Under the terms of the 50-state mortgage foreclosure settlement, US taxpayers could end up paying billions in penalties that were supposed to be paid by the banks. That's the gist of a front-page story which appeared in the Financial Times on Thursday, February 17. The widely-cited article by Shahien Nasiripour notes that the 5 banks that will be effected by the settlement - Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial - will be able to use Obama's mortgage modification program (HAMP) to reduce loan balances and "receive cash payments of up to 63 cents on the dollar for every dollar of loan principal forgiven."
And that's not all. If borrowers stay current on their payments after their loans are restructured, the banks could qualify for additional government funds which (according to the FT) "could then turn a profit for the banks according to people familiar with the settlement terms."
How do you like them apples? Leave it to the bank-friendly Obama administration to turn a penalty into a windfall. In effect, the settlement will help the banks avoid losses on mortgages that are vastly overpriced on their books and which were probably headed into foreclosure anyway.
Taxpayers will stump up the money for the principle writedowns that will allow the banks to extract even more tribute from underwater homeowners. What kind of penalty is that?
Here's how Mark Gongloff sums it up over at Huffington Post: Of course, no one knows for sure how many perks and "bennies" the banks will eventually nab, because the written copy of the settlement still hasn't been released. Our guess is that the banks' will come out smelling like a rose and that the 50 Attorneys General will end up looking like fools for taking their victory lap too soon.
Keep in mind, that the banks are really only on the hook for $5 billion in cash. The rest of the $25 billion settlement will be shrugged off onto investors in mortgage-backed securities (MBS) many of who are retirees and pensioners. They're going to get clobbered while the perpetrators of this nationwide crime walk away Scott-free.
It's also worth reviewing what this case is all about, which is industrial-scale fraud directed at millions of people whose lives have been ruined by the banks. Here's a clip from an article in Reuters that helps to put it all in perspective: Repeat: "84 percent of them appeared to be illegal ...(and) those numbers are comparable nationally."
So, why are we talking about "mortgage foreclosure settlements" instead of criminal prosecutions? Why hasn't anyone gone to jail with evidence this compelling?
Look: The banks have been foreclosing on homes they don't even legally own. That's what robosigning is. Would you be willing to accept a measly $2,000 for being tossed out of your home and onto the street by someone who doesn't even own the mortgage? Of course, not.
9 million homes have been lost to foreclosure since 2007, and there will be another 9 million before we're done. Homeowners have lost $8 trillion in home equity (in the last 4 years) and 11 million people are currently underwater on their mortgages. All of this is unprecedented. All of this is the result of fraud.
Forget about the mortgage-foreclosure settlement. It means nothing. Someone has to go to jail. That's what matters.
And that's not all. If borrowers stay current on their payments after their loans are restructured, the banks could qualify for additional government funds which (according to the FT) "could then turn a profit for the banks according to people familiar with the settlement terms."
How do you like them apples? Leave it to the bank-friendly Obama administration to turn a penalty into a windfall. In effect, the settlement will help the banks avoid losses on mortgages that are vastly overpriced on their books and which were probably headed into foreclosure anyway.
Taxpayers will stump up the money for the principle writedowns that will allow the banks to extract even more tribute from underwater homeowners. What kind of penalty is that?
Here's how Mark Gongloff sums it up over at Huffington Post: Of course, no one knows for sure how many perks and "bennies" the banks will eventually nab, because the written copy of the settlement still hasn't been released. Our guess is that the banks' will come out smelling like a rose and that the 50 Attorneys General will end up looking like fools for taking their victory lap too soon.
Keep in mind, that the banks are really only on the hook for $5 billion in cash. The rest of the $25 billion settlement will be shrugged off onto investors in mortgage-backed securities (MBS) many of who are retirees and pensioners. They're going to get clobbered while the perpetrators of this nationwide crime walk away Scott-free.
It's also worth reviewing what this case is all about, which is industrial-scale fraud directed at millions of people whose lives have been ruined by the banks. Here's a clip from an article in Reuters that helps to put it all in perspective: Repeat: "84 percent of them appeared to be illegal ...(and) those numbers are comparable nationally."
So, why are we talking about "mortgage foreclosure settlements" instead of criminal prosecutions? Why hasn't anyone gone to jail with evidence this compelling?
Look: The banks have been foreclosing on homes they don't even legally own. That's what robosigning is. Would you be willing to accept a measly $2,000 for being tossed out of your home and onto the street by someone who doesn't even own the mortgage? Of course, not.
9 million homes have been lost to foreclosure since 2007, and there will be another 9 million before we're done. Homeowners have lost $8 trillion in home equity (in the last 4 years) and 11 million people are currently underwater on their mortgages. All of this is unprecedented. All of this is the result of fraud.
Forget about the mortgage-foreclosure settlement. It means nothing. Someone has to go to jail. That's what matters.
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