Foreclosed Upon Americans Get Chump Change While Banks Erode Regulations

bankstersgThe Federal Reserve and the Office of the Comptroller of the Currency are cutting an $8.5 billion deal against ten of the largest banks for their systematic foreclosure and loan modifications abuse which resulted in millions losing their homes. From the settlement press release.

FHFA Firestorm!

firestormThe FHFA just pooped on half a million Americans and denied those underwater on their mortgage to obtain partial debt forgiveness. Millions of American homeowners holding out hope are outraged. Acting FHFA director Ed DeMarco:

Today, I provided a response to numerous congressional inquiries as to whether the Federal Housing Finance Agency (FHFA) would direct Fannie Mae and Freddie Mac to implement the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA). After extensive analysis of the revised HAMP PRA, including the determination by the Treasury Department to begin using Troubled Asset Relief Program (TARP) monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks.

Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.

A Change to our System of Property Rights based on Political Power

robosignforeclosureSo says Roosevelt Institute fellow Matt Stoller in the below interview. Stoller is talking about the 50 state mortgage fraud settlement and frankly he's right. It's beyond belief the government has literally shoved under the rug banks improperly seizing and foreclosing on properties owned by Americans.

Mortgage Settlement Is Corruption Poster Child

housemazeIt's simply a failure of law. Barry Ritholtz wrote a admonishment of the Obama administration and state attorney generals for buying into the 50 state mortgage settlement pig in a poke:

We never want to see an innocent party “accidentally” evicted from a home. The legal system has evolved so this has become a “legal impossibility.” Imagine returning home from work or vacation to find the front door padlocked, the belongings strewn all over the block, a big orange sticker screaming “FORECLOSED” on the garage door, with an auction sign in the front lawn. Now imagine that this occurred even though you are not in default or even delinquent on payments. Thanks to the robosigning banks, this legal impossibility has happened repeatedly, even to homeowners who paid cash for their houses and had no mortgages. Imagine that — foreclosed with no mortgage.

Pretty incredible huh? It used to be no one could simply just take your home. Such a violation of personal and property rights was unheard of. Now the stories are so routine, the press barely covers them.

Bloomberg Law interviewed an on fire Ritholtz, who explains, in simple English, why this settlement is such a big deal. Literally the settlement throws out 1000 years of individual property rights, law and is a loss of personal freedom you really need to pay attention to.

National Mortgage Settlement is a Big Fat Pig in a Poke

pigpokeThere are new revelations on the 50 state mortgage fraud settlement. From The Financial Times:

A clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter.

The existing $30bn initiative, the Home Affordable Modification Programme (Hamp), provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

The settlement is estimated to be $40 billion. The fines are only $5 billion of this, which implies U.S. taxpayers are on the hook, not the banks, for $30 billion. So instead of getting any justice that using people's homes, their shelter and main life investment as a gambling chip and paper chase game is wrong, once again we get to pay for financial folly while banks pocket the cash.

Naked Capitalism has put up a top 12 list of things wrong with the foreclosure fraud settlement. Here's reason #1:

Snippets From the 50 State Mortgage Settlement

mersAs expected, states were strong armed by the administration and have agreed to a $25 billion, 50 state mortgage fraud settlement with five banks for robo-signing and mortgage fraud. According to the Wall Street Journal:

The agreement covers five banks: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five firms handle payments on 55% of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance.

While the banks pony up $25 billion, they are the ones who made out like bandits.

About $5 billion would be cash payments to states and federal authorities, $17 billion would be pegged for homeowner relief, roughly $3 billion would go for refinancing and $1 billion would be paid to the Federal Housing Administration.

Who's the Big Bad Wolf Now on Foreclosure Fraud and Abuse?

three pigsWe all know the story of the three little pigs and the big, bad wolf.

Little pig, little pig, let me come in.
No, no, not by the hair on my chinny chin chin.
Then I'll huff, and I'll puff, and I'll blow your house in.

To date that's been the story of the banks as the big bad wolf, blowing houses down all over America with fraudulent foreclosures, viewing home owners as tasty piglet snacks of profit.

Will we ever see role reversal in this never ending grim tale? Will the big bad wolf finally be our government, blowing down the Banks' house of mortgage and foreclosure fraud? Can the government at least hand Americans just a few bricks at least? It's yet to be seen.

The latest seems to be dueling events. One the one hand, there is a foreclosure fraud settlement in the works for all 50 States, which supposedly gives banks immunity and waves all future legal actions. Yet at the same time, the New York Attorney General filed a civil fraud lawsuit against three major banks over MERS.