OPINION AND EDITORIAL
WHAT NOW FOR HOMEOWNERS?
The foreclosure scandal settlement deal
Good for consumers or just another rip-off by big banks and the government?
February 12, 2012
If you are one of the 750,000 homeowners here in the Puget Sound area and across the country whose home was illegally foreclosed upon in the ever-so-slick MERS robo-signing foreclosure scam by some shadow entity that did not even hold clear title to your residence – but never told you that - you may be less then thrilled with the sound of $2,000.
Chart from Wash. State Attorney General’s office showing where money from the settlement with banks and loan servicers will go. CLICK TO ENLARGE
Two thousand. That is roughly the average consumer settlement amount across 750,000 home foreclosures as a result of Thursday’s $25 billion settlement announced between the big banks and various state attorneys general.
A deal that holds bank and other financial executives and associates in many ways harmless (although that is not the way the deal is being sold to the public) and lets them out of ever having to admit any guilt about many, many things going back to and including the crucifixion of Christ.
Technically the settlement agreement with the money changers still allows for criminal prosecution of those who improperly processed or signed foreclosure documents.
But with so many states signing off on a settlement deal this size, how many prosecutions do you imagine will take place? How many have taken place to date? If you are counting on just five fingers you are in the right neighborhood.
The deal also still allows individuals to sue mortgage lenders if they do not want to be a part of the settlement but with so many of them cash strapped and some unemployed for a very long time, who can afford to sue - and maybe wait years to get to court - when they desperately need whatever few crumbs of money they can get now? Who can even afford to hire a lawyer to sue?
Two thousand dollars. In many areas that amount is not even enough to rent an apartment or condo considering first and last month's rent and damage deposit.
A slap in the face? A great deal for Americans? Yet another sign that American law has no top and no bottom and that those at the top get the same treatment you’d get if you broke the law?
Is it not more than curious that all manner of local and national news media, not to mention our state’s attorney general, is selling this deal in their “news” stories and press releases with the angle that “relief is on the way for homeowners”?
Relief? Are you kidding? Is it open mic night at the Comedy Club?
Two thousand dollars for some shadow player with no name in some unnamed location having had the privilege of bending you over and pounding your life into hammered mule dung and roughing up your family’s life irrevocably?
Two thousand for making you homeless? Putting you and your kids out on the street like you were the weekly trash?
Two thousand for taking the only home you may ever own in your lifetime? Your credit may be destroyed for a very long time. The foreclosure may have contributed to your marriage breakup.
In some cases a family member may have been so despondent he or she took their own life.
And now you will never know if your home was foreclosed upon on illegally by the same technocrats who didn’t even hold legal title to it.
Two thousand. A pretty good deal? Relief?
THE ATTORNEY GENERAL SPEAKS
Sure it is. Listen how almost giddy Washington State Attorney General Rob McKenna is over this thing. He pitches it in a press release as, “The largest consumer financial protection settlement in U.S. history. Thousands of Washington state homeowners stand to benefit who have already lost their homes or are struggling with mortgages larger than the value of their property.”
And it gets more exciting, he says.
“Our settlement holds America's largest banks accountable for harms homeowners suffered from shoddy loan servicing, illegal robo-signing and faulty foreclosure processing,” McKenna said.
“The settlement results from bipartisan cooperation among Democratic and Republican attorneys general partnering with two federal agencies. From the beginning, we have worked to help homeowners harmed by the banks’ corner-cutting and to implement strict new loan servicing and foreclosure standards to prevent future harm.”
And McKenna, who is running for governor, wants you now to know how hard he fought for your interests: “We fought hard to make sure that many of these borrowers will benefit from the settlement.”
This deal holds them accountable? Is someone smoking loco weed?
If you’re a hardcore cynic about what goes on time and again in the mystic fun house loaded with magic mirrors that is now the landscape of modern America, here’s where you go with this in terms of logic:
The same Wall Street centered mega bank execs - the ones with ice water in their veins and money signs for eyeballs - that caused the Great Recession/Depression with their (deregulated thanks to politicians) exotic derivatives shell game (that even experts didn’t understand) and the bundling then of “toxic mortgages” to be sold as Triple-A securities – meaning mortgages in those bundles that were often sold fraudulently on a massive scale to people they knew could never keep up the payments – the same people who did all that and then got saved from going under by a taxpayer funded bailout in the hundreds of millions of dollars and who then turned around and paid themselves millions in bonuses with those taxpayer dollars without shame, these same characters now get a pass and most likely will never see the dim light of a prison cell.
And in the fun house we call this accountable.
THE BIG BANKS: TAKING AMERICANS ON ANOTHER TAXPAYER SUBSIDIZED RIDE
These guys will never even see the inside of a courtroom where they have to answer under oath for what they did. They don’t have to admit to a thing.
Don't have to talk openly and on the record about what they did to you and your family.
Any one of them could light a twenty-dollar cigar right now, blow smoke into your face and snarl “Dare you to do something about it sucker!”
They got themselves a sweet deal. Banks are the big winners because the costs to them are very small compared to the scope of the damage they did. And last year alone those five banks did a combined $46 billion in profits.That is for one year.
And the same banks only have to put out $5 billion in hard cash in this settlement, not the $25 billion touted in media reports.
The bank execs walk with a slap on the hand, you get to bitch and moan just like last time around. And that is all most victims of this well oiled Bernie Madoff type scam-on-steroids will be able to do. Bitch.
This is what McKenna and the other AG’s are proudly selling to the public with a straight face as a swell deal. Don’t you feel lucky now that a true blue God fearing white hat gunslinger like McKenna is here to fight for your interests?
And what of President Obama in all this? The man who campaigned as the savior of middle America, the middle class? Change we can believe in?
Yesterday in his televised pitch on the deal he almost looked embarrassed, sheepish actually, reading that silly script and for all the world looking like a man doing his best to convince Americans (and probably himself) this was a good deal for any homeowner affected by this nightmare.
NBC News had a guy on the air last night (in tears) who lost his home in this debacle. He called the settlement "a sham" and an insult to homeowners and he ought to know. He's an actual victim, not a government bureaucrat spinning a "settlement" where nothing really is settled.
The guy that wrote the book "Too Big To Fail" was also on the tube talking about this deal.
And for openers he says there's not even a good way right now under this deal to figure out who the devil qualifies for any of this pennies-from-heaven relief, "And we really won't know for six months to a year," says Andrew Ross Sorkin.
"This is really going to be a battle for many homeowners to actually participate in this program. You have to have your mortgage owned by one of these five banks," he adds.
One major problem is that half of the people in this country who are now underwater in their mortgages did not have their loans originate with these five banks, says Sorkin.
Another problem is this: he thinks it will take two to three years just to "flesh out how people are gong to get paid" in this glorious settlement.
WHERE THE CYNIC GOES WITH THIS
And the deal they made for that stay-out-of-jail card cost the banks a pittance. Critics say that a $25 Billion settlement amount split up between the players is a slap on the wrist. A joke.
If you’re a cynic you must ponder how fortunate it is for these characters that they could figure out a way to privatize profits in a massive world-wide exotic derivatives scam, unheard of in the history of the human race or modern finance, and put all the downside risk on the public, then create and pump up a housing bubble which eventually exploded (as they knew it would) and leave taxpayers holding the bag -- the same characters who then are amazingly never prosecuted for that cute little number and indeed make billions off it -- and who now will never be prosecuted for a massive post-bubble MERS robo-signing mortgage home foreclosure scam.
A slick trick indeed. God must be on their side.
God must love them immensely for he showereth upon them manna from heaven in the form of stay-out-of-jail cards handed out by all those government gunslingers like McKenna.
It is not lost on some that every time some inner city black kid with a rusty .22 with a broken firing pin knocks off a 7-11 for $98.37 – and hurts no one in the process - the entire law enforcement/legal machine kicks into high gear and ignites the turbo-chargers to find that dangerous criminal to make sure the no account miscreant does a minimum five years hard time in some hellhole as an example to others about how effective the law enforcement-legal system is.
How sharp it is. How on the ball it is. How tough it is.
But let someone in a three piece suit in Manhattan destroy thousands upon thousands of American lives, foreclose their homes out from under them when they don't even legally own the property they foreclosed on, rip their hearts out of their bodies, burn their souls to the ground, rake them through the Trail of One Thousand Tears, take them for hundreds of millions of dollars in a taxpayer funded bailout and cost them more in dollars and cents and pure emotional agony than any other loss in their life outside of a family member’s death…and those guys walk free?
Yes, they walk. They do a money deal for pennies on the dollar with guys like McKenna and walk. No prosecution in most cases most likely. Back to business as usual.
It is morning in America. The system works.
Black kid with public defender and rusty .22 does hard time. Rich white guys in suits walk.
That is, if you’re a cynic of course. We all know that’s not the case. This is America after all where government officials wear white hats and always do the right thing. They’re on our side. They have press releases that affirm that.
THE DEAL THE MEGA BANKERS GOT
Thursday's announcement marks the end to 16 months of blah-blah-blah.
The result is a state-federal settlement that will deliver not much of any relief to U.S. homeowners, although many news stories are selling the angle it will. Not selling it outright mind you, but pushing the angle.
Almost makes one think they might have a horse in this race.
The deal is spread out over three years. It requires the banks to cut mortgage debt amounts and extend those whoop-dee-doo $2,000 payments to borrowers who lost their homes to foreclosure.
And it also releases the banks - Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co., Citigroup Inc., and Ally Financial Inc. - from civil government claims over “faulty foreclosures” and the “mishandling” of requests for loan modifications.
There’s a nice term. Mishandling.
The banks will still face other potential government enforcement actions – which could result in more “deals” however - and investor lawsuits related to their packaging of home loans into securities, and other mortgage-related activities.
It is also true that many of those lawsuits, if they do materialize, can be settled for pennies on the dollar as an estimated 85% of all lawsuits do not result in court trials.
"The bottom line about this settlement, is it's okay, it's a step forward, it's a step in the right direction. But let's not kid ourselves, there's a hell of a lot more that needs to be done," said Ira Rheingold, executive director of the National Association of Consumer Advocates in what may be the day’s biggest understatement.
California, the state that has racked up about a third of the country's foreclosures in the past few years, will get an oversized portion of the relief, some 45 percent.
Some consumer protection groups, foreclosure attorneys and others predict there won't be deluge of bank foreclosures.
That’s because the agreement released mortgage lenders from civil claims related to the MERS robo-signing scandal and “other foreclosure abuses.” You can view that angle as sort of a civil get-out-of-court card.
Florida is one state with a badly hit housing market. The word is there that Florida's share of the agreement, about $8.4 billion, isn't anywhere near enough to help change the course of that state's badly hammered and struggling housing market or even offer much help to homeowners who are underwater with their mortgages or who were wrongly foreclosed upon.
For Florida where 2 million homes - nearly half of all residential properties - are underwater and worth less than what their owners agreed to pay for them, that settlement is the equivalent of a mouse passing gas in a very big wind.
One news story on the settlement quotes Chuck Mineo, a Pennsylvania lawyer, Florida Realtor and consultant for Consumer Advocate Law Firm, as saying for anyone in Florida this deal is an “irrelevancy.”
He says at best it can knock off maybe $20,000 from some people's mortgages, "But the people I work with are well underwater and they're throwing up their hands," said Mineo who adds that “no one is going to feel that $7.6 billion."
More on the settlement here and here