National Mortgage Settlement All But Inevitable As California, New York Join Deal [UPDATE]

A settlement between the nation's largest banks and the government over allegations of widespread mortgage fraud could come as early as Thursday, capping nearly 16 months of negotiations.

The settlement will resolve claims that five of the nation's largest banks forged documents and wrongfully foreclosed on borrowers in what has come to be known as the "robo-signing" scandal. New York Attorney General Eric Schneiderman and California Attorney General Kamala Harris have been outspoken in urging the Obama administration to hold the nation's biggest banks accountable for their role in the housing crisis and have resisted signing on to the settlement until now over concerns that it would go too easy on the banks and provide too little homeowner relief. The two states' participation had widely been seen as necessary to a successful deal.

In this election year, the proposed deal has become a political lighting rod as some consumer advocates have criticized the Obama administration for what they perceive as terms that deliver too little help to desperate homeowners.

"Even if the final settlement number is $25 billion, it pales in comparison to the scope of the problem," said Margery Golant, a Florida-based attorney who represents homeowners and formerly served as assistant general counsel at subprime mortgage giant Ocwen Financial. "If you do the math, that's a few hundred million per state. That's not enough to change anything."

The majority of the settlement money is earmarked for helping homeowners change the terms of a mortgage or refinance it, or reduce the amount of principal owed.

California and New York are joining more than 40 states that already have agreed to the settlement. Florida, Massachusetts, Nevada and Delaware have remained resistant to joining, though that will likely change now with California's and New York's participation, sources familiar with the negotiations said.

Shaun Donovan, secretary of the Department of Housing and Urban Development, said last week that a deal "will be finalized, I would expect, in the coming days." A final deal has not been officially announced.

This story has been updated to reflect that the settlement deal could be finalized as early as Thursday.

Comments

[econ1]

12:12 PM on 02/10/2012

The banks clearly didn't do their job. If they were required to keep a percentage of the loans they provide they would be more careful. Alternatively strict limits on the amount down (say 25%) and rigorous credit reviews should be required. Otherwise we will revisit this whole issue again.

[jsblackball]

01:24 PM on 02/09/2012

yeah there not telling all bank to do this what about m&tt bank i dont her there name at all which there in with this mess i lost my home . when they wouldnt lower ower payment after i had to have byepass dont . then after three month i went to try to go nack to work they say there closeing the doors . but hire two guys / then they close a month later after i try to get my job then lost my house to m&tt bank treats so we left the house

[yomama99999]

12:25 AM on 02/10/2012

look at how you write. in this economy, i wouldn't lower your payment either.

[djnjon]

01:21 PM on 02/09/2012

All the laws broken and None of them have gone to jail.

[ignacio sanabria]

12:06 PM on 02/09/2012

A fair settlement would be where the homeowner keeps his/her house and make affordable payments according to his/her income. If there is a huge gap from what banks have to lose and what the owner needs to pay, the banks could issue stock as any business does. Anything less than that will compromise the welfare of the American people.

[NoLongerAnonymous]

11:54 AM on 02/09/2012

People are getting educated on the law, which is what the banks fear most. This comes down to the individual taking action on their own behalf. DON'T BE COWED!!!! The banks count on your fear and confusion. Write to your "pretender" lender or "servicer", AKA debt collector (this is what most banks are; they DO NOT own the mortgage loan), for a QUALIFIED WRITTEN REQUEST and also do a DEBT VALIDATION LETTER. Google those terms. You will be lied to, misled and even questioned over your right to know. You WILL NOT find out the true holder in due course of your mortgage! Verify and Validate! In most cases you will be given the major run around as no one knows who the beneficial owner is, who holds the original mortgage note or who possesses it or how they acquired it. You CAN beat foreclosures by getting an attorney and asking the above questions. They cannot enforce illegal contracts. KNOW YOUR RIGHTS! EDUCATE YOURSELF and save your inherent right to be free from debt slavery.

[Realtychik]

04:53 PM on 02/09/2012

Please tell me why you care who the actualy debt holder is?

[webnova]

07:58 PM on 02/09/2012

Realtychik ......... Excuse me .... Really. Why would you ask such a question? As a matter of Law and just plain common sense is .... that you would only pay the holder of your note. This is beyond comprehension that you would ask this .... I am simply beside myself.
However there are Millions on Millions who are paying on their mortgages who have no clue who they are paying. Oh sure they are paying the Servicer but who actually owns the Note.
Here in the State of Arizona the Note and the Deed are not to be separated ... yet they are and the Notes are no where to be found.
The financial crime on this is Beyond Comprehension ... this is why the deal was cut. No one can tell you who owns what, yet the servicer will fraud the papers so they can make a buck on top of a buck 10000000 over.

[kathy smelser]

11:44 AM on 02/09/2012

they should be forced such a large amount that it causes them the same amount of pain we went through ...then put them all in jail

[Larry Ortega]

11:30 AM on 02/09/2012

Who we thought was the champion for America in bringing justice to the Trillion dollar fraud perpetrated by the big banks - has just folded. This deal will provide pennies on the dollar to the money stolen by big banks, and will preclude any and all future lawsuits stemming from this fraud. If anyone is close to AG-Harris(CA), tell her to keep her spine in check. Where she was in not joining the settlement is where she needs to stay. In this case nothing (no settlement), is better than something (pennies on the dollar combined with criminal and civil IMMUNITY for bringing the American economy down to it's knees). I THINK NOT!!

[Skeetshooter]

05:17 AM on 02/09/2012

With this near legalization of Wall street crime, our new gilded age has officially begun.

[Ian OFull]

09:35 AM on 02/09/2012

My sentiments exactly.

[Greg285]

10:20 AM on 02/09/2012

I concur....

[iam99]

03:21 AM on 02/09/2012

They all bought homes, but all they have left are bean burritos- if they are lucky.

[hwc4577]

02:40 AM on 02/09/2012

Shank of america

[MrSavage]

02:09 AM on 02/09/2012

Might I suggest we don't worry so much about the amount of the settlement, which will somehow or other end up coming out of our own pockets anyway, and pursue criminal charges for those who most blatantly broke the law. I mean, let's face it, the mid level execs who most likely signed off on these shenanigans won't be paying this settlement out of their own pocket but a little jail time might just get their attention. What little money that is recovered could be used to fund some sort of mutual assistance for the lawyers of individuals who were directly harmed by mistaken foreclosures etc.

[kimdreams1]

01:46 AM on 02/09/2012

This is what I know for sure.
We have been sold out. We went to sleep at the wheel. We have to get big money out of politics. United we stand, divided we fall. If we don't take to the streets in HUGE protest, it will happen again. We all bought into the American Dream. We became complacent and never thought this would happen to "us" in America. Extreme right wing repubs need to be dismanteled. Complacent Dems need to fight a lot harder. Both sides of the aisle will have to fight long and hard to get my vote again. Current President is the lesser of two evils. OWS should be taken a lot more seriously.

That is all...

[OldTulsan]

01:14 AM on 02/09/2012

So much for petitions from more than 360,000 people...

http://www.ourfuture.org/blog-entry/2012010319/bad-bankers-bad-deals-and-presidents-great-gatsby-problem
Bad Bankers, Bad Fraud Deals, and the President's 'Great Gatsby' Problem OurFuture.org

""Investigate the Banks!" Today a coalition of progressive groups handed in a petition with more than 360,000 signatures that demanded exactly that. It calls on the Obama administration to stop pushing a cushy fraud settlement for bankers, to pursue a fair deal for shafted homeowners, and to let criminal investigations against Wall Street crooks proceed.

Yet White House officials are still aggressively pushing the very same cushy deal on foreclosure fraud that inspired the petition. And just this week the Justice Department declined to prosecute fraudulent bankers once again as it worked to settle another bank fraud case..."

[Siebenstein]

01:36 AM on 02/09/2012

...and yet the streets are quiet as if Americans gave up and thinking :"It's okay just steamroll me"

[OldTulsan]

02:13 AM on 02/09/2012

The only thing that would get Americans in the streets is a shortage of affordable food.

"Civilizat­ion and anarchy are only seven meals apart." — Spanish proverb.."

[sixtoes]

02:39 AM on 02/09/2012

This is the reason that Obama endorsed Kamala Harris for CA state Attorney General. As one of the hardest hit states by bank fraud, Obama needed someone there who would go along and settle for a pittance.Everyone remember that the next time this woman comes up for re-election.

[Areyoukiddingg]

12:53 AM on 02/09/2012

So now, it's okay to file fraudulent paper to courts, the irs, other government. What happened to the rule of law in the U.S. and where is Holder? He should be trying to block this until an investigation is conducted. Of course, that's why there hasn't been any and they want it whitewashed; can't inconvenience your donors, you know.

[OldTulsan]

01:42 AM on 02/09/2012

The Rule of Law was murdered...

http://www.bloomberg.com/news/2010-07-07/wachovia-s-drug-habit.html
Wachovia's Drug Habit - Bloomberg.com

"...The bank didn’t react quickly enough to the prosecutors’ requests and failed to hire enough investigators, the U.S. Treasury Department said in March. After a 22-month investigation, the Justice Department on March 12 charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program.

Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its detection systems. Wachovia’s new owner paid $160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009.

[snip]

‘No Capacity to Regulate’

Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says.

“There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,” Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught...”

R.I.P. Lady Justice

[Areyoukiddingg]

02:09 PM on 02/09/2012

It's a sad day for America. RIP rule of law 2/9/12

[MrBadExample]

12:47 AM on 02/09/2012

This should be getting the kind of attention the election stories get--with 100 or so posts a minute and lots of appropriate outrage. It really is time for pitchforks and torches.