California Attorney General Harris Now Signaling Willingness to Rejoin Foreclosure Talks

Dave Dayen saw this one coming. When Kamala Harris said she was not willing to participate in the so called “50 state” attorney general mortgage negotiations, he recognized Harris’ refusal to join the New York attorney general Schneiderman’s group as a bad sign. Note that the state of the talks is persistently misreported in the MSM as being only Schneiderman, when Delaware, Massachusetts, Kentucky, Nevada, and Minnesota are also out of the talks.

It is a safe bet that the Democratic party has been muscling Harris since her defection last week. The Administration is desperate to have the AGs provide legitimacy to their planned “settlement as coverup” strategy. Not that it will be that effective in the end. The threat of the two states where all securitization trusts are domiciled (New York and Delaware) has the potential to undermine the value of any settlement, particularly since New York has the potent weapon of the Martin Act. Merely those two states moving forward (and remember, it is more than those two states) has the potential to be extremely embarrassing to the Administration and the AGs who continue to serve as human shields for the Administration.

But the belief appears to be that even with this group pushing forward, nothing all that earth shattering will happen prior to the 2012 elections. That is an awfully risky bet. The filings this year by Schneiderman, Beau Biden, and Catherine Masto alone have provided ample evidence of bank misconduct, and also provide ideas and cover for private sector litigants (particularly investors, who are a very conservative bunch). And any settlement will not restrict the rights of private plaintiffs, such as aggrieved homeowners, to act.

Note that Harris’ body language is ambiguous: she has only said she is would take a better deal from the banks if she offered one, which merely means she is willing to negotiate with them separately. So narrowly, this is just a reiteration of her position as of last week. But this reaffirmation also opens the door to her rejoining the talks if the banks make meaningful movement, and Reuters concurs with this reading. I don’t see this happening (and neither does Massachusetts AG Martha Coakley, as quoted in the Wall Street Journal account).

From the Journal:

California Attorney General Kamala Harris, who dropped out last week from talks aimed at wringing a huge settlement from banks accused of foreclosure abuses, remains open to a deal if it involves “a stronger proposal” from lenders, according to a person familiar with the situation….

Negotiators believe they can still reach a broad-based settlement if enough states sign on and are able to lure back others that have balked at certain terms…

But no agreement has been reached on some of the most divisive issues, such as the extent to which banks should be released from additional legal claims.

Yves here. This is why whether Harris is in or out ultimately will not matter. There is no bargaining overlap between what the banks want (a big release) and what a fair number of the AGs are willing to give (a narrow release). Back to the article:

Ms. Harris’s decision to walk away from the negotiating table last week has contributed to a sense of urgency in the negotiations, said one person familiar with the banks’ thinking…

Obama administration officials have worked behind the scenes for months to try to keep the process on track. Some senior officials view a deal as an opportunity to widen the use of principal reductions for underwater mortgages.

Yves here. The principal reductions talk is PR. We’ve done the math before, and the dollars that the assembled parties are likely to get will not allow for deep enough mods to enough homeowners. They’d be better off applying it to writedowns of seconds and mortgage counseling (or to Adam Levitin’s impish suggestion, funding Legal Aid).

The Administration seems determined to keep up the belief that a settlement is imminent, which has been the party line since January. Penelope was able to keep her suitors at bay for 20 years by, among other things, dragging out the weaving of her Odysseus’ burial shroud. I don’t think the Administration will prove to be that resourceful.

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  1. Malmo

    Obama put his cards on the table at his news conference yesterday when he stated that banks did not commit criminal acts but rather immoral ones, and therefore immoral conduct isn’t against the law. In other words the justice dept is disinterested in prosecuting, and by extension–in the end–so will be most of, if not all, of the states.

    1. beowulf

      And that’s great news for Bradley Manning! Oh wait, moral conduct is still against the law. Sorry, carry on.

      1. Doug Terpstra

        Obama: “a lot of that stuff wasn’t necessarily illegal” . . . right, not necessarily, so why attempt to prosecute or even investigate a single instance!? We can start illegal wars, keep suspected terrorists in prison in Gitmo for life without trial, assassinate US citizens without court scrutiny, or torture whistleblowers with impunity, but we can’t be bothered to inconvenience savvy businessmen. “That’s part of the free market system.”

        “Your winnings,sir!”

    2. TGS

      It was apparent that Obama hadn’t conducted due diligence on stacks of subprime loan files, let alone Alt-A and prime loans from the bubble, when he made that comment. Anyone who’s analyzed defaulted loans can go right to the broken laws in the file.

      Most Alt-A was fraudulent when it came to over-stating incomes on applications (bank fraud). The California housing bubble of 05-07 was fueled by over-stated income Interest-Only and Option ARM loans, primarily from Countrywide and WAMU. It was common to see someone earning $75,000/yr who had an $800,000 NegAM Option ARM, and was absolutely clueless as to what kind of loan they were in.

      There’s overwhelming evidence in 05-07 vintage loans of everything a serious AG would need to go after the banks. They encouraged bank fraud (against themselves) by emphasizing stated income loans. I should say, passed on the cost of bank fraud to the institutional investors of their faulty MBS.

    3. R Foreman

      Immoral or criminal, the banks will be zombies for the next 50 years while they try to recapitalize. Meanwhile there will be no lending, and GDP will collapse… brilliant! Create a bunch of money-sucking pigs that don’t do anything to earn their keep.

    4. Sharon

      Obama disgusts me. I can’t even stand to listen to him talk anymore. I know he’s better than the alternative blah, blah but secretly I long for Elizabeth Warren to run for President or Obama to announce his retirement.

    1. brian

      “part of the Brown machine”

      that’s putting it poliely
      she was Willie’s short time girlfriend when he started running for mayor
      he needed to win back female black voters in sf who were miffed with his taste for white women over the years in sacto
      after he won she got dumped
      got to be sf’s da and was a total disaster
      but totally politically ambitious
      definately sees herself as guv or senator
      early obama supporter
      as a life long dem i’d never vote for her

      1. Jeff

        As a San Francisco resident, I agree with your rather flippant observation. Harris is part of the category
        check off candidates wing of the lick spittle
        Democratic Party, along with the other empty suit of
        clothes, Gavin Newsom.

        Harris was a disgrace as district attorney, she has
        done nothing as attorney general…there was a glimmer
        of hope when I read that she had walked away from the
        big bank sellout, but now we see her true colors.

        “Harris takes heat for contributions from convicted felon
        More drama in the Attorney General race this week — a few weeks after questions were raised about some of GOP nominee Steve Cooley’s past campaign contributions, Democratic hopeful Kamala Harris is taking fire for a similar situation.

        A news story today details how Harris accepted $1,250 in 2006 from Norman Hsu, a big Democratic donor who made national headlines in 2007 when it was revealed that he had been on the lam for more than a decade for grand theft charges in California. He was sentenced to 24 years in prison for campaign finance violations and fraud related to a Ponzi scheme.”

    2. psychohistorian

      The current drunk is faith based everything in the global inherited rich and look at where they have brought us.

  2. sunset

    Harris wants to be governor and I doubt she would do anything to upset the establishment (she got political start as a member of the Brown machine).

    1. Jeff

      Make that WILLIE Brown, not to be confused with Governor Jerry Brown who wouldn’t be caught in the same room
      with Her Disgracefulness.

  3. chris

    Well you can never expect a politician to do anything that is considered the right thing if they are going to lose access to money provided by corporate America. If the CA AG rejoins the talks every single protester in the US should end up in CA and shut down LA.

    Rick Santorum call the 99% loony and fringe this morning on CNBC. He was so clueless and had on idea what he was talking about.
    See more on the with this link

  4. John Drake

    Matt Taibbi nails this in Rolling Stone today. To whit: “Amidst all the bad news coming out of Wall Street and the economy, here’s something good: California has backed out of the talks for the long-awaited foreclosure settlement, now making it far from likely that the so-called “Attorneys General” deal will happen anytime soon.

    California Attorney General Kamala Harris sent a letter to state and federal regulators explaining that she pulled out because the proposed settlement amount for banks guilty of bad securitization practices leading up to the mortgage crisis – said to be in the $20 billion range – was too small. From Business Week:

    Harris says in a letter to state and federal negotiators that the pending settlement is “inadequate” and gives bank officials too much immunity.

    I’m convinced that the deal will eventually go through, however, after some further concessions are made. Certainly the absence of both New York (whose Attorney General Eric Schneiderman gamely started this mess by refusing to sign on or abandon his own investigation into corrupt securitization practices) and California will make it difficult for the banks to do any kind of a deal. But there is such an awesome amount of political will to get this deal done in Washington that it almost has to happen before the presidential election season really gets going.

    If it does get done, expect a great deal of public debate over whether or not the size of the settlement was sufficient. Did the banks pay enough? Should they have paid ten billion more? Twenty? Even I engaged in a little bit of that some weeks ago.

    But if and when that debate takes place, it will actually obscure the real issue, because this settlement is not about getting money from the banks. The deal being contemplated is actually the opposite: a giant bailout.

    In fact, any federal foreclosure settlement along the lines of what’s been proposed will amount to a last round of post-2008-crisis bailouts. I talked to one foreclosure activist over the weekend who put it this way: “[The AG settlement] will be a bigger bailout than TARP.”

    How? The math actually makes a hell of a lot of sense, when you look at it closely.

    Any foreclosure settlement will allow the banks to pay one relatively small bill to cover all of their legal liabilities stemming from the monstrous frauds they all practiced in the years leading up to the 2008 crash (and even afterward), when they all schemed to create great masses of dicey/junk subprime loans and then disguise them as AAA-rated paper for sale to big private investors and institutions like state pension funds and union funds.

    To recap the crime: the banks lent money to firms like Countrywide, who in turn created billions in dicey loans, who then sold them back to the banks, who chopped them up and sold them to, among other things, your state’s worker retirement funds.

    So this is bankers from Deutsche and Goldman and Bank of America essentially stealing the retirement nest eggs of firemen, teachers, cops, and other actors, as well as the investment monies of foreigners and hedge fund managers. To repeat: this was Wall Street hotshots stealing money from old ladies.

    Along the road to this systematic thievery, a great many other, sometimes smaller offenses were committed. One involved the use of the MERS electronic registration system. By law, banks were supposed to register with county-level offices in each state every time they sold or resold a mortgage, and pay fees each time.

    But they didn’t, instead registering with the private deed-transfer agency MERS, allowing them to systematically, and illegally, bypass local taxes.

    So any “AG settlement” might allow the banks to avoid legal damages being sought from three different set of enraged creditors: the public institutions who invested in these sham securities, the private investors who did the same, and the localities who were cheated out of their taxes.

    Let’s take a look at each of those three categories.

    As far as private investors go, we’ve already had one lawsuit directed at Bank of America, over losses linked to purchases of bad MBS (mostly from Countrywide mortgages), which resulted in an $8.5 billion settlement.

    That one settlement, covering 22 mostly private plaintiffs, cost one bank, Bank of America, nearly half the size of the entire proposed AG settlement. This is from the Times story about that deal, in June:

    In a research note, Paul Miller of FBR Capital Markets projected that Bank of America could face a total of $25 billion of losses from the soured mortgages, the most of any of the major banks.

    So a private analyst this summer was estimating that just one bank, Bank of America, could face more in damages than the Obama administration and the AGs are now trying to “wrest” from all the major banks, combined, for all their liabilities.

    Just a few days ago, news of more such suits came in. An Irish company called Sealink Funding is suing Chase and Bank of America, seeking $4.5 billion combined in connection to losses in mortgage-backed securities sold to them by those banks. Meanwhile, a German bank, Landesbank Baden-Wurttemberg, is suing Chase for an additional $500 million in losses.

    These huge amounts – a few billion here, a half a billion there – are coming from single companies, directed at single banks. And think about the Bank of America settlement for $8.5 billion: what’s the usual payoff in a lawsuit settlement? Ten cents on the dollar? Five?

    In fact, the settlement amount in that case was just 2% of the face value of the loans when they were securitized ($424 billion), and represented just 4% of the principal still outstanding ($221 billion).

    Why do those figures matter? Because the way these securitizations were structured, legally, Bank of America is obligated to buy back any loans that were sold fraudulently at face value – that is part of the legal language in the “pooling and servicing agreements” under which all of these mortgages were pooled.

    So minus a settlement, Bank of America – one bank — had a potential liability of $424 billion just from its Countrywide holdings! And it got off for $8.5 billion, a major victory.

    All of which puts in perspective the preposterously small size of the proposed AG settlement. $20 billion would be a lousy number if we were just talking about Bank of America. But all the big banks combined?

    And that just covers legal exposure to private investors. How about public agencies and institutions? Well, just recently, the Federal Housing Finance Agency sued a group of the major banks (Chase, Barclay’s, and Citi, among others) over losses connected with, again, bad MBS.

    This suit covers sales to the two GSEs, Fannie Mae and Freddie Mac, and they’re seeking $200 billion. The’re asking for $25 billion from Merrill Lynch (which is now owned by Bank of America) and $6 billion from Bank of America proper, meaning they’re claiming $30 billion in damages from just one bank.

    This, again, puts into perspective the idea of a collective $20 billion settlement covering all the major banks.

    But wait, there’s more. The FHFA lawsuit only covers the GSEs. How about state pension funds?

    Well, over the summer, Bank of America caught another lawsuit, when a group of union and state pension funds sued Merrill Lynch for misleading them in a $16.5 offering of, you guessed it, MBS certificates. The suit included claims from Mississippi and Los Angeles County employees, the Connecticut Carpenters’ Annuity Fund, and others.

    So again, just with those two lawsuits, one bank, Bank of America, is facing nearly $50 billion in damages. And this doesn’t even cover all of the other states and localities that were wiped out by sales of fraudulently-conceived MBS. California’s state pension fund, CalPERS, lost $100 billion all by itself between 2008 and 2009, largely due to plummeting MBS values.

    That would explain why Kamala Harris had to pull out of the settlement talks: she must have realized that going through the courts, her state could probably recover far more than whatever California’s share of $20 billion would have been. It’s incredible that other states have not already come to the same conclusion.

    Lastly, of course, there is the matter of lost taxes. To date, most of the lawsuits filed by counties over unpaid fees have been directed at MERS, the private electronic registry company through which the banks “legally transferred” all of these mortgage deeds.

    For example, my old home county of Essex County, Massachusetts, recently sued MERS for $22 million in unpaid fees. Dallas County, Texas, lost even more, suing MERS and claiming it lost between $50 and $100 million in fees.

    You can do the math. That’s two counties – not states, but counties – claiming they lost a total of at least $70 million. And yes, they’re suing MERS, but ultimately the real liability probably rests with the banks, who would probably have been paying those fees had MERS not existed.

    Will any AG settlement cover that potential liability? I have no idea. But if the settlement is broad enough, and covers all activities connected with securitization, it might very well cover these unpaid fees.

    How many hundreds of millions in fees will the states lose if that deal goes through? Has anyone even asked? Have any county officials even been consulted?

    The point of all of this is, if you add up all of the MBS-related liability out there, the banks as it stands are facing an Armageddon of claims from all sides. It can’t possibly be less than a trillion dollars, and it’s probably much, much more.

    But the Obama administration’s current plan is to let them all walk after paying a few shekels apiece into a $20 billion kitty.

    Certainly, of course, one can see the logic of a universal deal that avoids the probable end result minus a federal settlement – bankruptcy for one or more of the big “TBTF” companies (especially Bank of America). After all, if all the suits go through, then the final settlement for most of those defrauded parties will be squat or close to it, since there won’ tbe any money left to recover. So if they can come up with a deal that satisfies plaintiffs at least in part and keeps the banks solvent, I suppose that might be a good thing.

    But the negotiators really have three actors they have to consider: the banks, the investors, and the homeowners, who of course were also victims of this artificial bubble.

    The current proposed deal is a huge giveaway to the banks, a major shafting to most of the investors, and would probably give homeowners either next to nothing or some cosmetic reward, i.e. a little bit of principal forgiveness, counseling, etc.

    If the Obama administration was serious about helping actual human beings through this settlement, then it would be fighting for homeowners to get the same bailout the banks would get. If the banks are getting a trillion or more dollars of legal immunity, why shouldn’t homeowners get that much debt forgiveness? Or, half that much? A quarter?

    It’s encouraging that California and New York have already come to this conclusion. Hopefully, down the road, there will be a settlement, but one that’s fair to everyone. It’s probably up to the states to stop this TARP-on-crack of a deal.”

    To screw the masses or not to screw. That is the question…

    1. Susan the other

      So how did the banks become so bankrupt? They collected huge sums from pension funds, the private investors. Have the banks already lost their revenues by gambling on derivatives? They and the Fed are keeping the stock market propped up, but I don’t think that accounts for all the missing loot. We’ve heard it is stashed offshore somewhere. And that it is the shadow banking world of derivatives, i.e. we can’t look at those books. Ah, yes, immoral but not illegal. How on earth can there be an equitable solution to this mess?

      1. Yearning to Learn

        So how did the banks become so bankrupt?

        Here’s one reason:
        Bonus pool for Wall St 2000-2009 was $209.3 Billion.

        but the real reason:


        $100B levered x 10 = $1,000B. (this includes $100B from the bank and $900B borrowed)

        20% gain in one year = $1,000B x 0.2 =$200B.

        So now the firm has $1,000 B PLUS $200B or $1200B
        this includes the original $100B from the bank
        Plus te $200B in “profit
        and the $900B borrowed.

        Take that $200B profit and give out half in bonuses, etc…

        $1200B (-) $100B leaves $1100B.
        This includes:
        The $100B original
        the remaining $100B in profit
        $900B borrowings

        (and $100B is in Banker CEO pockets)


        But “unfortunately:
        what if there is a 20% loss AFTER the original 20% gain?

        $1100 x 0.8 = $880B.


        Thus this bank has:
        original $100B wiped out
        $900B owed, and only $880B on paper. (thus underwater!).

        it is of course worse than this, because as this happens the banks must sell assets which leads to bigger losses and fear etc.

        hopefully that makes sense.

      2. psychohistorian

        One would think that if trials were held at the Hague the current international legal interpretation of these peoples actions would fail the moral turpitude test.

        Again, the words from a Blues song from the 30’s that I heard recently keeps coming back to me:

        You may call me crazy but at least I know right from wrong.

        That, IMO, is all the OccupyXX movement needs to say ……..STRONGLY.

    2. jo6pac

      Yep, nothing for Main Street once again but then is anyone suprised? Harris just another criminal in office.

      1. Yves Smith Post author

        The math is offered above is bullshit.

        Catherine Masto of Nevada got $57,000 per homeowner (yes, I do not have the decimal point wrong) from Morgan Stanley, which owns a servicer, Saxon Mortgage. That is versus an average home price of $119,000 in Las Vegas and $199,000 in Reno.

        Per Dave Dayen:

        So if you look at $57,000 per homeowner in the Morgan Stanley settlement and apply it to BofA, you get a number that probably ranges into the billions, and that’s just one small state.

        That’s the reward for doing investigations before settling. Anyone who knows anything about prosecutions or negotiations (which includes the overwhelming majority of lawyers) would NEVER endorse settling without investigating. Anyone who advocates this strategy either does not know what they are talking about or is a shill.

  5. joel3000

    Harris is a noodle.

    I, a CA resident, was surprised to see she was bucking the agreement. Now it looks like it was just for show.

    1. Doug Terpstra

      It’s called extortion and soliciting bribes. Tom Miller did it; all politicians do it. Her campaign chest now runneth over.

      As Obama would say with a shrug, it’s not “necessarily illegal . . . just immoral or inappropriate or reckless.” So we should do our utmost to settle this whole thing quietly and continue ‘free’ market business as usual.

  6. Alex

    I just used the CA Attorney General’s website to send an email stating that I was pleased that she had pulled out of the 50-state settlement talks, and that I’d love to see her persecute the banks for their misdeeds. I don’t know if it will do any good, but I do reside in CA so hopefully my opinion will count for something, however small.

      1. psychohistorian

        Didn’t it used to be and can we please return to the time when what we pay these folks is enough incentive, along with the ego enhancement, to work for the highest and best long term public benefit while they are there?

        1. ambrit

          Dear psychohistorian;
          Yep, there was once a ‘Golden Age.’ What we’re seeing here are the results of the re-Financialization of Politics, American Style.

  7. Dan G

    The banking system is immoral, but legal, since they did away with Glass Steagle.
    Entering wars without a vote from congress is immoral and illegal, but Obummer does what he is told anyways.
    Selling mortgages to people that can’t afford it, and then blowing up their interest rate is immoral; selling it to investors in tranches, and then doing improper papaer work is immoral and illegal.
    Letting a Pozi scheme, crony capitalisttic, oligarchial goverment/banking/military/healthcare…etc just plain sucks, and it is not good for America.

  8. Taylor

    Look what she left behind: Very subject to influence:

    *2010 City Budgets:

    SF: $6.48 Billion / 808,977 citizens = $8010/capita
    LA: $6.73 Billion / 4,060,000 citizens = $1658/capita
    SD: $2.85 Billion / 1,395,132 citizens = $2043/capita
    CHI: $6.11 Billion / 2,853,114 citizens = $2142/capita

    Of any major city in the U.S.* San Francisco pays the most per capita to fund our government and we get a 5-year backlog in the crime lab.

    San Francisco Superior Court Judge Anne-Christine Massullo said prosecutors “at the highest levels of the district attorney’s office knew that Crime Lab Technician Madden was not a dependable witness at trial and there were serious concerns regarding the crime lab.”

    “The drug lab scandal has already led Harris’ office to drop hundreds of cases before they came to trial. The total was 800 cases by mid-May, but despite repeated requests, Harris’ office has not provided an updated tally….”


  9. pws

    “The sound of the bell of Jetavana echoes the impermanence of all things.

    The hue of the flowers of the teak-tree declares that they who flourish must be brought low.

    Yea, the proud ones are but for a moment, like an evening dream in springtime.

    The mighty are destroyed at the last, they are but as the dust before the wind.” — Opening lines, Tales of the Heike

  10. Piggybankblog

    When I think of Brian Moynihan or Barabra Desoer, I think of the song by John Lennon called Piggies:
    So if it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

    BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.
    Have you seen the little piggies
    Crawling in the dirt
    And for all the little piggies
    Life is getting worse
    Always having dirt to play around in.
    Have you seen the bigger piggies
    In their starched white shirts
    You will find the bigger piggies
    Stirring up the dirt
    Always have clean shirts to play around in.
    In their ties with all their backing
    They don’t care what goes on around
    In their eyes there’s something lacking
    What they need’s a damn good whacking.
    Everywhere there’s lots of piggies
    Living piggy lives
    You can see them out for dinner
    With their piggy wives
    Clutching forks and knives to eat their bacon.

    When I filed my lawsuit against Bank of America, I thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
    Please stand with me and Brookstone Law Firm, and send an email to Bank of Abusing America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
    So please send your email directly to Bank of America and include the following:
    1. Your name
    2. Your complaint concerning your experience with Bank of America.
    3. Please end your email “I support John Wright vs. BofA Lawsuit!”
    4. Please send a copy of your email to
    5. Please send your email to BofA CEO Brian Moynihan:
    I have created for all of those who have been abused by Bank of Destroying Americas potentially irregular, fraudulent and simply abusive home loan modification process.
    Divided we might have fell America. UNITED WE MUST STAND!
    My name is John Wright AND I AM FIGHTING BACK!
    John Wright

  11. orionATL

    californians deserve a better than AG harris.

    so how come they don’t have one?

    did they do their political due diligence when she was up for election?

    after all, if commenters above are correct and fair in their assessments, harris had a track record, in s.f. for example, warning of incompetence.

  12. Francois T

    Given the extreme duplicity of the Obama administration when it comes to their slavish devotion to the financiers, I must start to seriously consider the possibility of helping his defeat in 2012.

    Since there is nothing that will make BO see the light, it is past due time he starts feeling the heat.

  13. SmartAlek

    Private Settlement Negotiations should prove difficult although not impossible.
    Lenders have stepped up foreclosure fillings which should in turn produce public outrage.

    This will give plenty of ammo to unemployed mobs of homeless and foreclosed upon CA citizens to start making demands.

  14. Ray Phenicie

    Mortgages in and of themselves are inherently inequitable. For years-nay decades- I have been railing against the absurdity of the basic philosophy involved in a mortgage: that the property will increase in value.

    The so called increase in value has to be balanced by a constant wearing out of materials that must be replaced; everything in this universe passes under the gnawing tooth of time. Aluminum, wood and brick-three common exterior cladding materials-all have limited lifetimes that are either over or well on their way to passing after 30 years.

    In 30 years at today’s costs:
    Complete Roof replacement-$5-8,000
    Replace heating and cooling system-$2-3000
    Taxes per year-and this totally kills the deal-in Michigan for a home valued at 150,000, taxed on a 50% assessment at about 40-50 mils will result in a yearly payment of $3-4,000. 30 times average say of $3,500=$105,000.

    Maintenance on the exterior and interior-painting, carpet replacements, lawn mowing, snow shoveling, minor repairs to caulk and exterior surfaces, replacing doors and windows which wear out-? Say roughly %1 of the home value per year-$1500-if that sounds high-I was a home owner for 12 years and saw a lot of work on a small suburban bungalow. The foundation was sagging causing old school plastering to crack and crumble; tree roots filled the main sewer connector to the street -$5,000 to dig up and replace.

    There are more costs, insurance and financing but I will stop as that would put us well over another $150,000. Financing alone will probably be $175-275,000 in 30 years.

    But there is yet another insidious gremlin lurking under the aluminum, brick or wood cladding: the frames of almost all residential housing are constructed from soft wood pines. These woods are heavily laden with saps that petrify in 20 years. The underlying framework is therefore then very brittle and highly prone to fire damage. This is all part of the whole scene of developers throwing together a marketable product that is poorly constructed and inherently constructed to be of little value in the long run. I find that most Americans accept lower standard for small items like fixtures, cabinets, faucets, etc. than is found in Europe and many homeowners are prone to look longingly at the designer showcases that are featured at Lowes and the other big box home improvement stores and may eventually underwrite a “home improvement” loan to the tune of another 5-20% of the home value.
    That completes my reality check for the day.

  15. Jon Simons

    On the surface a very large settlement figure seems like justice is finally starting to be served. But if B of A (and others) can’t pay, and go back to the Government for yet another hand out, we end up paying after all.

    And haven’t B of A been threatening to put Countryside through bankruptcy if the settlement figure is too high for their liking, effectively pulling them out of any settlement payments entirely?

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