Guest Post from Paul S. written in March 2012 – Some things never change
In early February, a settlement between the Federal government and the Attorneys General of 49 states (all but OK), and the nation’s 5 biggest mortgage servicers was announced. The five servicers are Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial. Smaller ones are expected to join later.
The settlement calls for $25BB in compensation for abusive and fraudulent practices by the mortgage servicers in foreclosures and mortgage loans. The funds will be spent in a number of ways, including principal reduction for loans that are at risk of foreclosure and are underwater ($10BB), principal reduction for loans that are current and underwater ($3BB), funds towards forbearance for unemployed borrowers, anti-blight and short sale remedies (up to $7BB).
Compensation for people who lost their homes ($1.5BB), repayment of public funds lost as a result of mortgage fraud by servicers and the cost to correct related problems ($3.5BB) make up most of the rest of the settlement funds.
If the smaller servicers get on board, the total settlement could go to $30BB.
When we consider the approximately 11 million homeowners who are underwater by up to $700BB, and the fact that the housing crisis was arguably caused in large part by greed-driven lowering of lending standards and the creation of clearly deceptive loan products, $30BB seems like a paltry amount indeed.
Other terms of the settlement require changes in servicers’ business practices, including restrictions on dual-tracking, consistent timeframes for certain loan modification processes, as well as additional requirements for record keeping and following legal procedures.
A watchdog has been appointed to monitor compliance: Joseph Smith, the top banking regulator from North Carolina. Fox, henhouse, whatever. It’s show time again, folks, step right up and see the latest illusions from the people who brought you Weapons of Mass Distraction!
As usual, it appears that in spite of nearly a Trillion dollars in underwater mortgages (and an unknown total loss of home equity), plus massive losses to investors on the derivatives that were used to keep the greed flowing, there will be no charges filed against any of the executives who conceived of and perpetrated what will go down in history as the biggest financial scam since the Federal Reserve was created in 1913. The Banking-Industrial-Government Complex (BIG-C) is alive and well.
While the 99% are tilling the soil, the 1% is soiling the till.
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What is the purpose of this? A reminder of 2009? Is this an appetizer to a new housing crisis?
Almost zilch was spent on mortgage re-financing etc. This was a lot of smoke blown up the collective asses of the American peoples asses . I talked to one of the reps from Bank of America as to how many defaulted loans was she looking after in S.C. . She told me over 450 . I asked how many had gotten a mortgage adjustment…she said ZERO !
Why….she said Fannie Mae and Freddie Mac told them not to do ANY !
Wow a whole 450, huh?
Realestatepup is a repo specialist, I’ll be on the lookout for her comments.