Mercury Rising 鳯女

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Call Your State AG’s Office NOW: Bankster Immunity Screwjob In Progress

Posted by Phoenix Woman on February 9, 2012

Minnesotans, call 1-800-657-3787 or 651- 296-3353 to tell Lori Swanson, state Attorney General, not to sign on to this travesty:

The 50 state AG settlement, which Peter has suggested is more accurately called a pardon, screws John Q. Public, twice.

First it screws over homeowners by immunizing robo-signing from criminal prosecution or large scale civil suit. Several attempts at class action cases have failed to obtain class status. Therefore, the only way to pursue a claim involving robo-signing is for each individual homeowner to do it on his/her own.

Further, without the imprimatur of Attorneys General making those same arguments, the arguments of the individual homeowners will be of even more diminished weight and the banksters’ claims of “sloppy” paperwork will be spun through their PR machines until the truth is lost.

The robo-signing is the smoking gun that is the key to proving every other part of this criminal conspiracy, which is why the banks had to have robo-singing immunized.

So, homeowners are screwed.

That’s not all. As Cindy goes on to explain, this settlement allows banks to forge documents (hence the “robosigning” immunity) to steal your home AND then steal your pension.

Call your state AG, NOW.

13 Responses to “Call Your State AG’s Office NOW: Bankster Immunity Screwjob In Progress”

  1. David W. said

    You might be interested to know this before calling, from the U.S. DoJ:

    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.

    There’s more here about MERS that’s worth reviewing also:

    I would be the last person to argue that banks did nothing wrong in the last ten years. I am very critical of the banks, and of the way the Bush-Obama administration has dealt with the banks. However, I am in about 90% agreement with Judge Teilborg that the plaintiffs in the MDL litigation were wrong about their two central arguments.

    I haven’t seen any evidence that the banks were intentionally trying to fool borrowers when they developed MERS. The banks were trying to avoid recording fees, and they were trying to develop a system for offloading inherently bad loans onto the buyers of mortgage backed securities and derivatives. I don’t think the banks cared at all about borrowers.

    Judge Teilborg also seems to me to be correct about automatically invalidating MERS mortgages. It is clear that there are many foreclosure cases where the wrong party has done the wrong thing, sometimes spectacularly wrong. Many of those foreclosures should be halted until things are sorted out. But even in the worst case scenario a judge can probably figure out who owns what, and eventually allow somebody to foreclose if the borrower isn’t paying. That will be costly, but there is no reason why the mortgage should be permanently invalidated.

    With 72 cases in this MDL, it is certainly possible that one or more plaintiffs will succeed in persuading the 9th Circuit that Judge Teilborg overlooked something. But there isn’t any broad legal doctrine of “Bank error in your favor! Collect 1 free house.” Screwed up paperwork makes things more difficult for borrowers in some respects, but it can also work in the borrower’s favor in negotiations for a modification, or especially in bankruptcy. It rarely ends up completely and permanently invalidating the bank’s security interest. …

    • Cindy Kouril is a former Special Assistant US Attorney for the Southern District of New York. She’s been following this for a long, long time. When she says it stinks, it stinks.

      Here’s more from http://news.firedoglake.com/2012/02/08/49-state-foreclosure-fraud-settlement-will-be-finalized-thursday/ (emphases mine):

      And then there’s the settlement price: $25 billion, divided up several ways. $3 billion will go toward refinancing for current borrowers who are underwater on their loans, as well as short sales. $5 billion will go as a hard cash penalty to the states, which can use them for legal aid services, foreclosure mitigation programs, and ongoing fraud investigations in other areas (one official close to the talks feared that much of that hard cash payout will go in some Republican states toward filling their budget holes). The federal government will get a cash penalty as well. Out of that $5 billion, up to 750,000 borrowers wrongfully foreclosed upon will get a $1,800-$2,000 check if they sign up for it, the equivalent of saying to them “sorry we stole your home, here’s two months rent.”

      The bulk of the money, around $17 billion, will go to principal reduction credits for troubled borrowers. The banks will not get dollar-for-dollar credit for every write-down; reductions on loans bundled in private-label mortgage-backed securities, for example, will be under 50 cents on the dollar, and write-downs for second liens (mostly home equity lines of credit) will be more like 10 cents. Housing and Urban Development Secretary Shaun Donovan believes that they will be able to get between $35-$40 billion in principal reduction in real dollars out of the settlement. Donovan became the point person on the federal level, along with DoJ, as the Administration pretty much took over the investigation and settlement process from the states, who were led by Iowa AG Tom Miller.

      […]

      I’ve done the math on this before, and you’re talking about $20,000 (when homes are on average underwater $50,000) for 1 million borrowers (when there are 11 million underwater). If Donovan is correct about 2:1 maybe you’re at $30,000-$40,000. And the banks have three years.

      There will be plenty more to say about this once we get all of the facts of the claim. In addition, this will have to go before a federal judge to sign off on the settlement. And we won’t know for many years whether this promise on loan modifications, unlike all the others, will take. But it’s going forward. And now the only hope for accountability and justice for the crimes of the financial crisis lie in some scattered lawsuits grandfathered in and Schneiderman’s RMBS working group. One thing is clear – the banks relieved themselves of a significant portion of liability at a price they believe they can easily handle.

      • David W. said

        There’s something off here with regard to the claim that foreclosure fraud applies to all 11 million homes that are currently underwater, when the issue has been foreclosures brought by those who couldn’t prove they held the note (i.e., mortgage) thanks to sloppy paperwork that the MERS system tried to excuse in court, excuses that judges don’t accept oddly enough. But in the vast majority of even those cases the truth was that the homeowner was in default, and when the paperwork was cleared up the judge has no problem with the foreclosure going forward. It definitely isn’t a matter of “sorry we stole your home”, but more compensating the homeowner for the costs incurred to them by the banks own sloppy paperwork.

        The problem with loan modifications is that most homeowners in default are simply too far underwater for one to be worked out. If you were only paying the interest on a $300,000 loan at 6%, even if you lower the interest rate to 4% they won’t be able to afford to pay both the interest and principle. Such are the consequences of the burst real estate bubble when houses no long always go up in value.

    • And here’s Yves Smith explaining the top twelve reasons to hate the mortgage settlement:

      1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.
      2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.
      3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

      • David W. said

        Felix Salmon on the other hand thinks the settlement is a good thing:

        If you’re a bank shareholder breathing a sigh of relief, then, don’t. The only thing you’re protected against, now, is lawsuits over robosigning. Were those likely to cost $25 billion if they had gone to court? It seems unlikely to me that they could have raised that much. Other big-money lawsuits over securitization can and almost certainly will still be brought — which means that the big banks all still have significant litigation risk hanging over their heads.

        So why did they do this deal? Well, for one thing, it’s not nearly as expensive as it might look at first glance. It’s not like they’re paying out $25 billion and getting nothing but a bit of immunity in return. A huge chunk of the money will go towards principal reductions on underwater mortgages — which means that it’s not really a cash outlay at all.

        Let’s say I lent you $350,000 to buy a house, and that house is now worth only $250,000. I’m holding that mortgage on my books at par, but if I sold it there’s no way I could get $350,000 for it, or even $250,000. I give you a principal reduction of $40,000, so that you now owe $310,000. That’s good for you — which is why the settlement is a welcome development. And it means that I have to take a $40,000 write-down on my balance sheet. But the mortgage is still being held on my books at $310,000, which is still more than I could have sold it for before the write-down.

        In other words, what’s happening here is that the mortgage settlement is at heart largely just encouraging banks to bring their balance sheets closer to reality — which is something they’d have to do sooner or later in any case. Indeed, insofar as principal reductions can increase the value of a mortgage, this deal is actually making banks money, over the long term.

        So think of this as that rarest of settlements, one which really is a win for all sides. The attorneys general get a big deal, homeowners who got foreclosed upon get $2,000 apiece, and the banks get to do the kind of principal reductions they probably have wanted to do for a while, but while getting significant immunity from prosecution at the same time.

      • David W. said

        Dean Baker isn’t so thrilled however:

        “I’m not thrilled with the settlement, since it doesn’t accomplish much, but at least it doesn’t preclude further civil or criminal suits. In terms of the commitment of payments in the form of write-downs, we don’t have a clear counterfactual that allows us to gage how much would have been written down anyhow. We also have the peculiar situation where the banks get to pay the penalty with write-downs of debts to MBS investors.

        The big plus is that the settlement does not preclude further legal action on securities fraud and other issues. [New York Attorney General Eric] Schneiderman and the other holdouts deserve credit for this.”

        That this isn’t going to help much is true, but the settlement was about MERS robo-signing, not with every home that’s underwater.

    • And if anyone was wondering what happens to Massachusetts AG Coakley’s lawsuit against the banks, now you know: It was gutted by the settlement.

      All because some East Coast Democratic bundlers and rainmakers let it be known that the cash donations to Democrats would dry up if Schneiderman and the other AGs didn’t cave and accept this travesty of a ‘settlement’.

      • David W. said

        According to AG Coakley herself, the consequences of the national settlement don’t seem that dire, as this quote from Dayen’s post shows:

        “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.”

    • MarkH said

      David W. wrote, ‘there isn’t any broad legal doctrine of “Bank error in your favor! Collect 1 free house.” ‘

      Nobody ever said there was. The discussion was about the separation of the mortgage from the debt and whether a homeowner going through bankruptcy could discharge the debt and retain the house — relatively new legal territory I suppose.

      The question remains of who created the idea of MERS and who decided at the banks to use it instead of legally handling the paperwork at the county courthouses. Somebody thought to save a bunch of money and they avoided the normal legal routine.

  2. Phoenix Woman said

    Meanwhile, in exchange for getting off with slaps on the wrist (no banksters will go to jail over this), guess what? The banks will actually be stepping up the rate of foreclosures.

    Yeah, just what the housing market needs, NOT: A bunch more vacant properties to sell in an already-glutted market.

  3. Charles II said

    Well, I’ll be Eeyor here, and say that I think the agreement was necessary.

    Not good or morally right or even genuinely expedient, but necessary.

    In order for the crisis to be resolved, the banks have to write down the value of loans/property they hold on their books. (Readers with long memories may recall that I first said this in 2008). If they renegotiate mortgages, that happens directly. If homeowners sue them, which this deal apparently encourages and forces them to re-negotiate, then this happens. If they foreclose and then discover that they can’t sell them except at fire sale prices, then this happens. Ugly, messy, and hell for those who are foreclosed, but progress toward an eventual resolution of the problem at the core of the crisis.

    As long as the banks were threatened with being inundated with criminal indictments, they were never going to deal. The MERS fraud was so bad and so provable that it would have closed them all down. It was only a good negotiating chip as long as it wasn’t used. So, at some point, the AGs had to drop the threat.

    Did they get a good deal? Not really. But the logjam has been broken. Forward progress is possible.

    Whoopee.

    • A settlement may well be necessary, but what was allegedly agreed to — but interestingly enough, not yet even agreed to in principle — is worse than a slap on the wrist: it actually makes us, through our pension plans, foot the bill for it all. That was Cindy’s point. If the banks’ “punishment” is to be insulated from all actual punishment, what keeps them from doing this to us again and again?

      And as it turns out, the banks are not only not going to be insulated from all pain, the deal — if it goes through — will likely be a huge money-maker for the banks.

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