Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.

The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.

Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The 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.

Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.

Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The estimated 3.8 million households who would qualify for such a settlement means they all get chump change after banks illegally took their homes. Of those 3.8 million households, initially only 200,000, now estimated at 323,000, bothered to file with an independent review of their plight at all. The New York Times ran the numbers before the announcement but the back of the napkin math is still valid:

As part of a consent order in April 2011, the comptroller’s office and the Federal Reserve established the Independent Foreclosure Review, which mandated that banks hire independent consultants to audit loan files and look for illegal fees, bungled loan modifications and instances where borrowers lost their homes even though they were current on their payments. Only 323,000 homeowners submitted files to be reviewed.

Under the enforcement action, the banks were required to review foreclosures conducted in 2009 and 2010. They hired consultants to analyze cases in which borrowers suspected that they had been injured by bank practices, such as levying excessive and improper fees or foreclosing when a borrower was undergoing a loan modification. Some 4.4 million borrowers journeyed through the foreclosure maze during the period.

Some back-of-the-envelope arithmetic on this deal is your first clue that it is another gift to the banks. It’s not clear which borrowers will receive what money, but divvying up $3.75 billion among millions of people doesn’t amount to much per person. If, say, half of the 4.4 million borrowers were subject to foreclosure abuses, they would each receive less than $2,000, on average. If 10 percent of the 4.4 million were harmed, each would get roughly $8,500.

The banks complained the review process was too expensive for them, yet the game was rigged from the beginning. Banks themselves turned each mortgage case review into a rule hell paper chase. They hired the $250/hr consultants, costing them $1.5 billion. The banks along with the OCC and the Fed set up so many rules and a maze of conditions that took at least 20 hours per case to even start examining systemic mortgage loan abuses. Banks did this to bury any finding of wrong doing. Homeowners did not even submit their claims due to the rigging of the game for foreclosure reviews. Their house was gone, seized and the banks are going to get 100% away with it all.

Now we have yet another slap on the wrist settlement when the real agenda is to stop any further review of the top 14 banks' mortgage abuses. The House Oversight Committee has requested a review of the settlement (pdf), but this is a review request, there is no hold on a deal if the Federal Reserve and Currency Comptroller do not grant a delay in this settlement.

Over and over again we see slap on the wrist fines and settlements, as was the state settlement against abusive and illegal foreclosures.

If this isn't bad enough, banks just won a major watering down of capital reserve holdings requirements so they don't run out of money during the next financial crisis. Wall Street Journal:

The Basel Committee on Banking Supervision, a group of the world's top regulators and central bankers, said Sunday that it agreed to relax a rule designed to ensure that big banks are able to weather financial crises without running short of cash. Bowing to two years of intense pressure from the banking industry, the regulators made it easier for banks to meet the rule, known as the "liquidity coverage ratio," and delayed its full implementation until 2019.

As the fox guards the hen house banks are dismantling any safeguards against future financial collapse one by one. The dismantling of what little financial reform there was continues. The Financial Times has details on the profits these banks will make by killing off one more regulation:

The results are largely good news for bank profits because institutions will be allowed to count more, higher-yielding assets in their liquidity buffers. In addition, the Basel group made clear that national regulators would be able to relax the rules in a crisis.

Matt Taibbi goes down memory lane on the propaganda of TARP and the rest of the bank bail outs.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences.

TARP was sold to the American people by claiming they would help homeowners and the little guy. Four years later we see what the results were.

The promise of housing aid, in particular, turned out to be a "paper tiger."

Anyone believing the Obama administration is interested in real financial reform, think again. As Naked Capitalism says:

Obama thinks the solution to every problem is better propaganda.

Isn't this the truth for when it comes to economic justice for the average Citizen, the only thing spun out by Washington D.C. is a flurry of talking points to cover up the fact they are squeezing the middle class dry. At this point, that's blood from a stone.

This article was updated with the actual settlement terms.