Lots of developments late today on the foreclosure fraud and servicing settlement. We know that a term sheet of some kind has been sent to the states for approval. Apparently there was a deadline attached to that, of February 3rd. We’ve seen deadlines before in the settlement, but this one has a little more weight attached, because the AGs have the document in their hands for the settlement.
The final value of any settlement will depend on which states it includes, and could drop sharply if states like California, one of the hardest hit by the foreclosure crisis, do not join.
In another sign the deal is close, negotiators have overcome a sticking point and agreed on Joseph Smith, North Carolina’s banking commissioner, as a monitor to ensure the banks comply with the terms of the settlement, these people said.
Smith was President Obama’s pick for FHFA commissioner, but he didn’t make it through the confirmation process. He comes pretty well-recommended.
But the existence of an independent monitor doesn’t answer the host of questions that go well beyond the release of liability in the settlement. In fact, Nevada AG Catherine Cortez Masto saw fit to write up a list of 38 questions and send them off to the settlement negotiators. This suggests that the AGs got a very vague document, with a lot of trust given to the executive committee on the details. Masto, at least, isn’t comfortable with that. And she has plenty of reason to be skeptical.
Nevada has been burned in the past by large, multistate mortgage settlements. In 2009 the state joined 10 others in agreeing to a settlement regarding fraudulent mortgage practices at Countrywide, the subprime lender that came to epitomize questionable lending during the housing boom. Bank of America, which now owns Countrywide, agreed to offer as much as $8.4 billion in loan modifications and foreclosure relief to 400,000 homeowners victimized by Countrywide’s mortgage fraud. But as of June 30, just roughly $216 million in payments had been made through the program. In August 2011, a frustrated Masto asked a court to void the deal so that Nevada could go after the bank on its own.
An Obama Administration official tried to downplay the Masto letter, saying that it only sought clarification on language rather than resistance to the settlement in general. I’d say that a 38-question letter raises more than just linguistic analysis. In fact, I know it, because here’s the letter.
Among other things, Masto questions whether there will be “geographic discrimination” involved in the settlement, wondering whether enforceable controls will be employed to prevent some states from making out better than others. Clearly this is a reference to the attempted California bribe of up to $15 billion out of the $25 billion total. Masto asks for an expected range of value from the settlement for each state, not just California. She wants to know if the states or the federal government would be in control if something goes wrong with the settlement. She asks if the servicers will have to advertise their giving away loan modifications to their customers. She wants to know a lot more about the role of the independent monitor. She asks if the settlement will “prevent states from effectively challenging future foreclosure actions that are based on faulty prior assignments,” which is an important point; essentially, she’s asking if this settlement effectively blesses bogus documents and ties the hands of the AGs who see them as fraudulent. That connects directly to the ongoing litigation in Nevada around mortgage documentation and the lawsuits against LPS.
In other words, Masto did her homework and saw this settlement as little more than a framework, without specificity on the release, the level of relief on a per-state basis, and the level of enforcement. Or, in other words, everything. And by the way, they want an answer by the end of the week. That’s clear at the end of Masto’s letter, where she writes: “Because there is a sign-on deadline of February 3, 2012, I need this information as soon as possible to allow my office to continue to evaluate the proposal on behalf of the state of Nevada.”
So where does this leave us? Beau Biden and Kamala Harris have said publicly that the current settlement is insufficient. Eric Schneiderman has said he thinks the settlement has gotten better, but he opposes it in its current form. Masto raises a flood of questions that cannot possibly get answered adequately in a week. Martha Coakley hasn’t said much lately, but she has an active lawsuit against banks on all of the conduct that would get released in this settlement. So in theory, the five Democrats who were always out of this settlement are still out as of this moment.
And yet, I’m sure you don’t find it to be an accident that the deadline on the settlement dovetails pretty nicely with the announcement of the RMBS working group. Just give up on this foreclosure fraud stuff, the theory goes, and next time we’ll really do an investigation, on all the securitization issues. Just sign on the dotted line. And what this has done is to let the air out of the balloon of opposition from progressive groups who organized for months against a settlement. You haven’t heard from any of them on the settlement in the past few days. It’s too soon to say what will happen, but without that outside pressure, I’d guess that a settlement is imminent.





24 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
GIVE THEM NOTHING but investigations, prosecutions and jail. The wallstreet banksters ran FRAUD BY DESIGN upon the american public. it was a PLAN WAITING TO BE FILLED WITH WILLING PARTICIPANTS who need only do their job. the ONLY HITCH was the PRICEHIGHJACK. the FALSE VALUE that – when questioned – was answered by a AAA rating and a guarantee (credit default swap) against risk. IT WAS A BANKJOB which the bankster thieve of wallstreet want to walk from and DO IT AGAIN.
make no mistake. the diabolical economic predators of wallstreet are just warming up. mainstreet is just being CONDITIONED INTO DESPARATION to accept abominable conditions for the next play… MAJOR LAND THEFT.
At the top of the letter, Masto says this:
That’s a bureaucrat’s way of saying “I’m not taking anyone’s verbal assurances on this.”
Again and again in the questions that follow, she says things like “Specifically and practically, what does it mean that . . .” and “What is the specific role of . . .” and “Can you explain . . .” She asks a host of very practical questions, asking for definitions, limits to authority, timelines, etc. These strike me as legitimate questions asking for clarity, not simply asking them to cover her tail or to try to gum up the works.
IOW, there’s a lot to this settlement document that isn’t terribly clear.
Her request that she get an answer in writing, with specific reference to the settlement language, is a clear shot at the banks and past assurances she was given that the banks failed to live up to. It’s also a warning shot at Miller et al., putting them on notice that she doesn’t trust them any more than she does the banks.
I’m pretty sure that Masto doesn’t have a draft of an actual settlement. She says: “As the final terms of the multistate continue to be disseminated, adn as we continue to gather infromation from numerous conference calls and meetings with our federal counterparts…”
It looks like she doesn’t have the federal part for sure: “1. What origination conduct did the federal agencies not release?”
She does have the State release, which is something.
She asks about sharing of information of actual investigations. That implies that no one has shared the extent of the investigations supposedly done to date.
She doesn’t have two schedules to the Consumer Relief Provisions.
They have no estimate of minimum value, or expected value by State.
How do they plan on getting this done by Friday?
Election year Ream Job, from Obama LLC to the citizens.
…”Countrywide, agreed to offer as much as $8.4 billion in loan modifications and foreclosure relief to 400,000 homeowners victimized by Countrywide’s mortgage fraud. But as of June 30, just roughly $216 million in payments had been made…”
On average, each homeowner would receive $21,000.
Countrywide has only released $216 million, an average of $540.00!
I know averages in this scenario are not valid, but they shed light on how Bank of America is screwing homeowners.
I fucking hate fucking Bank of America.
Perhaps I’m missing something. Now that we have Eric Schneiderman’s shiny new — oh, wait — state and federal investigative / prosecutorial team, just why are the feds pushing this obviously laughable settlement?
What’s with the bum’s rush deadline to sign off on an agreement without enough details to let the AGs know whether it’s good enough to sign or not?
Exactly what happens if the deadline is missed- you don’t get the second set of Ginsu knives?
David’s spot on as ever. For a more detailed look at AG Masto’s letter, check out http://abigailcfield.com/?p=876
There was a advertisement on this page a minute ago saying you can get into a new home, with no money down from Ranlife.com. Any takers?/s
…essentially, she’s asking if this settlement effectively blesses bogus documents and ties the hands of the AGs who see them as fraudulent.
Haven’t we already determined that the answer to this question is “YES!”
If you want a view from the veal pen, here’s a DKos diary purportedly from National Council of La Raza.
Check this: “We know that President Obama means business because he chose New York Attorney General (AG) Eric Schneiderman—a champion for taxpayers and homeowners—to lead this unit focused specifically on lending fraud and mortgage abuses.”
Hope and change, baby!
We sure are lucky that Obama means business, aren’t we?
For once the progressives have leverage over Obama LLC. As long as we keep this issue out front, Obama LLC has to keep sweetening the deal. He wants the reelection and this issue must disappear ASAP. Hopefully now some real negotiating will begin.
Great work david.
If you can go to jail for possessing God’s special herb then actual lawbreakers should suffer the same fate.
o lock up a couple hundred of the most lawless bankers by 2 -3-12 then we have a deal.
This white house is part of a criminal conspiracy to defraud the country for his campaign boosters contributors and needs some jail time .
The detailed reporting and continuing coverage of this issue by FDL has been outstanding.
It would be helpful to know the positions of all of the AGs because this year is an election year for many of them (Roy Cooper of NC for one). Driving this issue as an election issue for those who seem agreeable to the settlement could stiffen some spines to pursue prosecutions.
This Bullshit settlement is right up there with:
“Your check is in the mail.”
“I’ll respect you in the morning.”
“Sure I’ll call you.”
“No, I won’t cum in your mouth.”
Run Forrest, run!. Run far, run fast.
After the abject failure of HAMP, any AG worth their salt would question this administration’s intentions.
then, of course, there’s the Telecom immunity which dovetailed so nicely into the current spy/police state working up now,.
Like “Giving us the business”?
You forgot: “Trust me, I’m from the government”.
I have been following the Countrywide mess. The top three crooks basically “gave back” 25% of what they stole and otherwise got a slap on the wrist from the DoJ. Howeowners, as you point out, still screwed.
I hold Obama pesonally responsible for this.
And, it’s been a while since I said it, THANKS David for all you do.
We should all chip in and get you a silver tea set.
If you read through Mastro’s questions carefully, it looks like the AG settlement just gets us an even crappier version of HAMP.
HAMP didn’t work for beans, so ow we’re going to try an even more watered down version? Really? And for that these numbnuts trade away the world’s easiest to prove in court forgeries and perjuries? Really?
Some 60% of the populace can comprehend this as the kind of lawyering they knew when they filed, sued, and negotiated for their divorce settlements. It’s what lawyers do, they ingest, digest, and constipate.
Bank of America, Chase, JP Morgan, Goldman, Deutsche and so on. Each CEO and the underling VP’s should be put in JAIL and all of their property confiscated — just like they have been doing. All the while Obama and Eric Holder, the do nothing AG / Gun runner etc sat on his hands and let banks steal homes. No one followed the law AND no one wants to enforce it. Money, Money, Money is all that matters to a banker OR a politician.
At this point, what is purpose of a settlement???? The homeowners are not really getting anything. The AG’s should just charge the CEO’s and VP’s with criminal fraud and go after them personally.
Obama SHOULD just then arbitrarily demand principal reductions and restituion on foreclosures. Play Hardball with the banks — give them some jail time. I want to see the ARROGANT ASSHOLE — AKA — JAIME DIMON BEHIND BARS. Much of the foreclosure that were crooked were by Deutsche — drag that kraut’s ass across the pond for some jail time.