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The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

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As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

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242 comments

  1. William Wallace

    Crony capitalism wins again! Obama took the superpac about the same time this goes through? Mere coincidence?

    1. William Wallace

      “Since the statue of limitations has already run out on securities filings”

      They just had to bread and circus us long enough, Yves, why with an ever complex and increasing large workload, does a 5 year statutory limit make sense? With hard working people like you, it has taken YEARS just to scratch the surface of some of this corruption? What is the legal history for this 5 year limitation involving huge global mega complex problem? As Citigroup Chairmen REED just said on Bill MOyers, some of his colleagues at MIT with thier NEW MATH and models helped propogate this mess. It doesn’t make sense to me how with MIT PHd math wizzes figuring out how to obscure this mess (and other big minds) why 5 years is enough for a lowly lawyer to unravel it all.

      Secondly Yves you say: Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market

      However one guy once said a sucker is born every second, but 400 THOUSAND babies are born everyday, so a sucker is born every picosecond is probably more accurate. The masters of the universe aren’t worried about burning ENTIRE nations of people and hanging them out to dry, there will always be more suckers to swindle. Growth is good for business.

      1. ex. '40 act attorney

        “why with an ever complex and increasing large workload, does a 5 year statutory limit make sense”

        if the SEC was properly funded, properly staffed with top-tiered career attorneys and headed by someone who was independent of the industry (unlike the current and past chairmen), it wouldn’t be a problem.

        to be fair, from the other side of the conference call, being a staff attorney seemed like it was a cushy, autopilot job

      2. Mel

        Over in the copyright world, the U.S. Supreme Court has affirmed that works which have fallen out of copyright, after creator’s death + 75 years, can be put back under copyright by Congress. One would think that the same thing could happen to offenses that had escaped from Limitations, if the offenses were important ones, and if Congress wanted to.

          1. Ryozenzuzex

            This would *not* be ex post facto. In other words, it was illegal when they did it. The point of the “ex post facto” laws (and traditions) is to prevent abuse by those in power. I.E. You political opponent is a jogger? Make jogging down 4th street before 6AM illegal, and throw the guy in jail!

            Clearly not the case here. Congress eliminating the statute of limitations’ application to this case makes all kinds of sense.

            Still, it’s not going to happen. If for no other reason than they (the bankers) are the ones who own most of the congresscritters.

            Also, it’s still illegal and they’re still doing it. Re-read points 5 and 6.

  2. KFritz

    “The tumult and the shouting dies;
    The Captains and the Kings depart:”…….

    Some day, it may become public knowledge exactly how this low-nutrition sausage was ground up (as in, “you don’t want to watch your sausage being made”). Out of curiosity I’d like to know the essential details–whose arm was twisted and how they were twisted.

    1. William Wallace

      First we give a sweet deal to BP when they blast oil all over the gulf, now this. I see a pattern with Obama, huge legal deals to keep things at bay. I thought he promised Transparency and CHANGE? Instead we have legal deals that keep things opaque and more of the same.

      1. Non Commercial

        This deal is as important to Obama’s career prospects as the assassination of Osama bin Laden, and has been pursued with similar vigor. One of these escapades was for the benefit of those who think they have power; one was for the benefit of those who actually do. Obama learned from Clinton that the real base of the modern Democratic Party is not urban blacks or unionized labor, it is Wall Street.

        The only remaining question is whether the banks will now throw their weight behind Romney or stick with the Golden Boy who has proved he will deliver for them.

        1. C

          The sad part is that Obama is going to be fighting against Romney who is very clear about his intention to do less.

          1. farang

            “Do less”? How is that possible, is Romney planning to give government rewards for Fraud? To be certain, this is already close to rewarding criminal behavior by Obama. In point of fact, it is.

            And, I assert that “deals” such as this, no matter what stamp by whatever kangeroo court is put on it, CAN be thrown out as soon as honest government representation is installed, and then prosecuted properly.

        2. ETNIKS

          I’m amazed so many people haven’t yet got it.

          IT DOESN’T MATTER WHO WINS THE ELECTIONS. WE THE PEOPLE HAVE ALREADY LOST THEM.

          It doesn’t matter to the Cabal WHO will be their golden boy during the next political cycle….. they are all under their PAYROLL.

          However, I think Obama has shown his loyalty to the realm and on the plus side, he divides the left with most of them being scared shitless to realize there’s actually NONE on top helping them. It’s just too much to accept reality, so they truck along believing in fairytales.

          It will come handy especially when the shit hits the fan with the next financial meltdown and Obama can bring the troops out to the streets and disappear dissidents with his brand new NDAA law.

    2. Midnight Stalker

      No arm twisting here, just a lot of money spread around. It works every time! Obama is a toad and it is an election year so he has to get some points on the board for the people. The problem is that the Republicans will come up with a real loser (that is all that is available in their limited gene pool) making Obama look like a statesman, thereby electing Obama to star once again in the Wall Street Puppet Theater’s sequel, “Screw You II,” or “Bend Over, Here I Come Again.”

      1. KFritz

        I suspect that Schneiderman caved to arm twisting in the form of the entire leadership structure of the NY State Democratic Party. Harris held out long enough to make herself look good for her next step up the political ladder. Once those two caved–finita la comedia.

  3. Vincent Vecchione

    Thank you for covering this issue with such incisiveness and explaining the details in way that’s easy for non-finance professionals to understand. It is greatly appreciated!

    Anyway, although there is no substitute for comprehensive (and criminal) investigations, not everyone is lying down on the issue of fraudulent foreclosures. That’s pretty much the only ray of hope that’s consoling me at this point: http://www.msnbc.msn.com/id/26315908/ns/msnbc_tv-rachel_maddow_show/#46260580

  4. gs_runsthiscountry

    “The few own the many because they possess the means of livelihood of all … The country is governed for the richest, for the corporations, the bankers, the land speculators, and for the exploiters of labor. The majority of mankind are working people. So long as their fair demands – the ownership and control of their livelihoods – are set at naught, we can have neither men’s rights nor women’s rights. The majority of mankind is ground down by industrial oppression in order that the small remnant may live in ease.” — Helen Keller, 1911

    that is all…

    gs_

    1. MDBill

      Yup. Helen was a socialist. Her admirers don’t talk about that much. Howard Zinn did, but he’s dead.

      1. gs_runsthiscountry

        MDbil, goin’south,

        Rifling through famous quotes I stumbled upon that. Stand it alone and I think it is rather fitting. I am far from a socialist in my thinking; however, if social and legal justice means socialist, then, brand me socialist.

        How would you feel about that quote had Hellen Keller’s name not been attached?

        1. Midnight Stalker

          Maybe, just maybe, someday socialism won’t be a four letter word. As the system progresses towards the abyss and the oligarchs leave no breathing room for the masses, the realization will creep into the people’s soporific minds that socialism is the most fair and equitable system, as the cannibals of capitalism vainly try to convince the people otherwise by overlooking the inherent fatal flaws of super-capitalism. NO MORE!

          1. Nostradanus

            What is wrong with being a socialist, I’ve been one since college, I don’t sell stuff, I share it, if someone is in need, I give them what I have, or try to help them locate it, sometimes they call being a socialist, as being a Christian. It’s a cinch we’re not talking about the fundamental evangelical movement, those people are the haters, oh well.

  5. Conscience of a Conservative

    The following quote made me laugh: “We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan”. Anyone living in Manhattan knows its illegal to double park or park next to a no standing zone, yet the Time Warner guys do it all the time and gladly pay the bill as a cost of doing business. What the settlement has done, is monetize the liability so that banks can factor it into their business decision, they can elect to do it right, or do it wrong, and pay the parking ticket.

    1. Skippy

      I was once told by a reasonably wealthy man ” I can afford a DUI” ( Driving Whilst Intoxicated ).

      Skippy.. in another place and time, he would have been ended, too secure the well being of others.

      1. aet

        The Finns have the solution to that one – the sliding scale of monetary penalties or fines:

        “The Trick here is that Finland, and nearby Denmark, both levy speeding fines depending on the annual income of the driver unfortunate enough to pick up a ticket.”

        From:

        http://autos.aol.com/article/highest-speeding-fines/

        Just change the law to cover DUI as well….and hey Pe resto! …the rich would then feel the law’s bite just as keenly as the poorer scofflaws do.

    2. ambrit

      Dear CC;
      Well, the way things are developing now, I wouldn’t be at all surprised to see some radical types begin torching those double parked Times Warner vehicles. They make wonderful symbols. The perfect May Day gift!

      1. aet

        Fine ‘em based on how much Time-Warner earns in a year….
        express the present parking fine as a percentage of the median personal income in NYC, take that as the baseline, and make your calculations to determine how much of its income the Corp should cough up for its misdeed.

        1. ambrit

          Dear aet;
          I hadn’t heard about the DaneFinn sliding scale of fines before. (Sounds suspiciously like a jewelers measure to me.)

    3. wilemon

      “Forgery” implies that someone falsly created a document to extract money that they were otherwise not entitled to.That is not what happened here.The banks used robosigning instead of real signatures to complete foreclosure documents against borrowerers who had not paid their mortgages.In other words no one got anything they were not entitled to.I wonder how the author would react if his uncle left him a million dollars but then found out the will was void because his uncle had used a robosigner…….

      1. MsAnnaNOLA

        Just to be clear. Some people never had a loan and lost their home. Some people were preyed upon by mortgage servicers and put into foreclosure on purpose.

        See this blog. It is all in black and white.

        http://www.msfraud.org/

        They show you how it has been done and what to watch out for. Beware home owners! They will strip your equity and leave you homeless.

        1. BH

          Cases where the individual had no loan are being resolved in the homeowner’s favor. The banks, put into the light of the media, are backing down and making the homeowners whole. Likewise, cases where the homeowner was, in fact, not behind on his payments.

          So in general, the title has been or is being resolved to the appropriate party.

          This does not make what they did legal, and does not defend this obviously unfair settlement as a whole.

          1. tech98

            Too bad about the cost, stress and disruption to the resident’s life of having to fight a large corporation in court trying to steal their house under fraudulent pretenses. In a just world the banksters would be paying six figure damages for every heist they pulled, if not criminal charges for negligent fraud.

      2. Fingal

        As I received the story, the banks’ claims to be holders of those mortgages was not properly documented, or those documents had not been adequately maintained, with the result that the banks could not legitimately prove that they were entitled to take any action on those unpaid mortgages. So they let legitimacy fall by the wayside.

        In full knowledge that they lacked that proof, they systematically and repeatedly claimed to be the holders of those mortgages — as one writer said, “signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed.” (Ellen Brown, Truthout)

        The borrowers may have fallen behind in their payments, but to whom were those payments owed?

        1. Nathanael

          Exactly. Over and over again, the investor to whom the payments were *truly* owed was defrauded by banks which claimed to hold the mortgage (but had no evidence to indicate this).

          Result: any future buyer of the land buys it subject to claims from the *true* owner of the mortgage. There is no clear title.

          The bank which didn’t own the mortgage, but which “foreclosed” using forged documents, then “sells” the property which they don’t own, and has thus defrauded every future owner of the land too.

          Massachusetts law is now settled on this point: such “sales” by banks aren’t legitimate land sales at all.

      3. Nathanael

        This was forgery (a crime). It was also fraud: documents created in order to extract money which was not owed.

        Real property law for over 700 years has stated that property transfers and mortgage transfers which were not properly registered on the books of the local county don’t count and will be ignored by the courts. Fabricating documents to evade this is real property fraud.

    4. Julian

      This raises an interesting point; why would anyone who knows about this aspect of the deal ever take out a mortgage or a loan from any of these corps, or even deal with them generally? By putting such a paltry fine on fraudulent dealing, the government has effectively said “If you deal with a big enough player, we will not gaurantee the sanctity of contract”. In this way, the deal destroys whatever credibility these banks had.

      1. Nathanael

        The answer is that only an ignorant sucker would ever willingly do business with any of these criminal banks ever again.

        The criminal banks are counting on the existence of lots of ignorant suckers. On *that*, they may be right.

  6. Conscience of a Conservative

    Stopping foreclosure fraud is quite simple. One way you do that is suspend or disbar any lawyer submitting false statements to the court(works for judicial state) and criminally prosecute individuals(not the banks) who do it on the lending side.

    1. LucyLulu

      Quite right, Conscience. However, you’re assuming that the intent is to stop foreclosure fraud.

      1. Conscience of a Conservative

        Of course not! The intent was to cap bank liability and get liability off of banks balance sheets. The banks were at risk of being turned into giant REITS. They need as many private mortgages as possible refianced and put on the books of the gov’t.

        1. PL

          The attorney will claim he/she didn’t know the documents were fabricated because he/she relied on the client’s representations that they were genuine. State disciplinary boards have received many complaints about foreclosure mill attorneys but have disciplined few. Please advise if i am incorrect because good news would be so refreshing.

          1. Stanley I. White

            The rule of law you mean? That woud be good news. Mill attorneys committed felonies. But watcha gonna do punk?

          2. aet

            Upon precisely what facts (and indeed, precisely how did these lawyers determine the accuracy of those facts?) did they base this “reliance”?

            Or did they just assume honesty on the part of their clients?
            And is it normal for lawyers to do so?

            What allegiance does – or ought – a lawyer have to the truth?
            Or is her primary allegiance to her client?

          3. Nathanael

            NY’s courts started requiring lawyers to file personal affadavits saying that they’d verified the integrity of the documents personally, and that has had a lovely effect: the foreclosure frauds have ground to a halt.

  7. LucyLulu

    “Oklahoma stayed out of the deal because the state’s Attorney General, Scott Pruitt, did not believe that the banks should face any penalty.”

    Time for Pruitt to join the ranks of the unemployed.

    If I were a resident of Oklahoma, instead of an email or phone call, this would warrant a personal visit (to detain him indefinitely until he was sufficiently re-educated, followed up with ongoing supervision by unmanned aerial surveillance).

    1. PL

      Let me get this straight, the Oklahoma AG refused to join the settlement and, therefore, money for his constituants because he doesn’t think the banks should be required to provide it? Oh how principled! Now we know who the AG’s really working for.

    2. James

      Sod houses anyone? Oklahoma, as usual the bellwether of conservative insanity. Making Texas and Kansas seem like stone-cold liberal havens in contrast.

    3. tech98

      For all the criticism rightly directed at the Obama Administration’s handling of this situation, I think we have a very large clue here how a Republican administration would deal with this.

  8. Greg R

    Yves, I think you want to tune the 1st sentence in 9.

    I remember being in grammar school, and hearing of anarchism in the US during history class. I thought it sounded so bizarre. But, I was just a little kid.

  9. vv111y

    So shouldn’t traders @ banks now forge millions of false loans in peoples names and collect the massive rewards? As you say the fines are of no consequence, and it will take quite some time for the fines to actually be levied.

    Also, wouldn’t the best targets for the banks be the deceased, the elderly, and the generally infirm? It could be years, if ever, that someone will notice the fraud. That’s the low hanging fruit, along with the poor & uneducated. Then the middle class next.

    Thanks again Yves and take care. Get some rest and relaxation, it’s a marathon, not a sprint.

      1. Nathanael

        Nobody seems to properly audit the megabanks — why can’t they just credit a few billion to their own bank accounts and claim that it’s “mortgage payments”?

        I mean, seriously, the regulators are completely out to lunch, wouldn’t it be simplest for the megabanks to simply “print money” for themselves, electronically, rather than bothering with all these complicated frauds?

  10. Woodrow Wilson

    So now what?

    We have established that our own government, in collusion with TBTF’s, run the country through Financial Socialism/Plutocracy/Kleptocracy. The Rule of Law no longer exists.

    Some of us can’t post here what we’re really thinking, but I ask: Now what? Do Americans stand by and just wait for the NEXT looting & pillaging event? Or is everyone just content that this didn’t happen to them?

    1. JTFaraday

      No, it did happen to us. And it sets precedents for what’s going to happen to us in the future.

    2. ambrit

      Mr. Wilson;
      If the elites were smart, they’d allow the #Occupy folks to soldier along at a simmer, as a societal safety valve. If they shut #Occupy down, all that anger and discontent will find other, more violent forms of expression. Watch how the officials handle #Occupy this summer. Especially at the political conventions. The rest should be all too predictable.

    3. Piano Racer

      Mr. President,

      My advice: give up, fly under the radar, and concentrate on self-sufficiency. the system cannot be changed, not by the likes of you and me (and you being a former US president!) The only thing left that is capable of changing the system is complete systemic collapse. The good news is that this is inevitable, but it will only occur when the masses have taken all that they can and can take no more. The bad news is that the capacity for the masses to absorb wrong after wrong to the great detriment to their livelihood and well-being is vast.

      Independence, self-sufficiency, eliminating counter-party risk and minimizing to the extent possible ALL interactions with the system is the wisest course of action. Many will reject this notion as being too far away from what they have known all their lives, but many of us younger folks recognize the futility of engaging in any way with the system, and are making dramatic “outside the box” life choices based on this recognition. Pleasantly, some of us are finding that this lifestyle is deeply rewarding, and that though striving for self-sufficiency can be a great deal of work, yet it can also be deeply rewarding.

      1. Piano Racer

        “The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
        ― Frank Zappa

        1. aletheia33

          piano,

          salutations and bravo for your choices and integrity. if i may presume to say it: be careful when it comes time to raise children, should you choose to do so. your children, through your determination to give them the best start you can, become hostages through which TPTB will try hard to control you (and them). cultural isolation or separatism can also be a hard thing for kids to grow up in, especially as parents are stressed by the pressures of holding out against the norm, which can be very real.

          also, parents tend to disagree violently about how to raise kids, so if you’re doing it communally, you need to be prepared for some difficulties in that area.

          that said, it can be done over a lifetime. there are some real costs, but probably will be worth it going forward in the current worsening situation. make strong bonds with those of like mind and don’t try to go it alone. find a good corner out of the way. you should be okay.

          and please, don’t give up on the rest of us. apologies, we are more or less trapped in a transition crunch between eras right now that feels apocalyptic to us; we’re terrified and sticking our heads in the sand as hard and deep as we can. but we do retain hidden reserves of goodwill and resourcefulness that we are afraid, at least yet, to exercise much of. we’ve been addicted to our stuff for so many decades, we don’t have any memory of life without it. we’re spoiled and distracted. have compassion for us as you keep on your wiser path.

      2. Nathanael

        What *The President* should to is to defuse the most dangerous bombs which might explode during system collapse.

        For instance, disarm and decommission all the nuclear weapons in the US, or short of that, get them out of the hands of the degenerating and theocrat-riddled Air Force.

        For instance, shut down all the ready-to-blow GE Mark I (Fukushima-type) nuclear plants.

        ‘Course he’s not doing that. Shows he doesn’t really know what’s going on.

  11. JeffreyR

    I wonder what California, New York, and Delaware got for caving in if, in fact, they were ever serious to begin with. Another sad day in America.

  12. Richard Kline

    Anyone paying attention understands that this grotesquerie of a give-away to the banks is Obama’s main plank in his re-election campaign. What he’s after is to show he can serve the 1% better than any other hairball they could possibly cough up—and in that, he’s right. He’s the best bought son the banksters have ever had.

    I wouldn’t call it a ‘settlement,’ I’d call it a surrender document. The chief legal magistrates of 49 states in this country have surrendered any duty of oath and office to defend the interests of their citizens for less then chump change; cheap promises, really. A clipped penny dropped in a beggar’s cup on the way out the banquet door by the offenders. A cost of doing business, and one bargained down by obsequious officials to the vanishing point.

    The question comes to mind viewing this: Why, if the 1% can delierately and comprehensively violate statue for profit and be assisted in escaping jeopardy by the country’s officials, why on earth should anyone _else_ honor a contract or obey a statute in financial transactions? Those at the top of the chain manifestly are obligated to no law or restraint. Why, then, shouldn’t the bulk of the citizenry simply ruthlessly default? Particularly all those who are hopelessly underwater. No one higher up the food chain then them thinks ‘following the law’ is in any way desirable or mandatory, so why should they, or we, do so? Now personally, I think we should follow the law, and enforce it. But functionally, what this settlement demonstrates massively is that the law is for chumps and peasants. Nobody else need be overly troubled about ‘the law.’

    —And it is THAT knowledge, in my view, that will prove the most cancerous byproduct of this perversion of justice. Not directly; not immediately; put perniciously, insidiously, and potentially pervasively. When everyday folks understand that they are fools for following rules, and the sensebility of that as much as knowledge of the facts will leak out, then rules fall into abeyance. So it is not just an issue that titans of wealth walk free regardless of crimes, but more an issue that the law falls into disrepute in ways small and large but many. The damage from that isn’t just to confidence or to collateral but to restraint from rapacity and misfeasance at all levels. The rich are teaching us all that crime pays, and pays handsomely; society will learn that lesson if that is the way things go. That is my view, one baleful and regretful.

    As mentioned by Yves in the post furthermore, this corruscated atrocity of a legal outcome will do nothing to improve the housing market either, but will grossly and bluntly achieve the opposite effect. Who in their right mind would trust any investing or activity in real propert after the laws involved thereof are _proved_ by this outcome to have no force? After the authorities are proved not merely to have no credibility, to be absent of impartiality, but in fact to be demonstrated as wholly in league with robbers at the top of the financial pyramid thieving absolutely everybody else in society? We are just proving that to invest in property is to simply hand over your wallet to the banksters to take as much or all of as they so choose? So to get re-elected, one further piece of collateral damage inflicted by Obama is to ensure that housing will _not_ recover for many, many years, if at all. But the fact that ALL those AGs of both halves of the single party system will line up against the citizenry is the fullest possible demonstration that it is the 1% and their bought-and-paid for political system against the rest of us. They write the rules: we follow them but the don’t. That has a very bad end game . . . .

    1. craazyman

      You sound upset Richard.

      I remember reading my Plato years ago and being struck by the sophist Thrasymacus’ statement in the Republic that justice is “the advantage of the stronger.”

      It seemed cynical to me, a sweeping statement that saw no good in humanity at all. And Socrates filleted it like a fish, of course. But he was the protagonist and Plato took some creative license. He was a playwright, after all.

      I’m thinking Thrasymacus would be smiling now, and Socrates later when all these little songbirds fly back to our trees as crows. As you say.

    2. Steve (the other Steve)

      A very good comment from Mr. Kline!

      Perhaps it has become a cliche’, but we need “truth and reconciliation” to move forward. We will get neither. Banks will continue with disdain for customers, customers will hate banks even more and customers will hate each other because the cheaters have been subsidized by the honest. In short, a total social and economic disaster.

      I hope that Yves will now turn her expertise to the future of the mortgage market. It is now “socialized”, as Fannie/Freddie control 90% of new issuance. The private mortgage business may never come back.

      It’s hard to fathom the long-run implications of this development. I would love to hear from Yves and others on these implications.

      1. Susan the other

        Every county in every state will now have to figure out a way to cure all the clouded titles, probably on a case by case basis. It is going to be time consuming and expensive. It will probably interfere in the sale of millions of homes. MERS could be prosecuted forever and a day for “tampering with a recorded document”. But only Schneiderman is left standing. I would like to be able to follow his progress. MERS has no money so damages will never be part of that settlement, but a win for Schneiderman could smooth the way for the counties.

    3. LucyLulu

      The reason that people don’t stop paying on their loans is because they know that THEY will have every letter of the law enforced upon them. As Lanny Brueuer (sp?) says in FT article, there have 2100 mortgage related prosecutions since the crisis. The peasants are not privileged with the same exemption from being required to abide by laws.

      1. aletheia33

        it’s my belief that many people have in fact stopped paying–perhaps not so much on mortgages, but certainly on 2nd liens, credit cards, and the like, as they simply can’t, and i see this turning more and more into won’t, with every passing day of increasing unemployment and other depradations by the 1%. the more this spreads, the more people will realize that TPTB cannot pursue everyone. plus, how can you garnishee nonexistent wages?

        would like to see some reporting on this, but i guess it’s hard to get inside banks’ offices or otherwise get to their records to see how much they’re not currently collecting anything on. they sure don’t want us to know, and neither does gov’t.

        there’s this thing called a debt revolt. and de facto bankruptcies. and as chris whalen mentioned a year or more ago, in 1933, municipalities told their homeowners to stop paying their mortgages and just pay their local taxes. this seems to be where we may be headed. if the 1930s is any precedent, the relevant social structures could break down rather quickly.

        i do really wonder just how close we are to the complete dissolution of the social contract in relation to financial dealing.

        from gretchen morgenson’s nyt story yesterday (‘a mortgage tornado warning, unheeded’): “’From my own personal experience and 20 years of research and investigation, nothing — and I mean nothing — that a bank, lender, loan servicer or their lawyer says or puts on paper can be trusted and accepted as true,’ Mr. Lavalle said.”

        even in the MIddle Ages, with slow communication, people could figure out when they were being collectively had. they will here today, too. but how soon? or have we become so isolated from one another that we cannot even communicate that much, to come to know our own oppression as collective? will each one go down separately in his/her own pathetic little bubble, maintaining it to the end, one at a time with no compassionate action from neighbors?
        we shall see.

          1. aletheia33

            will try.

            as i recall, it was maybe 2009 on an nc linked video of whalen. an nc commenter noted at the time that on whalen’s video he plugged his new book, and yves on a video linked on the same day did not mention her book at all. (funny the things that stick in one’s mind!) whalen has mentioned this 1933 homeowners-told-by-local-gov’t-just-to-pay-their-property-taxes at least twice; he said it on another video interview not much later. whenever that book of whalen’s first came out is a good time frame. i’m on the case.

    4. Jill

      Richard Kline,

      Your post is poignant. The truth is the rest of us will follow the “law” because the govt. has the power to make us do that. More importantly, the govt. has the power to punish people for engaging in lawful activities to oppose the govt.’s lawlessness. In England for example, they are trying to get nerve gas approved for domestic crowd control. That was already used on protesters in Egypt and I’m guessing it will be used here as well.

      In China the most connected real estate developers just tore down a neighborhood of relatively wealthy people. When they protested one person from the neighborhood was taken by the govt. as an example to the rest who then sold their homes. In other words, this is what tyranny looks like.

      Right now, many wealthy people fail to understand what the lack of rule of law really means. They think it’s just a problem for outsiders (OWS) and other “little people”. They are wrong. A totalitarian system of govt. only cares about you if you are: 1. useful, 2. well enough connected or 3. actually part of the ruling overlords. Since everything is based on personality and connections when you lose those, your “friends” at the top throw you to the wolves.

      The types of analysis that Yves does are vital to show the ignorant top 30 percent that they too are expendable. This can only come to a good end through massive peaceful citizen action. With the govt. arrayed against its own citizens, armed to the teeth, we are going to have to be very brave and very committed to each other.

      1. Nathanael

        Soon the government will not have the power to punish people for violating the arbitrary rules set by the large corporations and their agent, the government.

        To be more specific, it will not have the power to punish more than a *miniscule fraction* of the people violating the rules. At which point the government’s “police” are merely a violent gang.

        This has already happened with copyright law, patent law, drug law, and “national secrets” law. It will happen in other areas of law.

        When it happens with the government’s “crowd control” ability, it’s all over. That is far, *far* closer than most people think — within 5 years unless the national government “straightens up and flies right”, which I don’t expect.

    5. aet

      President Obama did not make the decision to bail out AIG.

      TV and propaganda have clouded Americans minds – where does all that PAC money go?

      To TV.

      So…Americans have become very very bad at remembering very very recent history. Why?

      1. Nathanael

        Bush, indeed, chose to use AIG to pour money into other banks.

        However, Obama/Geither had the opportunity to change the management of AIG and stop doing that. They chose to “stay the course” and continued the backdoor bailout.

    6. diptherio

      Gresham’s dynamic with a vengeance. Sadly, it’s probably just a part of capitalist political economy. Any firm will have the incentive to violate laws if the pay-offs are sufficient and the probability of getting caught or suffering irreparable losses is low. Accordingly, any firm will have an incentive to try to drive those probabilities to zero through the political process. We all know that those with the money write the rules; that the rules are written (and enforced) in such a way as to benefit those with the money should come as no surprise.

      (Cost-Benefit Analysis and Business Ethics– http://www.rockymt.org/?q=node/288)

      1. Nathanael

        The probability of the criminals suffering irreparable losses must be made high.

        I don’t advocate this, but vigilantes murdering the CEOs of criminal banks would certainly raise those probabilities. I fully expect this to happen if nothing else is done to stop these criminals.

    7. b.

      Well said. Repost of the First Rule of democratic elections, also a charm against Yet Another Democratic Hero: If the nation looks like shit, do not re-elect any incumbents or former office holders. Ineffectual opposition – incompetence or pretense – is as much part of the problem as the perperators in chief.

      By all means, go vote. None Of The Above. If we see a national election with the highest participation in history, and a supermajority against all candidates running, we will at least have scored one for the history books. Not that “The People” would ever refuse to choose from the menu presented to them by the authorities.

      1. b.

        A good a reason as any to revisit The Role of Law.

        Greenwald has made the same point about the erosion of the rule of law, albeit in contexts more remote from the wallet. Maybe there is solace in recognizing that if principles cannot rise the Many in disgust and anger, neither does the wallet. At least with respect to the latter, the rich are truly different: A banker will indeed stand up for what he believes in, and put his money where his mouth is. It might only be a fraction, but believe that every dollar given away hurts him more than such an act would ever hurt us.

      2. tech98

        In CA a few years ago there was a proposition to add ‘None of the Above’ as a ballot choice in state elections. Sadly it didn’t pass.

    8. Mel

      True. As in my quote back then. They fixed up the whole pyramid thing, so then Egypt fell over.

      That’s the one thing you would really want not to happen, but nobody’s going to stop it.

    9. Sick To My Stomach

      This is the inevitable result of Cultural relativism. When we as a nation believe that right and wrong are determined by what the majority wants, we are doomed to fall on our own hoisted petard.

      It is woefully apparent that our campaigning officials, with the exception of Ron Paul and perhaps, Rick Santorum, are trying to define their campaigns by what they believe the majority of people want. Not by what is RIGHT.

      If there is a RIGHT and a WRONG then there can be a just legal system. But ONLY IF JUSTICE TRULY IS BLIND. Our justice in America seems to be wearing a mask made out of US dollars… And the heinous actions of TBTF banks are invisible to justice. However, Homeowners who are not made of money, are still held accountable, as the mask of money does not protect them.

    10. Nathanael

      “But functionally, what this settlement demonstrates massively is that the law is for chumps and peasants. Nobody else need be overly troubled about ‘the law.’ ”

      Already happened to copyright law (many years ago). Already happened to patent law (many years ago). Best practice among absolutely everyone is to ignore copyrights, and among tech companies is to ignore patents.

      Already happened to “national security” secrecy law, back when cryptography was declared a “munition”. Everyone knows that’s bunk. Process extended in this area with the TSA, blatantly lawless goons, and the Wikileaks revelations, showing that most of what the US government keeps “secret” is that it’s run by large corporations and works against our national interest.

      Already happened to building permit law in most places, for various reasons related to overreach and selective enforcement.

      Already happened in Native American law, which is kind of infamous, actually.

      Already happened in election law, in 2000, though people haven’t completely given up on that yet, because later thefts were better disguised.

      It’s already happened in criminal law, where it’s fairly well-known that poor/minority people are railroaded while rich white men get let off for killing people (I’m thinking of that New Jersey case).

      Taking this abrogation of the rule of law into the realm of ordinary real property law, which it hadn’t reached yet, is appallingly dangerous. There’s not much *left* of the law — and this time they’re going after the part which protects the bougeoisie, the group which historically fights most aggressively and competently for their rights.

      And they’re doing it on behalf of about 0.1% of the population. Maybe less. So they haven’t got the mass support which was present for stealing land from Indians.

    11. Nathanael

      “Who in their right mind would trust any investing or activity in real propert after the laws involved thereof are _proved_ by this outcome to have no force? ”

      “Possession is nine tenths of the law.”

      Trust me, people who can take possession of real property, *and* supply themselves with loyal armed guards, will still perform investing and activity in real property. (Drug lords come to mind.)

      It’s gonna get interesting.

  13. Chris

    I just want to point out that the WSJ reporting on this settlement has been false, misleading and downright propaganda at times. Last night they reported that California and Florida and NY had agreed, yet I read in the LA Times this morning that Kammie Harris has not yet agreed. I definitely trust the LA Times much more.

    It reminds me of an article I read back in November 2010 in that fish wrapper claiming that Congress had agreed to extend the Build America Bonds program. That turned out to be false also, and if you were dumb enough to trade off that false report you got slaughtered.

    1. Johnny Burlington

      Chris, they are political establishments. To pretend that they aren’t manipulative and jingoistic is childish, for that is their purpose.

      1. aet

        WSJ?

        That’s a Murdoch paper, the same Murdoch of Fox TV, the same Fox TV which declared GW Bush as President very early ….catapulting propaganda!

  14. Scott Thomson

    What does it mean moving forward – if a document is obviously forged/robosigned will it be accepted by courts? Will it no longer be necessary to establish the chain of title? Does this settlement change the laws governing these practices? If so I should create documents indicating I have paid off my mortgage.

      1. PL

        Is the settlement binding on homeowners who challenge foreclosure on grounds of fabricated documents and robosigning? I thought the settlement applied to civil actions brought by the states, but n ot by private litigants.

        1. aet

          The Government of the USA is not known for extinguishing its citizen’s existing rights – at least, not those rights which have arisen under existing private contracts – without both Houses of Congress agreeing to it first.

    1. Susan the other

      This settlement is a farce. It resolves nothing. Can an out of court settlement that is so unjust stand? Why can’t we have do overs here? We were never given the evidence which the banks withheld, etc. Let’s find the Achilles heel.

      1. ajax

        I vaguely remember that FOIA requests (Freedom of
        Information Act requests) can uncover all sorts of
        unsavory government or government agency documents …

    2. Nathanael

      “What does it mean moving forward – if a document is obviously forged/robosigned will it be accepted by courts? Will it no longer be necessary to establish the chain of title? Does this settlement change the laws governing these practices? If so I should create documents indicating I have paid off my mortgage.”

      The settlement means quite literally nothing with regards to any of this.

      In some states (New York and Massachusetts) the laws continue to be enforced by the courts, at least when you demand it.

      In other states (Florida), some of the courts are completely lawless and just hand houses to banks for the hell of it — in those states, since there is no law, but merely a rule “if you are a bank, you get to take the house”, you must first incorporate as a bank and *then* forge documents if you want to own your house outright.

  15. Middle Seaman

    When we told you not to vote for Obama (2008 primaries), you said that he is the savior. You forgot to add “of the banks.”

    1. aet

      hahahaha

      The republicans own this economy – they had both houses of Congress from 1994-2006:

      http://en.wikipedia.org/wiki/Republican_Revolution

      …the presidency from 2000-2008 – and the House of Representatives returned to their control in 2010.

      How can the Republicans NOT be responsible for how things are? What then were they doing while they were in power?

      When they held all three branches of the Government….wars began.

      Res Ipsa Loquitor.

      1. propertius

        So you believe there’s a fundamental difference between the Red and Blue teams of the Corporate Party? How quaint!

        1. Nathanael

          Oh, there is a fundamental difference.

          Republicans == Nazi Party
          Democrats == Centre Party of Weimar Germany (look ‘em up, they effectively put Hitler into power)

  16. Klassy!

    Could anyone explain point 4 to me a little more. It seems like a very big deal, but I’m not sure I get it.
    Thanks.

    1. Gil Gamesh

      I think if first mortgage principals are reduced in the aggregate, that reduces the probability of defaults somewhat. When the senior lender forecloses on an underwater house, the junior lenders (HELOCs typically) get wiped out. If the senior and junior lenders are the same bank, then what has occurred is balance sheet skullduggery

      1. Klassy!

        OK, thanks (and I appreciate not getting any swipes at my intelligence. But NC is not that type of site.)
        Yes, this bad.

    2. PL

      If homeowners are less likely to be foreclosed under the first lien, then second liens are less likely to be rendered worthless. In other words, the second lien retains its vaue.

    3. PghMike4

      I’m not an expert, but here’s what I think is going on. The servicers (often, the big banks) get to choose which mortgages to offer principal reductions. These big banks also own a lot of 2nd lien loans.

      So, they look for properties where someone’s likely to default on their mortgage, and where the servicing bank doesn’t own the 1st lien position mortgage, but does own the 2nd lien position mortgage. They then grant a principal reduction that doesn’t cost the servicer any money (but does cost some other investor money), making it more likely that the home owner will be able to stay current on their payments and thus pay off the 2nd lien position loan in its entirety.

      So, basically, they transfer money from the 1st lien position loan to themselves, and even get “credit” as servicers towards hitting their settlement goal.

      This whole financial meltdown has been an awesome example of a huge robbery happening in plain sight, in slow motion. And with those charged with enforcing the laws looking the other way.

      1. aet

        On the Republicans’ watch. From 2000, staffing the enforcement agencies was entirely their “responsibility”.

        Their “response” to charges of incompetence while in power has been telling. Telling of what THEY think “responsibility” means , when it comes to people asking them to answer for the ill consequences of their own conduct – while they held power.

        1. Eureka Springs

          You really should stop. We are and have been under systemic bipartisan corruption for a very long time. Quit searching for a lessor evil and just admit you are in hell… shopping for new horns.

        2. Susan the other

          We just got served up a steaming plate of medieval justice. So here’s a newsflash: This isn’t some snotty. effete little principality. This is America. Vote if you must – in fact vote even if you have to hold your nose to do it – just don’t put too much faith in the outcome – but always, always go to your city council meetings. It wont take long to grow some real grassroots. Hey, take your dog.

  17. Randy

    How utterly depressing this is. Now I get to spend all day listening to my banking commrades complaining about being ripped off by the government. They are too far gone; it is worthless to point out that the government just bailed us out. AGAIN.

    1. aletheia33

      thank you for keeping a sane perspective in the environment where you are. it’s heartening to hear of.

  18. Brooklin Bridge

    So let’s see. The AG’s have gotten to “look tough” for the last year and now just have to stop reading their mail for a while, the President gets to “help homeowners” in an election cycle and the banks get their shoes shined for a quarter…

    1. aet

      So you suggest people vote republican? or not vote at all? or just “give up hope, it’s no use”?

      Working for banks and Republicans, are we?

      Forgotten what is said to be written over the gates of Hell?
      Or that the road to those gates is paved over and made easy of passage with and by good intentions? ( How are things in Libya today? Oh, that’s yesterday’s news…. )

      1. Cindy Elmwood

        “So you suggest people vote republican? or not vote at all?”

        I wouldn’t suggest either of those things. At this point, I’d like to see people at NC, other blogs and the #Occupy movement try to rally around a 3rd party candidate, as a protest vote at the very least. Right now there’s nothing, not even a Dennis Kucinich or Ralph Nader that I know of who’s getting any mention. With the anger that’s out there, I am sure someone could do much better than Ralph Nader ever did, and at least have an impact if not win.

        FYI I’ve voted in 4 presidential elections and this is the first time I will not be voting Democrat. I’m not voting Republican either, unless by some miracle it’s Ron Paul vs Obama.

        Who do we rally around???

  19. killben

    “It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.”

    Nothing new … It has all along been the case of helping banks in the guise of main street.

    What is new is people are not revolting against all these actions and propoganda.

  20. Walkin Bob

    Whoa buddy!! I sense a “bring it on”, “have at it”, ruckus romp brewing in our midst. Take care of yourselves.Look both ways. For you people under 40, 2012 will be your “1968″!

    1. Spitzer Versus Dugan

      It will be far worse than 1968, the year you could buy cheap Detroit V8s, make your house note and watch your country drop tonnage on women and children in Vietnam. By golly things are different today.

    2. Damian

      i think you are a dreamer !

      the next step after extinguishing the principal asset (house) for most of the population and their jobs shipped out via the WTO – is the trifecta – social security will be wiped out for those below 55 years old and medicare changed to a level that the cost is prohibitive

      the ultimate objective is 160,000,000 will be going off the air by neglect and abuse over the next 50 years

      the cake is now baked !

      1. Nathanael

        Study some history. Turns out there’s only so far you can push people before there’s a revolution.

        That’s why I’m expecting a revolution. Since I am of little use in a revolution, I’m mentally focusing on what we can do to direct the aftermath in a good direction (a democracy) rather than a bad direction (a totalitarian dictatorship).

  21. Dan G

    This is all based on the false premise that the banks are to important to fail in the interests of “national Security”; then they can do what they dam well please.
    Next up, look for Obamanation to cheerfully announce a new bailout program for the citizens he soo desperately cares about. just in time for election there will be a new form of harp, hamp or hemp to delude the public in to thinking this is good for them and not the banks.

  22. Jim

    One year to retirement and I will take every dollar I have and move to another country. Send me my SS check to Pananma. Working class people don’t stand a chance in America these days. I see Greese is clawing back 20% on their minimum wage. Just like in the states it is attack the poor first.

      1. aet

        Well, taxing the rich would be a start in the right direction…as taxing poor people pays nothing by comparison!

    1. Dan G

      You better have it auto deposited in a US credit Union and then electronically transferred, or at some point they might feel it should be taxed or confiscated because your not raising the GDP here.

  23. Esohbe

    I am not in the law business but it seems like this deal creates a firewall that will have to be breached in any future lawsuit against TBTF. Bankers will fall back on this settlement and force any potential lawsuit to jump through the hoops to establish their validity. How many people are going to want to wade through this firewall?

  24. Gil Gamesh

    The President of Wall Street delivers for his constituents again. If Michele Obama doesn’t get a lifetime seat on the board of GS, there is no justice in this land. Never have so few owed so much to so many…just don’t try to collect. While we know the national government, helmed by a politician exquisitely groomed in the noxious corruption of the Chicago Way, is an oligarchy, the capitulation of the states’ AGs is indeed a sorry spectacle. $5b was the “best” our states AGs could do? Pathetic. They should all resign for malpractice, and then commit hari kari. I’d pay to see that!

  25. Mary Malone

    And to the AGs…
    From the U.S. Code Online via GPO Access
    [www.gpoaccess.gov]
    [Laws in effect as of January 3, 2007]
    [CITE: 18USC4]
    [Page 10]
    TITLE 18–CRIMES AND CRIMINAL PROCEDURE
    PART I–CRIMES
    CHAPTER 1–GENERAL PROVISIONS
    Sec. 4. Misprision of felony
    Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

    The charge carries $250K fine and 3 years in prison.

    Publicly disgrace them as much as possible. Contact every media outlet you can, and tell them what the AGs are doing is misprision, which is a federal felony. Petition your governor for the removal of your AG for unsuitability (disability) and criminal acts while acting under color of law.

    1. Nathanael

      Unfortunately, the “absolute immunity” doctrine says that Attorney Generals are above the law and can commit murder, rape and treason without being penalized for it, as long as they claim that they felt, in their sole discretion, that that was part of their job.

      I’m not really exaggerating the perniciousness of the “absolute immunity” doctrine. It’s that bad.

      1. Nathanael

        A good Constitutional Amendment would abolish the “absolute immunity” and “conditional immunity” doctrines and replace them with a doctrine of “responsibility, under which district attorneys and police are personally responsible for everything they do in their jobs.

        The Roman Republic had such a legal doctrine and it worked quite well.

  26. Jeff N

    the first time I attempted to post this article on my FB it left out the link. never seen that happen before. conspiracy?

  27. Frederick Leatherman

    The millions of homeowners injured by the banks are not getting any justice from this settlement. Instead, they are going to be impaled on it.

    I predict that very little, if any, of the $5 billion that the states “can use for legal aid services” to provide homeowners with lawyers will ever get spent for that purpose.

    I do not even see a realistic mechanism in this agreement that would prevent the banks from continuing to steal from homeowners. There does not appear to be any consequence to the banks that might deter them from future misconduct.

    Rather than deterrent consequences, I see a green light.

    Seriously, when the legal consequences for intentional fraud and theft involve no prison time for the perpetrators who profited from the scheme and the financial penalty for the intentional misconduct amounts to considerably less than a penny per dollar stolen, why would anyone think that this settlement agreement is anything other than an official blessing of predation?

    This loathsome and egregious insult will be added to the tab of injustice and just might be the proverbial straw that finally breaks the camel’s back.

    Yet another massive obamanable failure that is so vile that there are no words in the English language that are sufficient to describe it.

  28. Bravo

    Big Bank Bailout II, disguised as help for homeowners…an outrage that both the Tea Party and Occupy Movement should be sharing and voicing?

    1. Eureka Springs

      In my experience with Occupy… trying to explain this to the vast majority of folks falls on deaf ears or quickly makes listeners eyes glaze over.

      This is a link to probably the most liberal alternative Dem newspaper/blog in the “blue” state of Arkansas. I have been begging the editor Max Brantly (who is married to a federal judge) for a year or more to simply ask our Atty Gen Dustin McDaniels about this mess and to perhaps provide a link to the fine work published here at NC… to no avail. none whatsoever. And what do they do today? Simply cut and paste the AG’s press release. Also notice the few comments on this news. Had it been a Republican president or AG I guarantee you there would be the equivalent of blood splattering in the post and thread. ***crickets*** And of course this type of inevitability was more than apparent when candidate Obama rushed to out do McCain in protection of banksters in the Oval with Bushco a few weeks before the ’08 election.

      http://www.arktimes.com/ArkansasBlog/archives/2012/02/09/deal-near-on-settlement-with-banks-in-mortgage-crisis

      This AR Times report and NPR is the best liberal media 99 percent of Arkansans have.

  29. today's Democrats = yesterday's GOP, today's GOP = yesterday's ....can't think of appropriate analog

    I just “love” how Republicans criticize nearly everything that Obama does except: drone strikes, NDAA, tax cuts for the wealthy and whitewashing the finance industry.

    Talk about bipartisanship!

    1. NotTimothyGeithner

      I think you are looking for the 2nd iteration of the KKK not to be confused with the original organization or the current KKK. This is the KKK half the population of Indiana and Robert Byrd belonged to as a youth; although, they were more pro-women than the modern GOP. The GOP still has elements which would be more at home in the modern Democrats, but tribal identity is difficult to abandon.

  30. Ray

    Too bad it will always have to come to it. Pitchforks and torches,the only true incentivization, EVERYTHING is cheaper than blood

  31. brian

    just think
    if these folks had been around after the end of WWII
    we could have avoided all the time and expense of those pesky Nuremberg Trials

  32. Custerluck

    The Statute of Limitations “clock” should not begin until the date of discovery of the infraction. This means that anyone “discovering” fraud in their own mortgage documents, should have five years to prosecute.

  33. DanJS

    There needs to be an “electoral college solution” to any agreed “settlement,” if one can call it such with no investigations and only one or two indictments. That 2 or 3 highly populated states can negotiate a non-proportional “pay out” to suck away allocated moneys is absolutely wrong….

    Worse yet, the amount that 50 AG’s have “negotiated” (if you can call them negotiators when the homeowners/voters have been systematically excluded) is a paltry amount considering the massive size of this fraud.

    Finally, there is very little up-front cash involved… The banks want to “pay with accounting entries” not with cash assets.

    Call me cynical, but it looks like any cash in the Banksters coffers will be meted out to those “illustrious leaders of the banks” who have done an “excellent job” of negotiating this “non-cash,” under-funded agreement with government patsies at both state and federal levels.

    In other words, the Banksters can look forward to more massive bonuses “paid for” by the taxpayer/homeowners (delinquent or not,) and the “investors,” the already-raided pension plans of our nation….

    Face up folks! Get the facts! You are taking “punch after punch below your belt.” The immoral count of loss of fair market value, bank bailouts, enormous “bonuses,” non-investigated crimes, income tax evasion created by non-funding of “tax-favored real estate trusts,” etc. is escalating!

    The “settlement” engineered by the Banksters, Wall Street, our politicians, and judges who do not follow the law in court rooms (demand “standing” before proceeding with foreclosure suits,) will result in all of the above “fouls” being multiplied.

  34. Damian

    Yves;

    i want to congratulate you on your reporting of this whole mortgage market debacle since day one.

    You deserve a Pulitzer Prize- without a doubt –

    no other news organization has come even close to meeting your standards for facts, explaination and opinion of a very complicated and nuanced subject.

    i hope you make a big win !

    1. Ron Moss

      Remember there are two Israels, The one was led by Moses out of Egypt several thousand years ago, while the other the land of the Jews led by Netanyahu that has only had that name since 1948. They are not one and the same, The real tribes of israel migrated up through the Cascausus Mts
      into Ireland, England< Sweden, Scotland, etc etc. The royal line of David can be traced to the present Queen Elizabeth
      in Englane through King James, King Richard and the round table, etc.,etc. and Christ will return sooner than you might think.

      1. Thisson

        What on earth are you blathering about? Ireland, Sweden etc. aren’t exactly overrun with Jews, you know.

      2. ambrit

        Mr. Moss;
        Are you going on about the Joseph of Arimathea fleeing “to the West” with the sang real after the second fall of the Temple narrative? Granted, one of the “Lost Tribes” is generally agreed to have migrated across ancient Europe and settled in Provence, but, the Queen as holy repository of the Line of David? They’re a bunch of central Germans after all! Why do you think they changed the family name from Battenbourg to Montbatten after the First War?
        Take some heart though, if Darwin is right, and I suspect he generally is, then we’re all related to Yeshua benYusuf.
        Be of good cheer.

      3. Zhu Bajie

        2 Kings 17:6, King James Version: “In the ninth year of Hoshea the king of Assyria took Samaria, and carried Israel away into Assyria, and placed them in Halah and in Habor by the river of Gozan [in modern Syria], and in the cities of the Medes [in modern Iran].”

        Nothing here about Europe. British Israelism, Identity Xty are crap, and wallowing in them won’t help your economic problems.

  35. glassline

    To offer a small counterpoint to the anger and consternation expressed on this thread. One of the bottom lines here seems to be that the Obama team really wants to keep the banks from failing. As did the Bush team before it.
    It is not logical for them to pursue a policy that would seriously harm the banks at the same time they (us) are propping them up.
    I gather that many here think we would be better off if the banks failed or were nationalized. Maybe so, but my guess is that the economic and political dislocation would be devastating to vastly more people than what we have now.
    Utopian fantasists are usually convinced that from the ashes if the destroyed society a new found world based on justice and righteousness will arise. They neglect to acknowledge that the same struggles of organizing society and the tensions around power and resources are inherent in life.
    There is an undertone in the NC commentariat that we (the USA) have reached unprecedented levels of corruption. We have gone to hell in the proverbial hand basket. This is an implicit argument by glorification of the past. In what society have the elite ever ruled with egalitarian benigness? The twentieth century is a parade of monstrous injustices and calamities that dwarf the scale of this current foreclosure crisis.
    I find the tone of know it all righteous indignation expressed on this site annoying. I read it because it provides information on a factual and technical level I don’t find elsewhere.
    But there is a serious lack of perspective an abundance of projection on these comment pages. I personally would dread living in a society organized by such a crew. Witchhunts and burnings would be the rule of the day, eh. Oh this dude looks like a 1%er, he’s probably guilty of something, off with his head.
    The mortgage/foreclosure crisis was a classic bubble. The music stopped and now the messy process of who’s going to eat the losses has to be worked through.
    FWIW, if I were a seriously underwater homeowner and I could walk away that seems like a pretty plausible option, vs some token payment of $2000. This isn’t weakening the rule of law, it’s a legit approach to get out if holding some of the bag. All the parties to the fiasco who are net losers are going to pursue strategies to minimize their losses. The net winners get to laugh all the way to the bank.
    I think people here are way to quick to call for prosecution as a solution. I don’t trust prosecutors much, they are ruled by impure motivations as much as anyone else. The government has huge power to destroy lives. Look at the travesty of our current prison population! I wish this punitive mindset of “someone’s gonna pay” would be reduced. If it means some scoundrel 1%ers walk free, oh well.
    Thanks for reading.

    1. kravitz

      Then allow me to be the first to note the most obvious issue:

      The settlement insulates banks and investors, while serving homeowners to the lions and sharks.

      In some states, I suspect judges will ignore the terms and follow their own state laws on rule of law / property rights. Several already are using their own guidelines as to validity of a given case before the court. So each case is not screwed. But the settlement says fraudulent documents are okay, all is forgiven. To those who see the core concept of lying is lying – it’s an affront whether you have been foreclosed on, could be, or especially if you have no connection to the matter. Does this mean ALL fake documents are fine on the defendant’s side as well? Could this precedent find its way to the US Supreme Court?

      It’s so cute that public relations people are out spinning this as a wonderful thing. But even casual observers see the flaws.

      Now, perhaps we also have to revisit the idea of Honest Value versus Paper Value. Which is to say, what a given house should really be priced at versus other numbers pulled out of fantasyland. Should all homes be priced at their local value, and any mortgage absolutely stop at that number? Could investors and banks handle that?

      So homeowners don’t have to feel they’ve been let down. They have. Whichever side of fraudclosure they’re on.

      1. glassline

        I’m not saying I don’t find aspects of this situation disturbing: I do. In particular the whitewashing of the fraudulent practices of banks and servicers around forging documements. I’m trying to point out that with a f
        financial bubble burst if the magnitude I don’t see any solution that is practical that doesn’t require some hand waving, wink wink, and whitewashing. Rather than focusing on criminal penalties, my intuition is that we will all be better off trying to settle things. Criminal prosecution is expensive, especially against rich defendants. I think this is as it should be, the fact that we have any limits on govt power is a blessing. It’s easy to advocate for righteous justice when one is sure of their cause and that of course those they dislike are guilty. Until of course the guns are turned on them.
        Does the settlement as its outlined really legitimize forging docs as a legitimate practice going forward? My understanding is it sets a price (low) on past forgeries and doesn’t offer immunity from private litigation, just from state prosecution for the acts in the past that are covered.

        1. Susan the other

          This “housing bubble’ did not happen in a vacuum. In fact it isn’t a housing bubble at all, it is a credit bubble. It is a credit bubble because we have really bad trade agreements. And, oh yes, no jobs. Just a minor detail to you. But gosh, think about it … if you don’t have a job and you can’t get any credit how you gonna pay your mortgage, sell your house, or buy a new one? We are in this mess because we have no government. It is a joke to threaten anarchy. This is anarchy.

          1. Susan the other

            And…whatever form of government we wind up with will have to be founded on an economic system that does not rely on “productivity.”

          2. Thisson

            Almost, but not quite. We have a credit bubble not because of bad trade agreements, but because of bad (fiat) money and fractional reserve banking.

          3. ambrit

            Dear Susan the other;
            “It is a joke to threaten anarchy. This is anarchy.” You’ve got me wanting to go up in the attic and find my copy of the Sex Pistols album, “Nevermind the Bankers.”

        2. ChrisPacific

          Setting a low price on past forgeries in exchange for immunity from prosecution may indeed have the effect of legitimising forgery as a standard business practice in future. If the financial penalty is lower than the cost of doing things properly then it simply becomes a BAU activity for the banks.

          The overall effect on house prices is irrelevant in any case since nobody knows who legally owns most of them at present, so they can’t be effectively bought or sold. That won’t change unless (a) the fraud stops and (b) something is done to sort out the clouded title issues resulting from the fraud that has already taken place. It doesn’t look to me like the settlement will help with either – in fact it may have the opposite effect.

      2. OBWONdotNET

        Glassline? in all honesty you sound like one of my banker or lawyer neighbors who live in a wealth vacuum, refusing to look deeper than the nose on their faces. “I got mine and worked hard for it” Yeah, anybody who got involved in this foreclosure mess is a deadbeat and couldn’t afford that home anyway! Is that what you think Glassline? FYI the housing bust was engineered and caused by shrewd businessmen, lobbyists and politicians who worked for 40 years to change the laws which stood in their way. Check on where and how Robert Rubin, Larry Summer, Phil Gramm and Alan Greenspan made all their money. Every wonder why Sec.Treasurer Robert Rubin quit his $180,000 government job two months after he helped get the Gramm Leach Bill passed in 1999? Rubin went to work for Citigroup (formerly Citibank before the Rubin aided merger with Travelers Insurance) at a starting salary of approx. $17,000,000 per year and a place on the Board of Directors. Check out Rubins net worth today, or for that matter his sidekick Larry Summers net worth. You have a lot to learn Glassline, a whole lot to learn.

    2. sleeper

      This is the classic argument -

      The banks are needed to provide financial services / credit.

      And maybe so.

      But are the criminals in charge needed ?

    3. Klassy!

      The mortgage/foreclosure crisis was a classic bubble. The music stopped and now the messy process of who’s going to eat the losses has to be worked through.

      That was already worked through in 2008. Right now, what they’re working through is the newest way to disguise the flavor of this steaming load they’re serving us.

    4. Nathanael

      “I gather that many here think we would be better off if the banks failed or were nationalized. Maybe so, but my guess is that the economic and political dislocation would be devastating to vastly more people than what we have now.”

      Your guess is WRONG. We have proof: Sweden’s bank nationalization in the 1990s, Iceland’s allowing the banks to fail without bailouts in the recent crisis.

      Bankrupt banks do not function — they are zombies. Propping up zombie banks gets us *at best* Japan’s lost decade — without Japan’s massive social safety net, it causes much worse results, which we are seeing now.

      The correct thing to do is to kill the zombies and start new banks. FDR did this in the Great Depression, starting at least 12 new government-run banks (I haven’t counted all of them) to replace the essential banking functions of the liquidated, bankrupt private banks.

      Nationalizing the banks and replacing their management works. Liquidating the banks and starting new banks to replace their functions works. Both work very quickly and help a lot of people very quickly.

      Propping up the zombie banks does NOT work and hurts a huge number of people massively for a very long time.

  36. Simonee

    Hurray for Oklahoma! Boo for all other states, especially Harris (since I live in Calif). I am curious, since they are STILL doing the forgeries…does these mean the banks will be held accountable for new violations done in 2011 and 2012? I also heard that it does not cover any of the Freddie Mac/Fannie Mae loans – which is abou 60% of all loans.

  37. Backstop

    If recording fraudulent documents isn’t being investigated then how long will it take before “Linda Green” starts recording reconveyances?

  38. Susan the other

    We have to pretty much start over. We have to because “they” don’t get it. We have a good tradition of law to back change. Peaceful change. It is left to us to act. It always has been. So first things first: demand jobs. And as soon as the economy has a pulse, demand that your governor & legislature charter a State Bank. Then, hot on the heels of your new State Bank, petition relentlessly for a State Home Loan Corporation, the charter of which must expressly exclude any transactions with TBTF type banks even if those transactions are removed by several intervening transactions. The SHLCs should only do business with the State Bank or other institutions that are isolated from the criminal behavior we have just endured. This way we can really help out both the Federal Government and the TBTF banks by putting up our own firewall which protects them from ever becoming such hapless REITs ever again. They will rue the day. They will try to weasel their way in shamelessly. Be on your guard. This discouraging, harmful episode is a miscarriage of justice – actually an endrun around justice. But it is nothing more that one more rock in the river. We will go around it.

  39. Expat

    There is no longer even any pretence. Washington and Wall Street were edgy over the Arab Spring and the Occupy movements. When those led to nothing, they realized that they could do whatever the fuck they wanted.

    Just write a check for all your wealth and mail it directly to any top five bank of your choice. In the end, this will save you time and aggravation.

  40. Winston

    Reason #13: they are forgiving at the very least 100,000 acts of perjury and forgery (fraud against the court) related to mortgage documentation, a single incident of which would get any one of us thrown in jail for a long time.

  41. Cap'n Magic

    So this in the documents released has no meaning: “The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.”

    1. Damian

      you are missing the main point – without the “state” with the power of criminal discovery procedures on the easiest activities to prove – like robo signers and phony docs – it is much harder for an individual or institution to get to that level – many ways around the discovery process without grand jury access procedures

  42. Winston

    Great column! Even more proof of the absolute fallacy of “equal treatment under the law.” Justice’s blindfold should be removed and bundles of $100 bills should be stacked on one side of her balance scale. I’m up for a federal bill to mandate that all images and statues of her be changed in that manner to reflect reality.

    I am definitely NOT a grammar Nazi as I make all kinds of mistakes myself, but “attorney general” is not a rank. It means “general attorney.” Thus, the plural is “attorneys general” not “attorney generals.”

    1. aletheia33

      @winston: know whereof you speak. Webster’s 11th Collegiate (publishing industry’s recognized authority):

      Main Entry:attorney general
      Function:noun
      Inflected Form:plural attorneys general or attorney generals
      Date:1585

      : the chief law officer of a nation or state who represents the government in litigation and serves as its principal legal adviser

  43. Marc

    My disgust with our government knows no bounds. We’re governed by nothing but money sucking MAGGOTS. All of them.

  44. CaitlinO

    Amnesty For The Banks.

    But is the amnesty forward looking? With nothing done, perhaps nothing to be done, to clear up the horrific mess banksters have made of paper trails, they will continue to have to forge documents if they want to continue to foreclose.

    Are they forgiven for the sins they have already committed or the sins they are about to commit? Or both?

  45. Hugh

    The mortgage settlement is illustrative of several things.

    It is a prime example of kleptocracy in action. Kleptocracy is like a truck with a stuck accelerator, no breaks, and only one forward gear. It will never stop in and of itself. It will never slow down. It can only be stopped if we stop it. You can not negotiate with kleptocrats. You can not compromise with them. A vote for Romney or a vote for Obama is a vote for kleptocracy. As this settlement shows “the lesser evil” exists only in the mind. The reality is that Obama is every bit as bad as Romney and that every Republican is as bad as every Democrat.

    The settlement also shows how far the destruction of the rule of law and political corruption extends. It is not just a federal phenomenon but extends right down to state and local levels.

    And the settlement has something important to say about Obama. I have brought up the resemblance of this process with that of the healthcare debate. Obama was not a passive rider on this train. He was the engineer. This is the Obama MO. Come up with an implicit but unstated deal that completely serves the corporations and the rich behind them at the expense of the rest of us. Begin a bogus process with a lot of reformist sounding hokum, draw it out until everyone is weary to death of it, and then settle it on the original terms.

    Again we have seen him pursue this strategy on a range of issues: the healthcare debate and mortgage settlement but also the Afghanistan policy reviews that resulted in the Obama surge there, Guantanamo/Bagram/indefinite detention, Warren and the CFPB.

    Indeed all this shows something fundamental about Obama. He does the same things over and over again. So if you want to know what an Obama second term will look like, look at the first.

    Obama will continue to support and cover for the banks, corporations, and rich in every way he can. He will do next to nothing on jobs or to help homeowners. Elite wrongdoing will not be investigated or prosecuted. He will continue to pursue the War on Terror with all of its satellite wars and special operations. He will continue to erode the financial security and Constitutional protections of the 99%. He will continue to push Cass Sunstein’s agenda of broad deregulation. And he will continue his attacks on Medicare and Social Security.

    With a candidate like this, who needs a Republican? With parties like these, where is the democracy?

    I would point out that there is still time for us to come up with an alternative to the two parties’ corporatist candidates, but we need to act now. But I would say this no one in good conscience can support any Democrat or any Republican for any office, local, state, or federal.

    1. Nathanael

      You wrote: “It is a prime example of kleptocracy in action. Kleptocracy is like a truck with a stuck accelerator, no breaks, and only one forward gear. It will never stop in and of itself.”

      It will stop when it smashes into a brick wall or goes flying off a cliff.

      I strongly suspect this is how it’s going to stop.

  46. Jack Lohman

    So, the politicians use taxpayer money to bail out the banks, and they use part of it to pay themselves bonuses and another part is used for campaign bribes. How much was used for the bank and — like the loans they give to the public — is that required to be paid back? And, NOW I understand why the financial market is the largest campaign contributor to both parties!!! Give a dollar and get back $100. Good deal.

    Jack Lohman
    http://MoneyedPoliticians.net

  47. Jack Lohman

    And incidentally, this IS our political system. NOTHING is going to change until we get public funding of campaigns, and only a 100% turnover in November will do it.

  48. C

    It is telling that one of the effects this is expected to have is that it will speed up the pace of foreclosures and help banks “clear their balances” faster. While this is nice for the banks it hardly seems like this would help individual homeowners rather it will make the banks eager to move faster and, given that it grants immunity for robosigning, will likely encourage them to move faster to get robo-signed titles off their books before a suit can take place.

    See: http://www.bloomberg.com/news/2012-02-09/foreclosure-deal-to-spur-new-wave-of-u-s-home-seizures-help-heal-market.html
    and: http://www.forbes.com/sites/morganbrennan/2012/02/09/how-the-25-billion-foreclosure-settlement-will-really-affect-the-housing-market/

  49. Jim Elliot

    There are 2 primary thrusts to accepting this settlement.
    1.) Protect the status quo and the exisiting finance system (including the to bit to fail banks and MERS).
    2.) Convince at-risk homeowners to stay put and trust that things will get better. Thus spreading the problem of real estate and investment valuation out over time.
    This also protects the Status Quo.
    I’m a real estate broker and dealing with folks who are making decisions about buying or selling.
    I’m advising potential sellers to do the math regarding their situation and that real estate values are not going to be going up any time soon.
    I’m also advising sellers that they need to be doing the math for their situation and that prices are not going to be going up soon.
    I can see how this settlement may actually make things significantly worse for Sellers as lenders keep delaying foreclosures, dragging their feet on any significant mortgage modifications, resisting principle write-downs, and delaying short sales. Why shouldn’t they.
    They are now off the hook.
    I also see how this settlement will reduce the desire of legislators and voters for significant financial reform.
    Then there’s re-electing Obama.
    I bet the the big financial cheese just love him to death.
    (even if they can’t really say it)

  50. Peter

    BoA and JP Morgan Chase, certainly, had very little to do with the underlying mortgage crisis. BoA only because it was forced to acquire Countrywide by the government during the depths of the economic crisis is now subjected to government heavy-handedness. And while there were plenty of abuses that led to all our problems with mortgages, including those brought on by borrowers knowingly taking on more debt than they could ever afford and hoping to flip properties for a profit before everything collapsed, robo-signing was just a means to quicken the process of foreclosing on those leigimately far behind on their payments. While the process was improper slowing it down only means that it will take longer for housing to find a bottom from which it can begin climbing again.

    1. Damian

      appears you are a propagandist for the banksters –

      look this is a serious site authored by a party who knows the real story which is consistent systemic Bank Fraud – end to end -dedicated to the truth and the facts –

      take you nonsense and go to HP !

  51. Matthew Cohen

    You missed the biggest reason that this will have almost no impact.
    “The agreement will direct $17 billion to writing down debt to buffer about 1 million homeowners from foreclosure.”
    “The money set aside for mortgage-debt forgiveness also can be used for short sales.”

    I’m sure that the banks are spending around that on short sales annually in any case.

    All this means is that when the bank takes your house, instead of foreclosing, they forgive any loss when they sell your house. You’re still out of the house although you avoid having a foreclosure on your record.

  52. DanJS

    Today I was listening to Rush Limbaugh on the radio. As someone who has respected him for about 95% of his “positions,” I found myself very disappointed.

    Maybe it is because he spends 90% or more of his time with “successful people,” including “banker-types,” “Wall-Streeters,” and the “political class,” but it is evident from his pontifications that he has not done his homework.

    Rush has evidently bought into the narrative of “dead-beat homeowners” who “only want a free house” and thinks that the “robo-signers” were little more than “bank employees” who were erroneously using “bad forms” — No reason to re-create whole financial transactions for “simple clerical errors.”

    He has no idea that the crimes committed by the banks are forgery, false notarizations, creating fraudulent documents, false swearings to facts in court filings, etc. He seems to think the signatures were signed by “auto-pens” and not real people who were not employees of the banks nor holders of positions of Vice President of firms where they did not work.

    He knows nothing of the shambles our nation’s land records are in….. despite his being a champion of private property rights.

    Rush has no idea of the massive evasion of legally due fees and taxes “stolen” by MERS and the banks. They did this by “saving money for ‘unnecessary fees’ ” at the local level nearest the properties themselves.

    Else Rush would bemoan the excess taxes being shifted to honest taxpayers in every county of this nation…. If the fees and taxes associated with legal transfers of real estate are not paid by those who owe them (the banks,) the tax commissioners of every county must work with the governing authorities to “make up the difference” by assessing more fees and/or taxes or changing the millage rates on all other existing real estate.

    Does Rush know how much it will cost to mitigate the hundreds of millions of fraudulent “assignments” of real estate to “tax-favored real estate trusts” created to enable the process of turning mortgages into “sliced and diced” “bond-like securities”? Or that the “trusts were never funded,” thereby destroying the honest avoidance of income taxes?

    Maybe he owns some of these flaky “securities” and is thereby one of the “victimized” investors?

    Who will pay to restore our sacred land records if not the banks who destroyed them?

    As an advocate of “just laws,” Rush seems not to know of the concept of judges determining “legal standing” in courtrooms before continuing cases.

    This concept is no more or less “arcane” than the Constitutional requirement that the US President be a “natural born citizen,” a person born in the US whose parents are both US Citizens at the time of the “prospective President’s birth.”

    Where is his considered emphasis on the “illegal takings” aspect of land ownership…..?

    Does he know that in more than 23 states, banks successfully lobbied for laws to “gease the skids for residential foreclosures” and legislated “non-judicial foreclosure procedures” that herd “delinquent” homeowners to the courthouse steps without giving them a “day in court” to address disputed accountings of what has been paid and what was not paid… by both the mortgage servicers and the “borrowers”?

    Doesn’t that smack of the kind of courtrooms staffed with “rubber stamping judges” that Rush abhors?

    In the cases of millions of foreclosed homeowners, the legal concept of “eminent domain” is not even an issue… but their rights to personal property is no less sacrosanct than that of a property owner whose land is in danger of being confiscated by a government authority.

    Even if a case for “eminent domain” could be made, it has not been…. Nor, as Rush has ably pointed out, should that “taking” be done for the benefit of “private parties” in favor of the rightful owner currently living in the property…

    In other words “not the Government… Nor the Banks who just ‘Want a free house!’ ”

    Does Rush only see the portion of this massive iceberg of fraud pointed out to him by his peers on the bridge of the financial vessel upon which the hopes and dreams of Americans are traveling?

    Does he not know that the “iceberg below” reduced the retirement savings of hundreds of millions of Americans’ whose Pension Fund managers invested heavily in the “safe” “Mortgage-Backed Securities” the value of which dropped 30-40%?

    He either has no perception of the portion of this dangerous Ponzi scheme that lies beneath the surface in a sea that has been quietened by the mass media…. for political purposes….. or Rush has been “captured” and the “voice behind the curtain” is that of a Communist infiltrator.

    Quite frankly, I’m astounded that this normally astute pundit has such obvious cataracts blinding his well-earned reputation for genius. I can’t quite get my arms around the idea that he may be “on board” with the “captains of finance” who are purposely steering the US into financial catastrophe.

    Has Rush not heard the shout “Abandon ship!”? We hit the iceberg nearly 5 years ago and the “Bailout and Stimulus Lifeboats” Obama sent are useless! Is Rush still standing on the deck with the “stewards of our nation” who are still comforting themselves with the bromide “The ship we made is strong… it will not sink!”

    Rush’s “favorability ratio” with me has plumetted to below 80%!

    1. OBWONdotNET

      Your comments about Rush Limbaugh have to go down as one of, if not the best blogs I’ve read in my life. It was as if you were reading my own mind on the subject. Yes, I too was a conservative RUSH, HANNITY etc follower until I began researching their distorted facts, especially about the housing crisis and foreclosure. THE STANDARD CONSERVATIVE MANTRA regarding the housing crisis is that the banks were FORCED to lend money to jobless black people who had no money or credit ratings. Rush and Hannity point to the Community Redevelopment Act of 1977 (Jimmy Carter) which was aggravated by Janet Reno during the Clinton years. None of the conservative pundits ever mention ENRON inspired Senator Gramm whose GRAMM, LEACH, BLILEY ACT of 1999 opened the door wide open for all the graft and corruption leading up to the Housing Crisis, the ongoing Recession, the job and income losses, and of course the resulting foreclosures.
      Mutual corruption by both key Republican and Democrat figures fueled the economic collapse and they are working together in order to keeping feeding at the public trough.

    2. Nathanael

      Rush was always owned by the bankers (and the oil companies) — what happened is that you finally ran across something where you knew from outside sources what was really going on, and you noticed.

      It’s hard to “look back” at radio, but if you look back, you’re going to find that he’s been parroting party-line stuff for large corporate CEOs *all along*.

      Why? Well, that’s what they pay him to do. I have no idea what he’d say if he were actually independent, but it’s very clear that as of this point he has a radio show only at the sufferance of Clear Channel, a corporation whose bosses are entirely tied in with Big Finance.

      Glad you noticed.

  53. freedomny

    This “settlement” is so bad and upsetting on so many different levels..I almost can’t respond.

    What has happended to our country when the rules of law, fairness and accountability only extend to the “majority” of Americans…and not to those “connected” and who are a “minority”.

    Banker supporting OWS and ethical capitalism

  54. mike

    This was a case of the banksters getting preferential treatment, again, in order to continue to rob the taxpayer. AGs, such as the bankster advocate, Schneiderman, sold the rule of law for a few dollars. It’s truly disturbing that banksters will not suffer any consequences of their crimes. Robo fraud, liar loans, and other devious and criminal acts will be rewarded. There is really no sense in honoring contracts or for paying a price for crimes. The new mantra is rob before you get robbed. Obama and his crony bankster buddies are again laughing all the way to the bank and have just be awarded get out of jail free card by the govt. A sad day for America and a tragic day for the rule of law.

  55. John

    Watching the state AGs and Justice on CSPAN take their turns annouching how wonderful this is for the American home owner.

    The lies just flow out of their mouths like liquid gold.

  56. davboz

    So,…let’s see….we fine the “banks” many, many billions through the nationalist/communist aspect of our system, which really means fining tens of millions of bank customers along with IRA and fundholders through the remaining part of the free republic as founded. We don’t name anyone for this “crime” while the smoke and mirrors keep it hidden that it is governmental policy behind the whole problem. Nationalization of the housing industry has only caused private enterprise to struggle to keep up, and compete with the dominant and predatory nature of the government.

  57. Jake Tamarkin

    You should probably update your analysis now that the facts are in, including, for example, that not only does this leave victims’ civil claims intact (as well as all criminal liability), but also dedicates several billion to legal aid to support the pursuit of such claims.

  58. aletheia33

    FWIW and FYI, i forwarded yves’s list here to the relevant assistant AG in my state (to whom i’ve forwarded several of yves’s articles recently), with the following comment:

    From: [moi]
    Sent: Thursday, February 09, 2012 6:07 PM
    To: XXX
    Subject: sad.

    XXX,

    the below statement, by yves smith of the highly regarded financial blog naked capitalism, expresses my sentiments regarding the mortgage settlement, and [my AG's] decision to sign it.

    he has lost my vote forever.
    for worse are what our nation and victims have lost: the abilty to rely on attorneys general to see justice done for those who cannot defend themselves.

    i would appreciate it if you could forward this email to him.
    i expect it will be the last time that i will inconvenience you with this request.

    thank you. i much appreciate the efforts that i have no doubt your office has made in good faith.

    his response this morning:

    [my name]—I’ll pass your message on. In truth, Mr. Smith ignores the important claims that were not released by the settlement (criminal, private, MERS, securitization, etc.); the continuing ability of individual homeowners to raise robo-signing and chain of title defenses in their own cases; the focus of refi and other borrower relief on loans held by the five banks themselves; the strength of the mechanisms established by the settlement (a well-respected state banking regulator as monitor, and AGs’ authority to enforce the terms in federal court); etc. But of course he’s entitled to his own opinion.

    In the end, the fact that all of the states but Oklahoma—including California and New York—joined the settlement is a clear indication that the final agreement will bring substantial relief to American homeowners, drastically reform the servicing industry, and leave unreleased key claims that federal and state authorities can be expected to pursue in the months to come.

    As always, thanks for weighing in.

    XXXXX
    Assistant Attorney General

  59. Mary

    Its all a joke. My mother lost her home in 2007 and got a package in the mail this past December… an independent company is researching her loan for possible action and payment. The package is about 10 pages and asks all kinds of specific information. Some of the information is not possible to recover since the loan was handled by a broker, the broker was immediately unavailable after the close, the loan was sold from CTX to Wells Fargo and then sold again. There is no way most people will be able to come up with the details needed to actually receive any of the funds allotted. Its a JOKE.

  60. wilemon

    am

    “Forgery” implies that someone falsly created a document to extract money that they were otherwise not entitled to.That is not what happened here.The banks used robosigning instead of real signatures to complete foreclosure documents against borrowerers who had not paid their mortgages.In other words no one got anything they were not entitled to.I wonder how the author would react if his uncle left him a million dollars but then found out the will was void because his uncle had used a robosigner……all that really happened here was that the employees and shareholders of the banks are going to fund a payment to people who were not actually financially harmed by anything done by the banks.

    Reply

    1. reslez

      Then explain how people who do not have mortgages were foreclosed.

      You are wrong on the facts, shill. This is outright fraud.

      Banks use robosigners because it is cheaper than getting the documentation correct. At a price of $1500 per home, the rational business decision is to break the law and buy forgiveness later.

    2. Karen

      To my mind, either you believe in the rule of law or you don’t. EVERYONE who breaks the law should face the consequences. Independent of whether the homeowner has failed to make payments, if the servicer BREAKS THE LAW, he/she/they cannot be allowed to get away with that.

      If they ARE allowed to get away with it, it would only be fair that I should be able to break some law of my choosing and get off scot free. Ditto you. Ditto absolutely everyone. Of course, that way lies anarchy (e.g. Somalia), doesn’t it.

    3. Nathanael

      In addition to the banks trying to steal the homes of people who didn’t have mortgages (using forged documents), banks routinely attempted to foreclose on homes where the money was owed to a DIFFERENT bank (using forged documents). This is fraud, both ways.

  61. c smith

    MERS has no “reverse” gear. It works great when going forward (i.e.; a mortgage market with rising home prices and few defaults) but freezes solid when you try to back up.

      1. kravitz

        promises, promises, all kindsa promises…..

        I’m feeling so Dionne and Burt about now. How about you?

  62. Rumplemeister

    Wake up America! Our once righteous country is in the shitter. All of our governments are CORRUPT. You and I are are the targets of the richly wicked, or if you prefer, the wickedly rich.

    1. Judson Witham

      NOT ME BROTHER I’ve been fighting these SOBs for 30 years In Fact … I agree with you so many Americans are full of Manure it’s CRAZY ….. You are RIGHT !

  63. franc black

    I can’t believe what a bunch of dumb pussies you Americans are. You are being robbed … your children are being robbed … their children are being robbed … etc

    Your country sucks, but you go and bomb other little weak countries and not deal with your domestic messes. Unreal.

  64. Judson Witham

    FACT IS The Entire SO CALLED Settlement is CRAP. The actual payees are the People Who Have Been DUPED into their ridiculous WAY WAY WAY Over-inflated Loans the tax payers and those3 who have been ROBBED. <—<<<

    So have you actually seen the actual settlement agreement THE CONTRACT TO SETTLE that The President and Eric Holder and 50 State AGs and all the News Media are RAVING ABOUT ?? I mean the actual Settlement Not The BS They Claim It Is BUT The Settlement Itself ??? <—<<< Please Share And Repost … Where's The Friggin Agreement ?????

    Settle Agreements Are Cast In Stone and Then Presented To Courts for Judicial Approval …. The Tobacco Settlement was far far far larger …. I SAY HELL NO to this Settlement ABSOLUTELY NO. The Victims Need To File INTERVENTIONS under Rule 24 of the Federal Ruldes of Court and Per State Intervention Rules. The Bankster Cartel MUST BE STOPPED HERE if you don't stop them here This CRAP will continue and the People Will In The End Pay The Bill … STOP THE BANKSTERS use Rule 24 see http://www.facebook.com/groups/342722552426562/

  65. Ibelieveinmiracles

    Why? Why is our government allowing this to be done to us? This is so painfully,antagonizing. WHY!

    When the thief has been discovered, has stolen something, he must not only return what he stole, but he must give back seven times as much. Not only that, he must give (all that he has) his whole house away if necessary to pay back the fines he owes.

    Vengeance is mine saith the Lord, I shall repay!

    So shall My word be that goes forth from My mouth; It shall not return to Me void, But it shall accomplish what I please, And it shall prosper in the thing for which
    I sent it.

  66. Martin Marmolejo

    Governments that do not protect all of its people from bank thugs is a government not worth having. People, when they invest in homes, should feel safe in their purchase and investment. When banks play loose and investments go bad, if innocent people trying to make a better life for themselves suffer, this is tragic.

    There are governments in the world doing a much better job for their people. Singapore happens to be one. I’ve written a comparison blog post on how Singapore compares to the Congo that you can read here: http://bit.ly/AlxVYx

    Unfortunately, I see the U.S. government moving more in the direction of the Congo where corruption is rampant and resources are wasted.

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