Two settlements came down yesterday on mortgage-related issues that detail the expected inadequacy of a global settlement among state Attorneys General. First, Countrywide, now part of Bank of America, has finally figured out how to divy up $108 million among borrowers they screwed over.
More than 450,000 borrowers who were charged excessive fees by Countrywide Home Loans when they fell behind on their mortgages will finally begin receiving the $108 million the company agreed to pay in a settlement struck with the Federal Trade Commission in June 2010, the agency said Wednesday.
The number of consumers recovering money in the settlement is the biggest in the F.T.C.’s history and wound up being double what the commission had estimated. Most will get $500 or less, but 5 percent will receive $5,000 or more, the trade commission said.
“It is astonishing that one single company could be responsible for overcharging more than 450,000 homeowners, which is more than 1 percent of all the mortgages in the United States,” Jon Leibowitz, chairman of the trade commission, said in an interview. Countrywide’s “was a business model based on deceit and corruption, and the harm they caused to American consumers is absolutely massive and extraordinary.”
Almost as astonishing is that it took them a year to determine the settlement terms. Now that we see it for what it is, you’re talking about hundreds of dollars per borrower, not thousands, on systemic abuses. Remember, Countrywide’s CEO Angelo Mozilo isn’t going to jail for any of this.
Now, at the other end of a settlement, the Federal Reserve issued a consent order against Wells Fargo for similarly systematic overcharging, this time on steering borrowers into higher-risk loans. But once again, Wells does not have to admit wrongdoing, and once again, the cost of the settlement itself is paltry.
The Federal Reserve Board on Wednesday issued a consent cease and desist order and assessed an $85 million civil money penalty against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines. The order addresses allegations that Wells Fargo Financial employees steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications. In addition to the civil money penalty, the order requires that Wells Fargo compensate affected borrowers.
This is mortgage fraud that includes falsifying documents. But Wells Fargo will not have to admit any responsibility, and the head of their home loan division will get to keep his job. Meanwhile, $85 million is almost what Wells makes in a week.
Jeff Merkley actually got into Dodd-Frank an amendment that banned steering payments (banks would pay mortgage brokers to steer people into these higher-risk loans, because they could get more for them in securitization), so there is the potential for stiffer regulatory action in the future. But that’s only if you have regulators willing to do it.
These actions come as the state AGs are trying to bargain away their right to sue over consumer protection violations and fraud upon state courts.
State attorneys general are negotiating to give major banks wide immunity over irregularities in handling foreclosures, even as evidence has emerged that banks are continuing to file questionable documents.
A coalition of all 50 states’ attorneys general has been negotiating settlements with five of the biggest U.S. banks that would include payment of up to $25 billion in penalties and commitments to follow new rules. In exchange, the banks would get immunity from civil lawsuits by the states, as well as similar guarantees by the Justice Department and Department of Housing and Urban Development, which have participated in the talks.
State and federal officials declined to say if any form of immunity from criminal prosecution also is under discussion. The banks involved in the talks are Bank of America, Wells Fargo, CitiGroup, JPMorgan Chase and Ally Financial.
There are at least 10 AGs who won’t take this deal on the Republican side because it dares to do anything to the banks, and there are at least 5-10 on the Democratic side, particularly Eric Schneiderman in New York, who has to be on the deal to make it work (so much of the securitization claims run through New York trust law, immunity is meaningless without NY), who won’t take this deal because it would force them to give immunity. The ones who want this done, including the Justice Department and the White House, are leaning on the Dems and trying to sell it as some kind of help for the housing market.
But this is absurd in light of how little other federal agencies have gotten out of settlements, and how meaningless they are, given the fact that the banks are already breaking the law with regard to robo-signing, and haven’t stopped even though they’ve signed consent decrees and testified in Congress that they would end the practice. What makes anyone think that there will be any kind of enforcement on the settlement, when there isn’t any enforcement currently?
You have registers of deeds who have blown the lid off of this mess. John O’Brien attended a MoveOn house party to get the word out, so insistent is he on finding every avenue to explain the systemic fraud at the heart of the mortgage industry. More registers are coming aboard every day; Illinois registers are aided with the state investigation into robo-signing. They have the physical evidence. Before any settlement is inked, the principals should at least take a look at what they’re settling.




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“savvy businessmen” who collect 7 to 8 figure incomes for their duplicity don’t get jail time. Jail is only for us “little folk” who are trying to eke out an existence on 4-5 digits.
It should give them pause, but past performances show that won’t happen.
America is no longer our country. I’m so pissed right now that I am ready to go on a TAX and BANK boycott!
I am with you PP. I have never been so mad as I am today with our system, our legislaturds, our president and the cajones-less DOJ. I’m 60 yrs old and it didn’t use to be this way.
I recently had some dealing with a mortgage banker. They TRIED to screw me to the tune of $1,750.00. When I CAUGHT them, they just apologized, just like a cat-burgalr that you happened to walk in putting your valuables BACK in your jhewlerey box and jumping out the door.
This ALL stinks.
Immunity for these banksters with the consent of the white house really makes me sick. There will be a double dip of the economy with policy like this. The president should be ashamed of himself.
What was their excuse for originally charging you $1,750?
Killer Economy?
The deepening recession may lead to growth in suicide rates.
Actually it did. Back in the late 1800′s when the train barrons were making a killing there were tons of situations of politicians colluding with barrons, and all kinds of financial misconduct. when about 4000 people start protesting against working conditions with one train company, the US AG issued an order that protest was illegal and Grover, the POTUS, sent in the army to crush it. The AG was on the payroll of the railway company, sound familiar?
There are two economies in this country. The president, his friends, and his contributors, all hedge their bets before the market turns downward. They’ll actually make money off of another drop. And if it’s bad enough, the Preznit will give them trillions of free dollars of our money again.
The second economy, ours, will continue its decline. The gulf between the two economies will continue to widen until we’re all thralls pledging fealty to liege-lords. Welcome to France, circa 1600.
They were items they had “intended” to “waive” just forgot.
Now I don;t think our Attorney General is bought and paid for.
..
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We all KNOW the TReasury Secretary IS.
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The AG is just a lazy bastard.
Is that too harsh?
paid now, paid later, what is the difference. Not sure Holder is lazy, he is just following “do nothing” orders. I think the point I was trying to make is corruption and collusion between govt and the elite has been going on a very long time. So long as we keep our current undemocratic system it will continue.
Lots of people don’t realize that when somebody MAKES MONEY they have to make it OFF somebody else. Not every millionaire/billionaire generates his own wealth. Some just move it around. I’m not saying there is not a “quid pro quo. But there is frequently NOT a FAIR exchange and that is how many BILLIONAIRES become billionaires. Many are just damn lucky.
You get no argument from me. And I agree, Holder is probably just doing what he was told by the WH. “Pursue this, don’t pursua this.”
Now, Timmy, I think he gets his opinions and marching orders from Wall Street, not from 1600 Pennsylvania Ave.
I am with you. I try to do as much as I can on the barter system: I trade organic veggies for physical chores I can no longer do, I trade website design for most everything else I can.
Well that is twice as much as The Big Zero promised those of us on Soc. Sec. and 500 times as much as we actually got.
I am amazed, but no longer surprised, at the level of corruption in this country and the readiness with which the ‘mercun people accept it.
Why do the AG’s believe they have the right to settle on a fixed figure without knowing the extent of the problem? I recently saw the lead investigator Attorney General Tom Miller’s slogan, Stand up for the common good not for the corporate few. Why isn’t that happening, enforce the law with the settlement agreement, stop the deceptive and unfair practices levied against negative equity homeowners. as shown on the web-site: http://unitedinprosperity.org. Every negative equity homeowner is legally entitled to a similar and consistent financial advantage to remain a negative equity homeowner regardless of their income or mortgage history.
How are the AG’s planning on enforcing the settlement terms when the banks ar still violating the law after the consent orders signed with the OCC, Federal Reserve and the Office of Thrift supervision? The consent orders consisted of idea’s taken right out of the petition without the “teeth”. There are automatic penalties involved for not operating within the law, re-read the Unitedinprosperity.org petition. There is but one law for all.