending 2,000 checks to deadbeats on the back of account holders who will see raised fees on checking, savings, loans, etc.
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1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.
2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.
3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.
4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.
5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.
6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.
7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.
8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.
9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.
10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.
11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.
12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.
As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.
Topics: Banana republic, Banking industry, Credit markets, Legal, Politics, Real estate, Regulations and regulators, Ridiculously obvious scams, The destruction of the middle class
Email This Post Posted by Yves Smith at 4:25 am