I’m beginning to think that the last couple of days were April 1st in disguise. I mean, what a crazy practical joke our Federal Government and State AGs just tried to play! What a parade of press conferences, all touting a deal to trade some $25 billion in mostly more accurate accounting for some kind of release of origination, servicing and foreclosure fraud. But it turns out the deal’s not real.
More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public….That’s because a fully authorized, legally binding deal has not been inked yet.
All I have to say is “Linda Green” is only one person and the missing documents will be put up as soon as MERS gets them signed and notarized!
American Banker-
More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as “coming soon.”
That’s because a fully authorized, legally binding deal has not been inked yet.
The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.
“Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com,” the representative said in an email to American Banker.
Indeed, when the settlement was announced this morning, claims against MERS were explicitly carved out; state attorneys general can go ahead with suits against the mortgage registry. MERS is as exposed as a kid locked out of the house without a coat in a snowstorm.
What are we to make of the servicing settlementannounced today with much hoopla? The short answer is not much. The settlement is the large consumer fraud settlement ever, but it accomplishes remarkably little in terms of either alleviating the foreclosure crisis of holding to account those responsible for the housing bubble and subsequent foreclosure abuses. As my Texas relatives say, it’s “All sizzle, no steak.”
Instead, I think the settlement needs be seen as the conclusion to round one of an on-going struggle for accountability and reparations for the enormous damage the housing bubble did to the United States. Whether we will ultimately see meaningful accountability and reparations in the end is very much in question. Round two, featuring the Residential Mortgage-Backed Securities Fraud taskforce, could well be stillborn; the taskforce combines more motivated and more capable agencies, but it isn’t clear of the motivated can leverage the more capable or will be bogged down by them. But as for this settlement, if this is all that we get, it’s a big nothing.
There are two big issues to parse in the settlement: what does it cover and what sort of relief does it provide. Not surprisingly, both are quite limited; the banks wouldn’t pay big dollars for a small release.
The sweetheart deal the feds just finished forcing down the throat of the state AGs is only the latest piece of evidence–evidence enough to reach ‘beyond a reasonable doubt’–that your federal government works for the banks and not you. Team Obama has placed the economic interests of the banks and the freedom of bankers above your economic interests, the rule of law, and any notion of good faith, fair dealing and justice. They won’t admit it; Team Obama will run hard as champions of the 99% on all things, including being Tough On Banks! and Helping Homeowners! But neither is true, and it’s critical that you not believe them when they say it.
That said, please understand; I’m not hawking the Republicans: Mitt Romney, Newt Gingrich and Rick Santorum are no better on banking and housing. The only candidate I heard make some sense on these issues was John Huntsman, and he’s no longer in the race. On banking and housing policy, we currently have no good candidates.
My slim hope for good bank and housing policy rests on you. If Team Obama is confronted with an informed and active electorate over the next several months–confronted with enough voters demanding good policy instead ofeasily disprovable talking points–I think it’s possible to goad a-scared-we-won’t-be-reelected Team Obama into actually doing good policy.
“Let me help a few victims I created by ripping them off and illegally throwing them out of their homes by false court filings that I swore were true.” That’s what the so-called mortgage settlement talks are really all about: fraud, perjury and crimes. That’s what these banks did and that’s what they are trying to buy their way out of.
The settlement discussions are the same: eliminate all or almost all liability for the bank and, most importantly, all bank officers and employees in exchange for a loan forgiveness or modification program. Think about this: the banks engaged in a years’ long pattern and practice of what can only be described as fraudulent if not criminal conduct that would put anyone else in prison for years if not decades, yet banks get to buy off the cops with some money to help just a few of the victims they created.
AG Coakley Secures Additional “Carve Out” to Continue Litigation over “MERS” and “Ibanez” Claims
BOSTON – A $25 billion nationwide state-federal settlement over unlawful foreclosures, including robo-signing of documents, will bring an estimated $318 million dollars in assistance to Massachusetts borrowers, Attorney General Martha Coakley announced today. Attorneys General from 49 states have agreed to join the settlement announced today in Washington, D.C.
AG Coakley also secured an additional “carve out” to the agreement to allow her office to continue to pursue further relief in the courts against the banks over two Massachusetts-specific issues. Those claims include initiating foreclosures without holding the actual mortgages (so-called “Ibanez” violations) and allegedly corrupting the land recording system through the use of the Mortgage Electronic Registration System (MERS). The agreement will settle all other claims made as part of AG Coakley’s lawsuit against the five banks filed on December 1, 2011.
“Fixing this foreclosure crisis is one of the most important things we can do to restore a healthy economy,” said AG Coakley. “In Massachusetts, this agreement provides for immediate relief and continued enforcement. The banks will provide an immediate infusion of millions of dollars in relief for struggling homeowners. It also allows our office to continue to pursue our claims against the banks for initiating illegal foreclosures in our state and corrupting our land court system. By no means is this settlement the end of our work seeking accountability and relief, as we are continuing to look at the practices of Fannie Mae and Freddie Mac and are participating in the state-federal task force investigating the practices that led to the collapse of our economy.”
Since 2007, AG Coakley has been a national leader in addressing the foreclosure crisis by holding banks and investment giants accountable for their role in the economic downturn. Her office has already recovered more than $600 million in relief for Massachusetts homeowners and investors. AG Coakley’s Office has ongoing investigations into the foreclosure crisis and will continue additional efforts to stabilize the housing market in Massachusetts.
NATIONAL STATE-FEDERAL SETTLEMENT
Through this national state-federal agreement, five major lenders are expected to provide approximately $14.6 million in cash payments to Massachusetts borrowers, $257 million worth of mortgage relief, and a direct payment of more than $46.5 million to the Commonwealth that will be used to assist homeowners. The agreement settles allegations of widespread use of fraudulent documents by Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC.
Massachusetts’ estimated total share of the settlement is $317,915,272:
Massachusetts borrowers will receive an estimated $224,000,819 in benefits from loan term modifications and other direct relief.
Massachusetts borrowers who lost their homes to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse would qualify for $14,625,790 in cash payments to borrowers.
The value of refinanced loans to Massachusetts underwater borrowers would be an estimated $32,729,601.
The state will receive a direct payment of $46,559,061 that will be used to assist homeowners.
Under the national agreement, the five servicers have agreed to a $25 billion joint state-national settlement with these components:
Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
Servicers commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government). The state payments include funding for payments to borrowers for mortgage servicing abuse.
Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
An independent monitor will ensure mortgage servicer compliance.
Government can pursue civil claims outside of the agreement, and any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.
The state-federal settlement resulted from a civil investigation and initiative that began in October 2010. This investigation included state attorneys general and state banking regulators across the country, and nearly a dozen federal agencies. The settlement holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement seeks to stop future fraud and abuse.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. A separate agreement reached by Massachusetts allows the Commonwealth to pursue allegations that these five banks initiated foreclosures without holding the actual mortgages (so-called “Ibanez” violations) and allegedly corrupted the land recording system through the use of the Mortgage Electronic Registration System (MERS), stated in AG Coakley’s lawsuit against the five banks filed on December 1, 2011 . The settlement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The agreement also enables state attorneys general and federal agencies to continue to investigate and pursue other aspects of the mortgage crisis, including securities cases.
The final agreement, through a consent judgment, will be filed in U.S. District Court in Washington, D.C., and will have the authority of a court order.
Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases participating mortgage servicers will contact borrowers directly regarding loan modification options. However, borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of this settlement.
AG COAKLEY’S LEADERSHIP TO ADDRESS THE FORECLOSURE CRISIS
AG Coakley’s office has already brought numerous actions against major banks and financial institutions with the goal of keeping people in their homes and avoiding unnecessary foreclosures. These include actions against Fremont , Option One , Countrywide , Morgan Stanley , Goldman Sachs and Royal Bank of Scotland which all resulted in loan modifications designed to remedy unfair and unsustainable loans in Massachusetts. AG Coakley’s office has recovered more than $600 million in relief for investors and borrowers, helped keep more than 25,400 people in their homes, and returned nearly $60 million in taxpayer funds back to the Commonwealth.
Attorney General Coakley has also agreed to join the Residential Mortgage-Backed Securities task force. On January 27, U.S. Attorney General Eric Holder, along with Housing and Urban Development (HUD) Secretary Shaun Donovan, announced the formation of the task force. AG Coakley’s Office will lend Massachusetts expertise regarding its own investigations into the use of mortgage-backed securities which contributed to the financial crisis. Massachusetts is one of the only states to successfully investigate and settle these types of claims against lenders, returning more than $200 million for borrowers.
The federal-state settlement announced today primarily affects mortgages that are owned and held by the nation’s largest bank servicers. Fannie Mae and Freddie Mac, however, control a majority of the nation’s mortgage loans. Leaders of Fannie Mae and Freddie Mac have expressed an unwillingness to participate in federal loan modification programs, including principal forgiveness. In a letter to the acting director of the Federal Housing Finance Agency (FHFA) sent last Thursday, AG Coakley insisted that the FHFA should allow for principal forgiveness, guided by a net present-value analysis, which would increase loan modifications and help stabilize the housing market.
AG Coakley has also filed legislation in Massachusetts as part of this effort to tackle the ongoing foreclosure crisis. The legislation, An Act to Prevent Unnecessary and Unreasonable Foreclosures, filed with State Senator Karen Spilka and State Representative Steven M. Walsh, would set standards for determining when a loan modification, instead of foreclosure, is appropriate and would require creditors to modify loans when an analysis shows that it’s more profitable to modify the loan than to foreclose. The legislation applies to loans that have been identified as having certain risky features, typically associated with subprime loans, and in which the banks knew or should have known were destined to fail. The legislation would also codify two recent Supreme Judicial Court Decisions, Ibanez and <em>Bevilacqua</em>, by requiring a creditor commencing foreclosure to show it is the current legal holder of the mortgage. With today’s settlement, the provisions included in the loan modification legislation would become a key piece to ensuring the implementation of the settlement and protecting homeowners now and in the future.
More information about AG Coakley’s work during the lending crisis can be on her website .
Borrowers should contact their mortgage servicer to obtain more information about specific loan modification programs and whether they qualify under terms of the state-federal settlement:
Bank of America: 1-877-488-7814
Citi: 1-866-272-4749
Chase: 1-866-372-6901
GMAC: 1-800-766-4622
Wells Fargo: 1-800-288-3212
More information can be found on the state-federal settlement at the websites below:
Consumers who may have additional questions about the settlement or other concerns can submit a complaint online or call the Attorney General’s dedicated mortgage settlement phone line at (617) 963-2170. Consumers may also contact the Attorney General’s office at the following email address agocs@state.ma.us.
This matter is being handled by Attorney General Martha Coakley’s Consumer Protection Division, including Assistant Attorneys General Amber Villa, John Stephan, Sara Cable, and Justin Lowe; Acting Division Chief David Monahan; Investigator Monique Cascarano of the Investigation Division, Stephanie Kahn, Deputy Chief of the Public Protection & Advocacy Bureau, and Deputy Attorney General Chris Barry-Smith.
After Schneiderman’s Persistence, Narrow Settlement Preserves Sweeping Legal Claims For Housing Crisis Misconduct That Has Not Yet Been Investigated
New York To Receive More Per Underwater Borrower Than Any Other State, Plus Loan Modifications, Principal Reductions
Schneiderman: Civil & Criminal Investigations Will Continue As We Seek Accountability For Those Responsible For Crisis And Leverage Greater Relief For Homeowners
NEW YORK – Winning his long, persistent demand that a wide array of sweeping civil and criminal claims not be released without investigation, Attorney General Eric T. Schneiderman announced today a $136 million settlement for New York with the nation’s five largest mortgage servicers over foreclosure abuses, the most per “underwater” borrower of any state in the nation, and the fourth highest dollar amount nationwide as part of the federal-state settlement. In addition to penalties for past abuses, the settlement includes direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs. Today’s settlement, which also imposes strong national standards for mortgage servicing, fulfills Attorney General Schneiderman’s demand that he retain the right to bring legal action over misconduct that has not yet been investigated, a right that was absent from earlier settlement proposals.
“Thanks to the advocacy and support of Americans across the country, we have preserved the right to continue investigating the misconduct that led to the bubble and crash of the housing market. For a year, the proposed settlement was simply inadequate, and I applaud all those who fought with us to hold banks accountable for their role in the foreclosure crisis, provide meaningful relief to New York’s struggling homeowners, and allow a full airing of the facts to ensure that abuses of this scale never happen again,” said Attorney General Schneiderman. “On multiple fronts, we will continue to investigate the mortgage crisis that has impacted communities in every corner of this state, and ensure that justice and accountability prevail.”
Over the past year, Attorney General Schneiderman fought for a fair national settlement, on behalf of New York’s homeowners, for mortgage servicing abuses, making it clear that he would not sign an agreement that would give financial institutions broad legal immunity for conduct that had not been investigated. Until recently, the language in settlement proposals had been too broad to justify reaching an agreement. Today’s settlement is a vast improvement, and it will allow the Office of the Attorney General and other agencies to investigate and bring appropriate civil and criminal actions.
New York’s estimated share of the guaranteed cash payments in the settlement is $136 million, the fourth highest in the nation. New York will be able to distribute these funds to legal aid, homeowner assistance and advocacy organizations to help distressed individuals facing foreclosure or servicer abuse. Among the critical legal claims Attorney General Schneiderman fought for, and successfully preserved in today’s settlement are:
All criminal claims.
All claims based on mortgage securitization misconduct, under securities fraud statutes, including New York’s Martin Act, and other sources of law. This includes securitization claims based on servicing, foreclosure or origination-related facts.
All claims directly against the private national mortgage electronic registry system known as MERS, as well as claims against financial institutions for the use of MERS in the Attorney General’s recently filed lawsuit over a wide range of deceptive and fraudulent practices in New York.
All claims for violations of fair lending lawsthat relate to discriminatory practices in loan origination.
All tax claims, including any claim that the failure to transfer mortgage loans to the securitization trusts or other conduct violated tax rules.
All claims by counties for lost mortgage recording fees; and
All claims and defenses held by private and third parties, including those held by individual mortgage loan borrowers.
Mark Ladov, Counsel for the Brennan Center’s Democracy Program said, “Homeowners in every corner of state have been hit hard by the mortgage crisis. We must do everything we can to prevent this kind of economic catastrophe from happening again, and to assist the families and communities hit hardest. We applaud the leadership of Attorney General Schneiderman in ensuring that today’s settlement provides much-needed funding for foreclosure prevention services, a great deal for the people of this state. This settlement is a landmark, but much work remains to be done. Fortunately, Attorney General Schneiderman has preserved our state’s right to investigate the mortgage meltdown, and we will work with him to deliver justice for the people of New York.”
Kirsten E. Keefe, Senior Attorney, Empire Justice Center, said, “We applaud Attorney General Schneiderman’s work towards a meaningful agreement that promises to provide desperately needed relief to New York’s homeowners, as well as hold the industry accountable. We truly appreciate the Attorney General’s recognition of the importance and need for direct services for struggling homeowners, and the critical role legal services and housing counselors play in keeping homeowners in their homes. We look forward to working with Attorney General Schneiderman to ensure that servicers do the right thing and provide meaningful loan modifications to stabilize New York’s housing market and economy.”
Sarah Ludwig, Co-Director of the Neighborhood Economic Development Advocacy Project said, “Thousands of New York families and communities are still suffering from the fallout of the foreclosure crisis, and the settlement charts out critical relief. We thank Attorney General Schneiderman for insisting on transparency and accountability in the process of forging a multi-state settlement. We look forward to working with the Attorney General to make sure that the settlement is effectively implemented and enforced in New York, and to ensuring that individual homeowners’ rights are vigorously protected.”
Christie Peale, Executive Director of the Center for NYC Neighborhoods, said, “New Yorkers have been fortunate to have strong leadership fighting for a fair resolution to the economic crisis. We applaud Attorney General Schneiderman for his continued commitment to justice and accountability. This settlement, along with the state’s ongoing investigation into the mortgage crisis will bring both immediate and long-term relief to homeowners at risk of losing their homes.”
Today’s settlement preserves the legal authority of the Schneiderman-led Residential Mortgage-Backed Securities Working Group announced by President Obama in the State of the Union address. This joint investigation brings together the Department of Justice (DOJ), several state law enforcement officials, and other federal agencies to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.
The new working group includes hundreds of staff, including an initial commitment of 55 Department of Justice attorneys, in addition to analysts, agents and investigators. As it begins its work, 15 federal prosecutors – civil and criminal – and 10 FBI agents and analysts will be initially assigned to the working group. An additional 30 attorneys, investigators and other staff from U.S. Attorneys’ Offices around the country will join the working group’s efforts, in addition to existing state and federal investigations into similar misconduct under those authorities.
Attorney General Schneiderman has made it a top priority of his administration to hold accountable those whose misconduct led to the collapse of the housing market– and to provide significant relief to homeowners. In the State of New York, an average of 1 in 10 mortgages is at risk of foreclosure. The approximate number of individuals living in homes that are either in foreclosure or at risk of foreclosure (based on typical household size for each distressed mortgage) exceeds the populations of Buffalo, Rochester, and Syracuse combined.
The below figures for New York homeowners are estimates of the U.S. Department of Housing and Urban Development. The specific amounts are dependent on eligibility requirements and are not guaranteed.
Payments to victims of wrongful foreclosure: $13 million estimated Benefits estimated from refinance program: $140 million estimated Homeowners’ benefits from loan modifications: $495 million estimated
Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief. It will take between 30-60 days to appoint a settlement administrator, and banks will be conducting a vigorous search to identify eligible borrowers and this may take several months.
For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers.
For payments to foreclosure victims, a settlement administrator designated by the attorneys general will send claim forms to eligible persons (You may be eligible if you were foreclosed on between January 1, 2008 and Dec. 31, 2012)
Even if you are not contacted, if your loan is serviced by one of the five settling banks, you are encouraged to contact your servicer to see if you are eligible—keeping in mind that it will take anywhere from six to nine months to be contacted.
A little birdie sent me some settlement details. You can see how much little your state got, as well as whether your state bothered rewriting the official PR:
OCC Settles Civil Money Penalties Against Large National Bank Mortgage Servicers for $394 Million; Penalty Assessment Coordinated with Servicers’ Actions and Payments Under Federal-State Settlement
WASHINGTON — The Office of the Comptroller of the Currency (OCC) today announced agreements in principle with four large national bank mortgage servicers to settle civil money penalties in connection with the unsafe and unsound mortgage servicing and foreclosure practices that were the subject of comprehensive cease and desist orders issued by the OCC in April 2011.
Today’s announcement involves Bank of America, Citibank, JPMorgan Chase, and Wells Fargo. The OCC’s actions were announced in coordination with the Board of Governors of the Federal Reserve System and the announcement of the federal-state settlement involving the U.S. Department of Justice, the Department of Housing and Urban Development, other federal agencies, and state attorneys general.
In the agreements in principle struck by the OCC with these mortgage servicers, the servicers do not contest the OCC’s ability to impose penalties aggregating $394 million, and the OCC agrees to hold in abeyance imposition of such penalties provided the servicers make payments and take other actions under the federal-state settlement with a value equal to at least the penalty amounts that each servicer acknowledges that the OCC could impose. The amounts for each servicer are $164 million for Bank of America, $34 million for Citibank, $113 million for JPMorgan Chase, and $83 million for Wells Fargo. If after three years, a servicer has not paid an amount equal to its respective penalty, the OCC will assess a penalty against the servicer for the difference between the aggregate value of the actions and payments under the agreement and that servicer’s OCC penalty amount.
“The actions announced today mark important progress in addressing the problems associated with foreclosure processing and are a critical step toward restoring a functioning industry that protects the rights of the customers it serves,” said acting Comptroller of the Currency John Walsh. “The OCC has worked closely with the Department of Justice and other federal agencies throughout the federal-state foreclosure settlement negotiations. We have worked to coordinate the comprehensive fixes to mortgage servicing and foreclosure practices that we required in our April 2011 cease and desist orders to ensure that work complements actions required by the federal-state settlement.”
These actions follow the issuance of consent orders in April 2011 against Bank of America, Citibank, JPMorgan Chase, and Wells Fargo to correct deficient, unsafe and unsound mortgage servicing and foreclosure practices.
Those enforcement actions required extensive fixes to mortgage servicing and foreclosure processes. Much of that work will continue throughout the balance of 2012. The orders also required servicers to retain independent consultants to conduct a comprehensive review of foreclosure activity by these servicers in 2009 and 2010. As part of that effort, an independent foreclosure review process began in November 2011 which gives more than four million people the opportunity to request a review of their case if they believe they suffered injuries as a result of errors, misrepresentations, or other deficiencies in a foreclosure action on their primary residence in 2009 or 2010 by one of these servicers. More information about that process is available at www.independentforeclosurereview.com.
WASHINGTON – U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced today that the federal government and 49 state attorneys general have reached a landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement provides substantial financial relief to homeowners and establishes significant new homeowner protections for the future.
The unprecedented joint agreement is the largest federal-state civil settlement ever obtained and is the result of extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country. The joint federal-state group entered into the agreement with the nation’s five largest mortgage servicers: Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. (formerly GMAC).
“This agreement – the largest joint federal-state settlement ever obtained – is the result of unprecedented coordination among enforcement agencies throughout the government,” said Attorney General Holder. “It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will ensure the abuses of the past are not repeated.”
“This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan. “Banks must follow the laws. Any bank that hasn’t done so should be held accountable and should take prompt action to correct its mistakes. And it will not end with this settlement. One of the most important ways this settlement helps homeowners is that it forces the banks to clean up their acts and fix the problems uncovered during our investigations. And it does that by committing them to major reforms in how they service mortgage loans. These new customer service standards are in keeping with the Homeowners Bill of Rights recently announced by President Obama – a single, straightforward set of commonsense rules that families can count on.”
“This monitored agreement holds the banks accountable, it provides badly needed relief to homeowners, and it transforms the mortgage servicing industry so now homeowners will be protected and treated fairly,” said Iowa Attorney General Miller.
“This settlement has broad bipartisan support from the states because the attorneys general realize that the partnership with the federal agencies made it possible to achieve favorable terms and conditions that would have been difficult for the states or the federal government to achieve on their own,” said Colorado Attorney General Suthers.
The joint federal-state agreement requires servicers to implement comprehensive new mortgage loan servicing standards and to commit $25 billion to resolve violations of state and federal law. These violations include servicers’ use of “robo-signed” affidavits in foreclosure proceedings; deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.
Under the terms of the agreement, the servicers are required to collectively dedicate $20 billion toward various forms of financial relief to borrowers. At least $10 billion will go toward reducing the principal on loans for borrowers who, as of the date of the settlement, are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth. At least $3 billion will go toward refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth. Borrowers who meet basic criteria will be eligible for the refinancing, which will reduce interest rates for borrowers who are currently paying much higher rates or whose adjustable rate mortgages are due to soon rise to much higher rates. Up to $7 billion will go towards other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales and transitional assistance, benefits for service members who are forced to sell their home at a loss as a result of a Permanent Change in Station order, and other programs. Because servicers will receive only partial credit for every dollar spent on some of the required activities, the settlement will provide direct benefits to borrowers in excess of $20 billion.
Mortgage servicers are required to fulfill these obligations within three years. To encourage servicers to provide relief quickly, there are incentives for relief provided within the first 12 months. Servicers must reach 75 percent of their targets within the first two years. Servicers that miss settlement targets and deadlines will be required to pay substantial additional cash amounts.
In addition to the $20 billion in financial relief for borrowers, the agreement requires the servicers to pay $5 billion in cash to the federal and state governments. $1.5 billion of this payment will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. This program is separate from the restitution program currently being administered by federal banking regulators to compensate those who suffered direct financial harm as a result of wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment. The remaining $3.5 billion of the $5 billion payment will go to state and federal governments to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.
The $5 billion includes a $1 billion resolution of a separate investigation into fraudulent and wrongful conduct by Bank of America and various Countrywide entities related to the origination and underwriting of Federal Housing Administration (FHA)-insured mortgage loans, and systematic inflation of appraisal values concerning these loans, from Jan. 1, 2003 through April 30, 2009. Payment of $500 million of this $1 billion will be deferred to partially fund a loan modification program for Countrywide borrowers throughout the nation who are underwater on their mortgages. This investigation was conducted by the U.S. Attorney’s Office for the Eastern District of New York, with the Civil Division’s Commercial Litigation Branch of the Department of Justice, HUD and HUD-OIG. The settlement also resolves an investigation by the Eastern District of New York, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Federal Housing Finance Agency-Office of the Inspector General (FHFA-OIG) into allegations that Bank of America defrauded the Home Affordable Modification Program.
The joint federal-state agreement requires the mortgage servicers to implement unprecedented changes in how they service mortgage loans, handle foreclosures, and ensure the accuracy of information provided in federal bankruptcy court. The agreement requires new servicing standards which will prevent foreclosure abuses of the past, such as robo-signing, improper documentation and lost paperwork, and create dozens of new consumer protections. The new standards provide for strict oversight of foreclosure processing, including third-party vendors, and new requirements to undertake pre-filing reviews of certain documents filed in bankruptcy court.
The new servicing standards make foreclosure a last resort by requiring servicers to evaluate homeowners for other loss mitigation options first. In addition, banks will be restricted from foreclosing while the homeowner is being considered for a loan modification. The new standards also include procedures and timelines for reviewing loan modification applications and give homeowners the right to appeal denials. Servicers will also be required to create a single point of contact for borrowers seeking information about their loans and maintain adequate staff to handle calls.
The agreement will also provide enhanced protections for service members that go beyond those required by the Servicemembers Civil Relief Act (SCRA). In addition, the four servicers that had not previously resolved certain portions of potential SCRA liability have agreed to conduct a full review, overseen by the Justice Department’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of SCRA since Jan. 1, 2006. The servicers have also agreed to conduct a thorough review, overseen by the Civil Rights Division, to determine whether any service member, from Jan. 1, 2008, to the present, was charged interest in excess of 6% on their mortgage, after a valid request to lower the interest rate, in violation of the SCRA. Servicers will be required to make payments to any servicemember who was a victim of a wrongful foreclosure or who was wrongfully charged a higher interest rate. This compensation for servicemembers is in addition to the $25 billion settlement amount.
The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. Compliance with the agreement will be overseen by an independent monitor, Joseph A. Smith Jr. Smith has served as the North Carolina Commissioner of Banks since 2002. Smith is also the former Chairman of the Conference of State Banks Supervisors (CSBS). The monitor will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and publish regular public reports that identify any quarter in which a servicer fell short of the standards imposed in the settlement.
The agreement resolves certain violations of civil law based on mortgage loan servicing activities. The agreement does not prevent state and federal authorities from pursuing criminal enforcement actions related to this or other conduct by the servicers. The agreement does not prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group. The United States also retains its full authority to recover losses and penalties caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan. The agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits. State attorneys general also preserved, among other things, all claims against the Mortgage Electronic Registration Systems (MERS), and all claims brought by borrowers.
Investigations were conducted by the U.S. Trustee Program of the Department of Justice, HUD-OIG, HUD’s FHA, state attorneys general offices and state banking regulators from throughout the country, the U.S. Attorney’s Office for the Eastern District of New York, the U.S. Attorney’s Office for the District of Colorado, the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the U.S. Attorney’s Office for the District of South Carolina, the U.S. Attorney’s Office for the Southern District of New York, SIGTARP and FHFA-OIG. The Department of Treasury, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Justice Department’s Civil Rights Division, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Department of Veterans Affairs and the U.S. Department of Agriculture made critical contributions.
For more information about the mortgage servicing settlement, go to www.NationalMortgageSettlement.com. To find your state attorney general’s website, go to www.NAAG.org and click on “The Attorneys General.”
The joint federal-state agreement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.
The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.
The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.
The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.
The mortgage settlement terms have not been released, but more of the details have been leaked: …
LOS ANGELES – Attorney General Kamala D. Harris today announced an historic commitment to California of up to $18 billion that will benefit hundreds of thousands of homeowners in the state hardest hit by the mortgage crisis.
“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis,” said Attorney General Harris. “Hundreds of thousands of homeowners will directly benefit from this California commitment.”
“This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here. We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending,” continued Harris.
California secured the $18 billion agreement as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the estimated relief to California was $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into misconduct.
California’s participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.
Attorney General Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners. Failure to achieve this minimum level of reductions will result in substantial cash payments of up to $800 million that the banks will have to pay to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers the Attorney General to summon the banks to California state court.
California’s separate guarantee also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California’s hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.
To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team. The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.
The national multistate agreement and California commitment will provide substantial relief for thousands of Californians whose mortgages are owned by the five banks in the settlement, but thousands more will still need help as they struggle to stay in their homes.
“I will continue to fight for principal reductions for the approximately 60 percent of California homeowners whose loans are owned by Fannie Mae and Freddie Mac,” Attorney General Harris added.
Attorney General Harris will propose a comprehensive legislative agenda to protect homeowners in the mortgage market. This legislation will build on the three-year reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and an end to the unfair and confusing system of dual-track foreclosures.
“This is an historic amount of relief for California homeowners, but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify, reform and upgrade our broken mortgage system,” Harris added.
The financial benefits of this historic agreement extend to homeowners whose loans are owned or serviced by one of the five largest mortgage lenders. Benefits include: – More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments. – $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans. – $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011. – $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures. – $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed. – $430 million in costs, fees and penalty payments.
County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. It is estimated that homeowners in the following counties will accrue the following level of benefits over the three-year life of the commitment.
– Los Angeles: $3.92 billion – Riverside: $1.59 billion – San Bernardino: $1.13 billion – Sacramento: $820 million – Stanislaus County: $368 million
Additional details on the settlement, including how homeowners can apply for relief, can be found at www.oag.ca.gov.
SCREWED! Banks win again with help from Obama administration.
After a year of fake tough talk on banks, Obama Administration and AGs to release banks from liability for foreclosure fraud in exchange for vague promises!
NYT-
More than two million Americans could benefit from at least $25 billion in relief from the nation’s biggest banks as part of a broad government settlement to be announced as early as Thursday, according to state and federal authorities. It is the latest effort by the government to halt the housing market’s downward slide.
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. The success could depend in part on how effectively the program is put into effect because earlier efforts by Washington to help troubled borrowers aided far fewer than had been expected.
UPDATE: New York Times is now reporting the Banksters have reached the $25 Billion Dollar Deal.
Investors have your wallets handy…you’ll be needing them to pay for part of the banks Massive Fraud!
HuffPO-
New York Attorney General Eric Schneiderman and California Attorney General Kamala Harris are joining the national mortgage servicing settlement, making a deal that includes all 50 states all but inevitable, according to a source who spoke Wednesday evening on condition of anonymity.
“It’s hard to see any state staying out of the deal if California is in,” said the source.
The settlement resolves allegations that five of the nation’s largest banks forged documents and wrongfully foreclosed on borrowers in what has come to be known as the “robo-signing” scandal. Schneiderman and Harris have been outspoken in urging the Obama administration to hold the nation’s biggest banks accountable for their role in the housing crisis and have resisted signing on to the settlement until now over concerns that it would go too easy on the banks and provide too little homeowner relief. The two states’ participation had widely been seen as necessary to a successful deal.
YOU ‘RE being lied to again. If the AG’s have the right (by law) to go after the banks in the future, after the settlement, then why are the Banks trying to get the NY AG to drop the current lawsuit against MERS? If this is the case… this is also made part of the settlement for the future claims. Crystal Clear there is something in this settlement that other AG’s are signing to that they may not fully understand.
The settlement would not release this so why the panic? You’re being lied to.
Throw their asses in jail, why is there any negotiating happening in the first place?
FDL-
New York Attorney General Eric Schneiderman abruptly cancelled a conference call yesterday 10 minutes before it was to begin. The subject was supposed to be the foreclosure fraud settlement, and there was idle speculation that Schneiderman would announce that he would join the settlement. This would spur other holdouts to join, presumably, and at the very least break the somewhat united front against the settlement. You’d probably be looking at a formal announcement within days. But instead, Schneiderman cancelled, postponing the call “indefinitely.”
It looks like the issue is the lawsuits against MERS and three banks that he filed on Friday. The banks want him to drop it.
One person familiar with the negotiations said several banks wanted Schneiderman to withdraw a suit he filed on Friday against prominent financial firms, saying they had acted deceptively by filing erroneous and fraudulent foreclosure documents through a popular electronic mortgage registry designed to allow firms to save time and money by bypassing local property recording requirements. The person spoke on the condition of anonymity because the talks were ongoing. It was unclear whether Schneiderman had intended on Tuesday to address the status of those lawsuits during the news conference.
Arizona, Michigan and Florida, three of the states hit hardest by the housing crisis, will join a nationwide settlement over foreclosure abuses, officials with direct knowledge say. They will join more than 40 other states in approving a deal that would benefit many Americans who lost their homes or can’t afford their mortgages.
The three states’ involvement buoys hopes that a full 50-state deal is imminent.
Formal announcements from Arizona and Florida could come within a week, according to the officials, who spoke on condition of anonymity because they weren’t authorized to discuss the settlement publicly.
Arizona Attorney General Tom Horne said he first wants to resolve a separate foreclosure-related lawsuit his state filed against Bank of America.
Florida officials say they are still in discussions. Attorney General Pam Bondi “remains engaged in the settlement discussions in order to ensure that Floridians receive their fair share in the agreement,” she said in a statement. Other officials said Florida intends to back the deal.
Michigan announced Tuesday it would join the settlement. Officials said the state would receive about $500 million in aid.
Michigan officials also said they would continue a criminal investigation into Docx, a unit of Lender Processing Services of Jacksonville, Fla. The company is accused of using fake signatures on phony foreclosure documents. Missouri filed criminal charges against the firm and its founder Friday, saying it falsified 68 notarized deeds on behalf of mortgage lenders.
So why no lawsuit against LPS? FL AG’s office subpoenaed them for quite some time and 2 states have unleashed royal hell on them.
Business Week-
California, New York, Nevada, Florida and Massachusetts are among the handful of states that haven’t signed a deal with banks over foreclosure abuses, according to state officials and two people familiar with the talks.
The holdouts include some with the highest rates of foreclosures. More than 6 percent of Nevada housing units had at least one foreclosure filing in 2011, giving it the nation’s highest foreclosure rate, according to RealtyTrac. California registered the third highest rate in 2011 with one in every 31 units having at least one foreclosure filing during the year, said the firm, which tracks foreclosures.
California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman, who have been some of the most outspoken in pushing for changes to the deal, were among those who hadn’t joined as of yesterday’s deadline. More than 40 states signed on to the accord, according to Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.
“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor. “If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”
The terms for the settlement of the robo-mortgage scandal and the states participating in the settlement are expected to be resolved soon. Unfortunately, as this settlement approaches, new and grave questions have emerged. These questions raise the possibility that the government may be turning a blind eye to tax evasion and fraud.
Nevada Attorney General Catherine Cortez Masto won’t decide by today whether to join a nationwide settlement with banks over foreclosure practices, a spokeswoman said. A deadline for joining the accord was today.
Masto’s office is “still reviewing the terms” of a proposed nationwide settlement over bank foreclosure practices, Jennifer Lopez, a spokeswoman for the attorney general said. Masto is “working to address Nevada homeowners’ needs,” Lopez said. Masto said in a Jan. 27 letter to state and federal officials involved in negotiating the accord that she needed answers to 38 questions to evaluate the deal.
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