Foreclosuregate Update: Victim Compensation Fund In Negotiation
Posted by AzBlueMeanie:
For a better understanding of the Foreclosuregate scandal, I recommend this interview at Bloomberg News http://www.bloomberg.com/video/64555006/ (sorry, no video embed).
New York City Comptroller John Liu discusses his request, on behalf of the city’s Pension Funds, to directors at Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. to conduct independent audits of their banks’ mortgage and foreclosure practices. Liu speaks with Carol Massar on Bloomberg Television’s “In the Loop With Betty Liu.”
In other developments, the 50 state attorneys general and the country's biggest lenders are in negotiations to create a nationwide fund to compensate borrowers who can prove they lost their home in an improper foreclosure. States, mortgage lenders in talks over fund for borrowers in foreclosure mess:
The fund would present a solution for both sides, helping banks avoid lengthy and costly court challenges from homeowners and aiding state investigators in their efforts to seek relief for homeowners who were wronged, the officials said.
Discussions are continuing over the size of the fund, who would administer it and what kind of proof homeowners would have to present to get access to the money. But there is a consensus between the lenders and state officials that some sort of financial remedy is necessary to avoid the turmoil that could result from homeowner challenges.
Any settlement between the banks and attorneys general almost certainly would force lenders to put more resources into modifying the loans of homeowners who missed their payments, rather than rushing toward foreclosures, state officials said. The banks could also be barred from foreclosing on homeowners while simultaneously negotiating mortgage modifications.
The fund, the first of its kind in the mortgage industry, would mirror victim-compensation efforts set up in recent years in response to the BP oil spill in the Gulf of Mexico, the shootings at Virginia Tech and the terrorist attacks of Sept. 11, 2001.
* * *
Iowa Attorney General Tom Miller, who is leading a joint, 50-state investigation, declined to comment Tuesday on the specifics of the group's negotiations with the banks but said that hammering out details could delay a final agreement for a few months.
Miller said that's because the remedies being discussed go far beyond the problem of "robo-signing" and into deeper problems facing the mortgage servicing industry.
"We want to be more creative and figure out a way to make the system better," Miller said in an interview. "For instance, rather than having them pay a huge amount of fines, much of that money [could instead] go to adequate resources to make this work."
* * *
The attorneys general have been negotiating with each bank separately but pressing for similar terms. The state officials have been focusing on the three largest servicers – Bank of America, J.P. Morgan Chase and Wells Fargo – hoping agreements with those companies will serve as a model for others.
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Foreclosuregate Update
Posted by AzBlueMeanie:
A congressional oversight panel is set to warn on Tuesday that a widespread problem of flawed and fraudulent foreclosure paperwork could upend the housing market and undermine the nation's financial stability, just as the issue is coming under greater scrutiny this week in Washington. Don't underestimate foreclosure crisis, watchdog to warn:
The report, issued by the Congressional Oversight Panel, which monitors the government's bailout program, marks the first time a federal watchdog has weighed in on the nationwide foreclosure mess.
The panel echoed concerns raised by consumer advocates and financial analysts, who have said that although the consequences of the foreclosure debacle remain unclear, the problems could throw into doubt the ownership not only of foreclosed properties but also the millions of ordinary mortgages that were pooled and traded by investors around the world.
The report is scheduled to be released [this] morning, just before the Senate Banking Committee holds a hearing on the matter and as lawmakers are considering several legislative responses.
The spotlight on the foreclosure process has anxious financial executives mobilizing on Capitol Hill. A financial lobbyist said senior executives have been meeting with lawmakers and their staffers, and industry groups are planning letter campaigns aimed at preventing any aggressive new legislation.
"Everyone's very nervous about what's going to happen this week," said another industry official, who spoke on condition of anonymity because his firm has a stake in the outcome. "We have all hands on deck."
The banksters of Wall Street want "business as usual" to continue, i.e., governments to turn a blind eye to lenders' failures to comply with state laws pertaining to mortgages and foreclosures and federal laws pertaining to securitized mortgage investment devices such as derivatives. They want to keep churning mortgages for profits. Laws are for "little people" to comply with — homeowners being forced out of their homes in foreclosures, in some cases where there has been no default and even where the mortgage is paid off.
Some lawmakers want to resurrect legislation that would give bankruptcy judges the power to order lenders to reduce the principal that homeowners owe. ["cram-down" rule] Others are pushing for some big banks to spin off their mortgage-servicing arms to avoid conflicts of interest. There's also discussion of the federal government replacing the industry's current system for tracking mortgages with one that would be subject to federal regulation.
Not to worry say the banksters of Wall Street. "The risk is small that a bill gets through," the financial lobbyist said. But, he added: "We are taking it very seriously."
