Wednesday, February 8, 2012

Big Banks and Feds Shaft Homeowners On Foreclosure Settlement

Big Bank Money Grab
Big Bank Money Grab (Photo credit:

From Denny:  The nation's top five Big Banks are pushing hard to avoid millions of lawsuits by outraged homeowners - with yet another skewed settlement heavily in favor of the Big Banks.

Yes, the homeowners already foreclosed and homeowners seeking modified mortgage loans are getting the shaft by their federal and state governments.

It's an election year and these politicians and attorneys are actually foolish enough to sign off on this lousy agreement the average middle class homeowner does not want.  The American public grows more angry by the day at being ignored by national and local leaders as well as nickeled and dimed to death with excessive constant fees from every business quarter, mostly from banking.  If this settlement goes through as analysts are predicting, there will be a ferocious backlash come November.

Two key states hardest hit by the economic downturn and massive millions of foreclosures are New York and California.  The word is they are close to signing on to the agreement as well as Washington.  The negotiations are 50-state talks.  So far, 40 states have agreed to the settlement supposedly designed to right the wrongs of foreclosure abuses.  This settlement comes nowhere near to accomplishing that goal.

How many homeowners will be affected?  This settlement will help but a small pittance of those affected by shabby and illegal business practices from the Big Banks.  Only one million homeowners will qualify.  Those homeowners that do qualify must be "underwater" on their mortgages.  Underwater basically means the Big Banks have imploded the real estate market so badly that your home is no longer worth what you owe on it.

Which Big Banks are named in this settlement?  All the usual vile suspects:  Bank of America, JPMorgan Chase, Ally Financial, Wells Fargo and Citigroup.

From Iowa Attorney General Tom Miller, lead negotiator of the 50-state talks:  "Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement."

Notice anyone conspicuously missing in these talks?  Yeah, it's a council of homeowners to balance the influence of the Big Banks.  How can the average homeowner - and the American public - know if these talks are not leveraged or prejudiced in favor of the Big Banks?  We all know what happened in the BP Oil Spill crisis.

BP set about bribing President Obama with campaign monies and attorney Ken Feinberg (who was supposed to fairly administer the claims fund).  Suddenly Feinberg did an about face away from fairness and justice and went about disqualifying just about everyone.  Then those who did "qualify" were given a few thousand dollars and not allowed to ever sue BP if they accepted the one-time payments of $5,000 for individuals and $25,000 for businesses.

What was supposed to be a $20 billion fund for the Gulf Coast never ended up getting funded.  BP claimed to pay out $2 billion when the reality was quite the opposite.  They added their advertising to rehabilitate their bad name, employee costs and all other manner of expenses to that pay out claim.  It was such a sham.

As a result, foreclosures and closed businesses have run rampant the past two years across the Gulf Coast - all without help from Obama.  Obama made matters worse by passing these pittance homeowner foreclosure deals and allowing the Big Banks to speed up foreclosures without mercy.

So, here we are with yet another middle class insult from the Big Banks and our government with this so-called settlement.  People are so not happy with this deal.  The negotiators should go back to the drawing board.  As the deal stands it sure looks like many an attorney was offered sweet deals for later employment or awards of sending bank business their way if they write the settlement heavily to the banks' advantage.

Turns out there are others who consider this settlement wrong.  California Attorney General Kamala Harris called the proposed settlement "inadequate" a few weeks ago, upgrading recently to the settlement has "significant sticking points."  Does that sound like California is going to sign on any time soon?

To date here is the current deal:  The fund is supposed to be up to a mere $25 billion and include only up to one million homeowners.  Never mind that by the time the foreclosure mess is finished taking people's homes it will be up to 20 million homes as history just during the past four years.  If California does not sign on then the fund drops down to $19 billion.  This fund is ridiculously small.

From George Goehl of the National People's Action, a collection of community housing groups:  "$25 billion for homeowners would be a paltry down payment, considering that roughly 11 million homes are underwater by a combined $750 billion.  Anything less than $300 billion is a win for the 1 percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud."

To address the foreclosure abuses?  All that's offered is a mere $2,000 check to a few hundred thousand who lost their homes to foreclosure.  The number of eligible might rise to as much as $750,000.  There certainly are a lot of "ifs" in this deal.

What do the Big Banks want out of this settlement?  A lot.  Of course, they have already signed on to this current version it's so sweet.  If the states sign on it means they will no longer pursue further investigations to uncover anything new against the banks in civil court.

Supposedly, this deal does not protect the banks against criminal investigation or prosecution.  The only reason they would sign on to this is they think the states have no criminal cases against them.  The states that have not signed on to this settlement are concerned about not being able to prosecute any past wrongdoing that can be discovered at a later date.

If there anything in this settlement to help homeowners in the future?  Fines for mistreating borrowers in the future might run as high as $5 million per violation.  In the terms of Wall Street big money and Big Banks, that just translates "to a tip" as they are fond of reminding everyone. They would pay that all day and keep mistreating borrowers - and that's if there is a government in place that will actually enforce the new law.

Anything else of possible benefit to homeowners?  The mortgage principal might get written down by an average of only $20,000.  That isn't very much on an average $200,000 plus house.  Most people are underwater by as much as $50,000 to $100,000 on their homes.

This settlement accomplishes nothing but another Big Bank Bailout.  The abuses like robo-signing, where fake signatures were used to speed foreclosures, have yet to be addressed - nor the harm caused by the illegal practice.  Banks also failed to verify documents yet evicted homeowners.

How narrow is the scope of this settlement?  This settlement does little to assist homeowners to keep their homes or get back their homes.  There just isn't enough money to fund it.  The settlement also only applies to privately held mortgages issued from 2008 through 2011.

Did you know that Big Banks own almost half of all United States mortgages?  That's about 31 million.  This bad deal is subject to approval by a federal judge.

If everyone signs on, let's hope the judge has enough sense to reject it like in the Capital One Bank case in Massachusetts.  That judge ordered a bank auditor to investigate and turned up all kinds of interesting revelations.  Will this judge display the same critical thinking and sound judgment, refusing to be a puppet bought and paid for by the Big Banks?

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