Landmark settlement announced on foreclosure, mortgage fraud

[baked_goldfish]

State and federal officials on Thursday announced a settlement of $26 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

Comments

[13chapters]

I used to work (as an office monkey, basically) for one of the major subprime mortgage lenders that fucked everything up (although they don't appear to be part of this particular suit). I am cackling so much at everyone knowing what a bunch of scam artists they are now.

[baked_goldfish]

Yeah, this settlement is a mixed bag - $2,000? Really? - but I'm wouldn't be surprised if some of the new restrictions/non-cash settlement details (like having to write down mortgage balances) will create a kind of chilling effect on some of the more fucked up practices.

although they don't appear to be part of this particular suit

I wonder if this settlement will lead to more suits, to be honest.

[13chapters]

Oh, my former employers are being sued by MANY, MANY people. I just skimmed the article (am at work) and didn't see the payout amount. That's absurd.

[baked_goldfish]

Right? I got to the $2k amount and was like "...wut." I mean, I get that there's some other pretty decent stuff involved in the settlement, but um..."you lose your house, you get $2k" seems like an insult. At least they're not banned from taking part in other suits or whatever?

[erunamiryene]

Lost your house? Here's two thousand bucks! That totally makes up for it, right? :D

We'll LOOK at restructuring your loan, but we really only have to spend $17b of this money, so don't hold your breath.

Oh, and by the way, Fannie and Freddie loans don't count, too bad so sad.

This entire "deal" stinks.

/debbiedowner

[baked_goldfish]

iirc, Fannie/Freddie loans are being restructured under a bill from a few years ago. Not that they're not having issues getting banks to perform under the restrictions/regulations of that, but I think that's the reasoning behind Fannie/Freddie not being included in this settlement.

[erunamiryene]

Fair enough, but ... IDK, the more I read about it, the less it seems like a "deal" and more like "take what you're gonna get, peons".

[baked_goldfish]

It looks like it was mostly made for people who are still in their homes. I don't know, it's a mixed bag for real - like there are some things in there that are great, like how banks will have to revalue mortgages to actual market values rather than holding people to their original, overpriced mortgages - and I'm guessing that some of the lagging AGs were waiting for confirmation that the settlement wouldn't prevent them from going forward with other suits, but the $2k settlement just sort of blows. And the problems with the Fannie/Freddie restructuring needs to be addressed at some point.

[one_hoopy_frood]

$2,000 is jack shit when your house has been taken from you.

[aviv_b]

Wow! a whole two grand! That will really make up for losing your house through the illegal activity of the banks/mortgage underwriters. Why don't they say 'fuck you' to the foreclosed and call it a day. Yeah, guess they already did.

And I want to know how this money is going to be distributed. They talk about one point of contact, but will they just lose the papers again, only this time from one place? There have been other programs in place but the banks have 'declined' to use them.

It would seem to me that it wouldn't be all that hard to add something to the federal income tax form to rebate money directly to people who lost their houses. They submit proof they lost their house, govt sends them a check. No waiting, no hoops to jump through, no banks to drag their feet. That way, even if it is only $2k, people get the money now.

[baked_goldfish]

And I want to know how this money is going to be distributed.

It looks like the people getting the $2k will be getting it through their state's AG office. The "single point of contact" thing looks like it's related to people who are still in their homes.

[aviv_b]

That's something, anyway. I just hope the AG's offices won't have to rely on the banks to certify the foreclosure was true. Otherwise I'm afraid most of the homeowners will be deceased by the time the AGs get the info.

[baked_goldfish]

Yeah, I'm not sure about that part - I know the article says the banks have up to 3 years to complete the relief measures, but I don't know if that includes the payouts. It's pretty obvious this agreement was meant for people who still have their houses. I know that individual AGs were hesitant in part because a lot of them were in the middle of suing the banks for other problems, or planning on suing them, and some of them only backed this agreement because it didn't provide immunity at all - so hopefully that's a sign that there'll be more down the line for people who've actually lost their homes. Even if it's a state by state thing rather than a federal thing.

[blinkidybah]

Bullshit. These banks were illegally kicking people out of their homes, making people homeless, sometimes over mortgages they didn't even own or never even existed, and they have to cough up Five billion each? That's chump change to these assholes. They should be in jail for fraud and being terrible human beings, but we all know that's not going to happen even if the settlement says it's still a "possibility".

Also I work in housing and (obviously very initial) word on the street is that part of the settlement that isn't that 17b going to homeowners might be going to state and other agencies in order to buy up homes and make them into affordable housing. Which is great except for the part where they would be buying them from the banks.