Foreclosed Upon Americans Get Chump Change While Banks Erode Regulations

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.

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.

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.

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Comments

Well written sir, however the

Well written sir, however the 14 largest banks again are part of this "so called" deal. I ask why haven't the massive non-bank servicers that lurk under the governments so called radar. The Crooks I speak of are the companies like Nationstar Mortgage Lewisville,TX part of the fortress group. This company is a known foreclosure mill. They Nationstar llc" have been buying massive amounts bad loans from gmac, wells fargo etc etc. Some of this servicers shady business dealings aren't hard to find heck just type in Nationstar on the SEC's website and look at there dealings since 2007-2013 just some info for people to review whom may be interested in corruption at its height. its a shame business like this even exist however they haven't been fined once by any of the settlements AG's Fed's nodda. Seems it will never end unless somebody whom hasn't been paid off by these crooks speaks up the middle class or whats left of it. just my two cents and Thanks again for the great reading here. Tell me guys why hasn't the fed stepped in? Even the new CFPB isn't touching this servicer for there theft and lies could it be even they have money from such a criminal Enterprise? Ryan MN

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Settlement proves the Fed works for banksters

Why doesn't the Fed or SEC or DOJ or anyone do anything other than settle with them and allow them to make returns on their crimes at 1,000X? Easy answer, because the Fed is actually controlled by the very same bankers. And for those that don't have a literal seat at the table (like Dimon does on the Fed Board of NY), then there's lobbying. Just check out how much money these people spend lobbying Treasury, SEC, and DOJ. And if lobbying doesn't work, there's always the promise of a sweet job that pays six or seven or eight figures upon leaving government service if you just toe the line and don't ask any uncomfortable questions of your future employers (whether they work in the banks, defense, pharmaceuticals, accounting, hedge funds, energy, etc.). Look how many counts of forgery banks could have been busted for regarding robo-signing Linda Green's name. Imagine a person forging one name one time on one document and submitting it to a court to be registered - that's one felony and at least one year for each signature. These banks did it tens of thousands of times and no one goes to prison, no forfeiture, no probation. Why doesn't anyone step in and send anyone, someone to jail for massive criminal conspiracies? Uhm, because the criminals run the show and own the government?

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Basel III (weak to begin with) delayed until 2019? Classic farce

And spitting in the face of the non-banksters, regular global populace continues. How many billions in payoffs in USD, Yen, Pounds, Euros, AUD, CAD, and every other currency have already taken place to water down the Basel III requirements and to get this delay until 2019? How many more bribes will be exchanged until 2019? How many more bank and government manufactured crises will occur until 2019 that will, of course, force the issue to be revisited and the watered-down requirements to actually be completely made useless and/or delayed until the next century? Complete farce (and an expensive one at that). Watch how many people that helped write the rules and delayed their implementation move back and forth from banks to regulators to political halls of power during all this time. That revolving door sure does pay well for people of low character.

So I guess with all these capital requirements being eliminated or reduced substantially and delayed endlessly, regular bank customers can keep $1 in their savings and checking accounts without penalties? They get free checking? They get fantastic mortgage rates? Credit cards have 0.1% interest rates? CDs pay out at 10%? No? I'm sorry, I forgot, customers and citizens count for nothing, it's the people with their hands in the till and stealing the customers' money that meet with global banking officials/administrators/regulators and politicians and write/call the shots.

Rule #1 - rules and laws and social mores that apply to the regular populace don't apply to the big banksters, big corporations, and their puppets in the media and government. Rule #2 - when in doubt, refer to Rule #1.

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next bubble

When (not if) there's another bubble, I predict it will be in retirement funds. They won't stop until they "privatize" Social Security, and all that extra money in the financial markets will make today's casino look like a bingo game. Then, of course, all the profits will disappear into their hedge funds and offshore accounts, leaving most of us with nothing. Financial fraud ought to be a capital crime, you'd see a lot less of it then.

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Keeping Hope Alive

Every time I see a program like the OCC Foreclosure Review, HAMP, etc, I think it's just about keeping hope alive. People, especially the Democratic Party rank and file, have to "believe" that their leader, and their party are going to help them. The GOP is pretty clear that it's going to give more money to the wealthy etc. But the Democrats have to preserve the illusion that maybe, one day, if the big bad GOPers will let them, things will get better. Otherwise, people might start to wake up to the fact that we are screwed, and act accordingly.

So in a sense, killing hope in the Democrats is one of the most important things that we can do to mobilize people.

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