Foreclosuregate Update: The banksters of Wall Street win again

Posted by AzBlueMeanie:

Last week some legal observers thought the 44 50 state mortgage fraud settlement negotiations between the states attorney generals and the banksters of Wall Street might be unraveling.

On Friday, "In the latest of a flurry of under-the-wire lawsuits that seem to conflict with an imminent foreclosure fraud settlement, Eric Schneiderman, the Attorney General of New York and a co-chair of the federal task force looking into the residential mortgage-backed securities market, sued three banks for their use of the MERS electronic registry which resulted in fraudulent foreclosure filings." Schneiderman Sues Three Big Banks, MERS for Deceptive Practices, Illegal Foreclosures | FDL News Desk:

While the foreclosure fraud settlement is not supposed to release MERS claims, this is a significant lawsuit that I don’t think can square with any agreement on a settlement. Schneiderman, like Beau Biden before him, is suing MERS for deceptive practices. Those practices resulted in the creation of falsified foreclosure documents. And he’s suing the banks over the use of those documents. This is the ENTIRE point of a settlement in the foreclosure fraud case. I don’t see how you could bring this case and also agree to a settlement[.]

Today, every state but Oklahoma signed off on the foreclosure fraud settlement agreement letting the banksters of Wall Street off with a slap on the wrist. The amount of the settlement is pennies on the dollar compared to the fraud perpetrated; the settlement does not require disgorgement of ill-gotten gains. It is even fewer pennies on the dollar for the amount of fraud that still exists in the system, i.e., mortgage-backed securities in the derivates "shadow market." Paying a fine is just the "opportunity cost" of doing business. Most offensive, under the settlement "nobody's going to emergency, nobody's going to jail." The banksters of Wall Street win again.

Of course, the corporate media is reporting this story quite differenty. The Washington Post reports Landmark settlement announced on foreclosure, mortgage fraud:

State and federal officials on Thursday announced a settlement of more than $25 billion with five of the nation’s banks over flawed and fraudulent foreclosure practices that affected several million homeowners and became commonplace after the housing boom turned to bust in recent years. It is the largest government-industry settlement in more than a decade.

It aims to help troubled borrowers by requiring the banks to reduce the amount borrowers owe on their mortgages, lowering their interest rates and paying restitution to homeowners who suffered mortgage-related abuses. It will force lenders to revamp how they interact with struggling mortgage holders and bar them from trying to foreclose on borrowers while simultaneously negotiating mortgage modifications.

In addition, firms will have to make sure borrowers have a single point of contact with a lender, rather than being shuttled to different employees with each interaction.

U.S. Attorney General Eric Holder announced the deal–which he called the largest joint federal-state civil settlement in history[.]

Officials said the settlement-details of which can be seen on www.NationalMortgageSettlement.com – probably would be filed in a federal court within a matter of weeks and would require the consent of a judge. Once it is approved, banks would begin to deposit money into a trust account, and those funds would be distributed to qualified homeowners by the government. In all, 49 states have signed onto the agreement, with Oklahoma the lone holdout, federal officials said.

* * *

The settlement could grow in size and scope if officials can sign on an additional nine mortgage servicing companies which they’ve been negotiating with in recent weeks. That would bring the total number of banks participating to 14, and could raise the face value of the settlement to about $30 billion.

* * *

The talks got a major boost when they were endorsed by California ­Attorney General Kamala Harris, who had withdrawn her support last fall. Another key holdout, New York Attorney General Eric Schneiderman, also joined in supporting the settlement, which is backed by more than 40 states.

The participation of California and New York helped ensure a key election-year victory for the Obama administration, which has been intent on finalizing an agreement that officials argued would deliver much-needed aid to ailing homeowners. The backing of California and New York also means a much larger settlement than banks otherwise would have been willing to sign.

* * *

Negotiators maintained that they tried to narrowly tailor the legal releases in a way that would allow Schneiderman and others to move forward with investigations of other mortgage abuses.

The initial reluctance on the part of some states was due in part to their concern that the settlement would give banks a broad legal release from further investigations and lawsuits. But negotiators said the release in the final deal applies only to “robosigning” and mortgage-servicing-related claims. It leaves open the possibility of other lawsuits regarding fair housing and fair lending laws, civil rights claims, and claims dealing with how loans were packaged and sold, a process known as securitization. In addition, it does not shield the banks from any criminal violations that arise.

You can bet the banksters' attorneys will argue that this is a complete global release granting them full immunity. They will forum shop and find a conservative ativist judge who will agree, and before you know it, the "Felonious Five" of the U.S. Supreme Court will agree as well.

The New York Times reports Mortgage Plan Gives Homeowners Bulk of the Benefits:

Under the plan, federal officials said, about $5 billion would be cash payments to states and federal authorities, $17 billion would be earmarked for homeowner relief, roughly $3 billion would go for refinancing and a final $1 billion would be paid to the Federal Housing Administration. 

If nine other major mortgage servicers join the pact, a possibility that is now under discussion with the government, the total package could rise to $30 billion.

Because of a complicated formula being used to distribute the money, federal officials say the ultimate benefits provided to homeowners could equal a larger sum — $45 billion in the event all 14 major servicers participate. The aid is to be distributed over three years, but there are incentives for banks to provide the money in the next 12 months.

More than just an attempt to aid consumers and stabilize the housing market, administration officials cast the settlement as an effort to finally hold banks accountable for their misdeeds, more than three years after the mortgage collapse brought on a full-scale financial crisis. [Not one bankster has been prosecuted]

* * *

The amounts from individual banks were linked to their share of the servicing market. The biggest, Bank of America, would provide $11.8 billion, followed by $5.4 billion from Wells Fargo, $5.3 billion from JPMorgan Chase, $2.2 billion from Citigroup and $310 million from Ally. Bank of America would contribute an additional $1 billion for F.H.A. loans.

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure.

[Mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac, will not be covered under the deal, excluding about half the nation’s mortgages.]

* * *

Officials in Washington emphasized that the accord covered only one element of the housing bust, namely, the fallout for individual homeowners who defaulted on loans they couldn’t pay. Regulators and prosecutors could still pursue questionable behavior in the process by which those loans were made, known as origination, and the packaging of those mortgages into securities sold to investors by the big banks.

Shaun Donovan, the secretary of housing and urban development, said that new servicing standards would “force the banks to clean up their acts,” adding, “No more lost paperwork, no more excuses, no more runaround.”

* * *

President Obama called it a landmark settlement that would “begin to turn the page on an era of recklessness.” He said the government will continue to pursue violations of law in the packaging and selling of risky mortgages that led to the crisis. “We’re going to keep at it until we hold those who broke the law fully accountable.”

I am still waiting, Mr. President. There are statutes of limitations running. And not one bankster has been prosecuted.

[T]he settlement had been held up amid concern by New York’s attorney general, Eric T. Schneiderman, that it provided too broad of a release for banks for past misdeeds, making future investigations much more difficult.

Mr. Schneiderman was able to win significant concessions from the banks in recent days.

In the agreement’s expected final form, the releases are mostly limited to the foreclosure process, like the eviction of homeowners after only a cursory examination of documents, a practice known as robo-signing.

The prosecutors and regulators still have the right to investigate other elements that contributed to the housing bubble, like the assembly of risky mortgages into securities that were sold to investors and later soured, as well as insurance and tax fraud.

Officials will also be able to pursue any allegations of criminal wrongdoing. In addition, a lawsuit Mr. Schneiderman filed Friday against MERS, an electronic mortgage registry responsible for much of the robo-signing that has marred the foreclosure process nationwide, and three banks, Bank of America, JPMorgan Chase and Wells Fargo, will also go forward.

Along with how broad the releases would be, California’s attorney general, Kamala Harris, also pushed for her state to be able to use the state’s False Claims Act. That would enable state officials and huge pension funds like Calpers to collect sizable monetary damages from the banks if officials could prove mortgages were improperly packaged into securities that later dropped in value.

I really hope they are correct and will aggressively pursue the banksters of Wall Street. I won't be satisfied until "somebody's going to emergency, somebody's going to jail."