Today marks the national call-in day for state Attorneys General, sponsored by several community-based groups, asking them to do their job and prosecute foreclosure fraud meaningfully. The groups stress two elements that must be part of any resolution: principal reductions for homeowners victimized by foreclosure fraud, and criminal penalties for anyone who broke the law. You can find the phone number for your Attorney General at the link.
In a kind of preview for the settlement we could see, California settled a lawsuit with Countrywide’s CEO Angelo Mozilo and President David Sambol for $6.5 million. The money will go into a restitution fund for foreclosure victims.
The $5.2-million fund will be used to educate homeowners and assist other agencies statewide in prosecuting mortgage fraud. The intent of the settlement was, in part, to “restore justice” to homeowners who had been harmed by the foreclosure crisis, Harris said.
The remaining $1.35 million of the settlement, reached with former Countrywide Chief Executive Angelo R. Mozilo and former President David Sambol, will be paid to the attorney general’s office to cover investigation costs and attorneys’ fees.
Countrywide has agreed to reimburse the executives for the cost of the settlement. Neither of the former officers admitted wrongdoing.
This is a huge letdown. Mozilo and Sambol didn’t have to admit wrongdoing for predatory lending practices, and the foreclosure relief fund in a state as large as California is a drop in the bucket. California already secured an agreement with Countrywide in October 2008 that mandated loan modifications and other relief efforts which totaled $8.68 billion nationwide, including $3.5 billion in the state. Another $5.2 million will do nothing.
This is why the Attorneys General need a massive amount of pressure. Harris is seen as one of the better AGs on foreclosure fraud, and she’s been in office less than a month. This was not her case. But she’s getting behind it, and acting like it meaningfully addresses the foreclosure crisis. Nothing could be further from the truth.
Defense lawyers and foreclosurevictims themselves are working tirelessly to represent their interests and their rights in court. In some cases, they have been successful, including in a lawsuit about to reach the Florida Supreme Court (this is a huge deal, by the way, and could change the way Florida looks at foreclosure fraud under the law). They need support from the top cops in the states. The banks clearly violated the law and committed frauds upon state courts, and continue to cheat foreclosure victims through servicer abuse and faulty documentation masking the fact that they lack the ability to foreclose. Whether or not we still have a rule of law for the rich and the powerful depends on whether these Attorneys General use their authority.
They need to know that many are watching.