A little over six months ago, negotiations over the mortgage settlement concluded with a 49 state agreement to address robosigning and other predatory mortgage servicing and foreclosure practices. This was a pivotal moment, because it was possibly the last leverage point to look into problems with the securitization process that led to the financial crisis. One theory around the settlement negotiations is that it was a PR move designed to make politicians look good in an election year, without costing the banks anything. To this end, one of the core objectives was to have organized groups issue statements of praise, or at least not condemnation, upon signing of the settlement agreement.
This put pressure on the organized liberal establishment, which had found it difficult to reconcile their desire for a solvent middle class and their support for bailout-friendly politicians like Barack Obama. And so, a good amount of organizing energy was spent maneuvering between two different objectives, the desire to have some sort of remediation for the foreclosure crisis, and a desire to have President Obama reelected. As a result, most of the organized infrastructure decided to praise the settlement, sometimes with aggressive words like “monumental” and sometimes with faintness, with the use of terms like “first step” and “down payment”. There were some, however, who made arguments that the settlement was a bad deal, that it shouldn’t have been signed.
I’ve compiled a series of statements issued upon the signing of the settlement, so you can see the extent of the media framing fight that took place upon its signing. It’s also useful to show who was right and who was wrong. By and large, there have been no acknowledgments of error from anyone.
Statements of Support
Today’s settlement provides compensation for foreclosure victims without requiring individuals to waive their legal claims. While banks must be made to pay more to help homeowners, the settlement includes needed principal write-downs so homeowners can stay in their homes.
“This monumental settlement is a strong step towards assisting the millions of current and former homeowners that were exploited, discriminated against and taken advantage of by major mortgage servicing banks,” said NAACP President and CEO Benjamin Jealous. “The principal reductions, refinancing and other relief will provide desperately needed relief. Moreover, the creation of new mortgage servicing standards, including increased notice and documentation requirements during foreclosure and measures to deter community blight will initiate a new and important relationship between borrowers and lenders and help advance the much needed protection of homeowners in the future.”
National Council of La Raza (via email):
“NCLR (National Council of La Raza) worked tirelessly alongside advocates, housing counselors, and champions within the administration and the Attorney General coalition to reach a strong settlement, which provides critical relief to families who have fallen through the cracks,” stated Janet Murguía, NCLR President and CEO. “The Attorneys General and the administration deserve a great deal of credit not only for giving immediate help to struggling homeowners but for also securing changes to the mortgage servicing system which will prevent these kinds of problems in the future.”
The new standards “move the ball significantly forward,” says Alys Cohen of the National Consumer Law Center. “But much will depend on how (the agreement) is carried out.” Homeowners be reviewed for loan modifications before the foreclosure process starts. “That’s a game changer,” Cohen says.
Rebuild the Dream (run by former White House Advisor Van Jones):
Today, a $25 billion settlement will be announced in which big banks pay up for a portion of their bad deeds in the home foreclosure crisis. For what it is, this settlement is a step forward, and we are glad to see a small trickle of relief for some victims of the banks’ most irresponsible and fraudulent behavior. However, we must remember that this settlement addresses only a very limited set of fraudulent behaviors and helps only a fraction of the millions of underwater homeowners and foreclosed families who continue to bear a tremendous amount of pain and injustice.
We honor the hard work of New York State Attorney General Eric Schneiderman and others, including many grassroots progressive organizations, who fought courageously to prevent a total sweetheart deal for the banks.
“While we have always believed that a full investigation of banks should precede any deal, this foreclosure deal accomplishes our central goal: severely limiting legal immunity for banks so multiple investigations into the role of banks in crashing the economy and housing market can proceed unimpeded….“While the settlement is imperfect and key details have not yet come to light, the terms are greatly improved thanks to the leadership of Attorney General Eric Schneiderman of New York, along with Attorneys General Kamala Harris of California, Catherine Cortez-Masto of Nevada, Beau Biden of Delaware, Martha Coakley of Massachusetts, Lori Swanson of Minnesota.Because of their strong efforts to stand up to Wall Street on behalf of homeowners in their states, and because of the efforts of progressive organizations nationwide, there is no question that this is a better deal forhomeowners and taxpayers today than when negotiations began.”
“The $25 billion settlement is only a down payment on what major banks like Wells Fargo need to pay to fix the damage they wrecked upon homeowners, our communities, and our economy,” said Steve Fletcher Executive Director of Minnesota Neighborhoods Organizing for Change (NOC). “Attorney General Lori Swanson was 100% right to demand that the settlement not let the banks off the hook for all of their misdeeds that led to the foreclosure crisis.”
The deal announced today is too small. It falls far short of providing real justice for homeowners and American families. The estimated $10 – $20 billion for principal reduction is a small drop in a big bucket in comparison to $700 billion in total negative equity. The reported $1,800 restitution payment for those who already lost their homes is just a tiny fraction of the wealth stripped from so many families, especially families of color. That’s why PICO will continue to fight to ensure that the current deal is just a down payment on a much larger settlement that does justice for American homeowners harmed by the big banks’ criminal activity.President Obama has publicly acknowledged that allowing underwater homeowners to get out from under the debt they are living with is key to rebooting the economy. The Administration’s new Mortgage Fraud Task Force will keep the investigation into illegal practices alive. And the pressure continues to mount on Fannie Mae and Freddie Mac to stop allowing the big banks hide behind their opposition to doing principal reduction.
Funding for legal services
As part of the recently passed New York State budget, Attorney General Schneiderman committed $15 million from the multi-state settlement to foreclosure prevention, housing counseling, legal services, and other related programs. Separate from the multi-state settlement, Attorney General Schneiderman directed a total of $3 million from two separate settlements to fund legal services for homeowners in foreclosure or at imminent risk of foreclosure. State funding for these programs under the state Foreclosure Prevention Program was set to expire on April 1st and will now be able to continue.
In January, Attorney General Schneiderman directed a $1 million allocation of unspent dollars from a 2006 settlement between the Attorney General’s Office and Ameriquest Mortgage, Co. to foreclosure prevention services. Funds will be distributed through an expedited RFA process to non-profit legal services and legal aid organizations to provide direct legal services to homeowners in foreclosure or at imminent risk of foreclosure. These funds will allow critical services that would otherwise be lost to continue across the state.
The following are statements from individuals dealing on the ground with foreclosure crisis regarding the Attorney General’s commitment in the budget:
Meghan Faux, Director of the Foreclosure Prevention Project at South Brooklyn Legal Services, said, “This funding is truly a lifesaver. Without Attorney General Schneiderman’s intervention, funding for foreclosure prevention services would have expired and homeowners in need of assistance would have been abruptly cut off. Now, countless families across New York will have access to the legal services and housing counseling they need to save their homes and stabilize their community.”
Anne Erickson, President and CEO of the Empire Justice Center, a statewide legal services organization working to combat foreclosures in New York State, said, “New York’s Attorney General worked tirelessly to ensure that the funding secured through this national settlement is used in the true spirit for which it is intended – to help fight the epidemic of foreclosures across the country and to do so by funding on-the-ground services for homeowners at risk of losing their homes. Because of Attorney General Schneiderman, New York’s most vulnerable homeowners will not lose access to vital and effective services that provide the last line of defense against avoidable—and often wrongful—foreclosures. This is a major victory for struggling homeowners facing foreclosure in every corner of New York State, and we deeply appreciate the Attorney General’s strong leadership on this critical matter.”
Christie Peale, Executive Director, Center for NYC Neighborhoods, said, “This is great news. Thanks to Attorney General Schneiderman’s leadership, critical foreclosure prevention programs will not have to close their doors to New Yorkers in need. The loss of these services, coupled with gaps in regional funding, would have been devastating to struggling homeowners and communities throughout New York State. On behalf of the CNYCN Network of foreclosure prevention providers and the homeowners we all serve, we are grateful to AG Schneiderman for the lifeline that this funding provides.”
Durrant McKie, homeowner from Southeast Queens, said, “As a homeowner who was facing foreclosure, I can say firsthand that we would not have survived if it weren’t for the help of the Foreclosure Prevention Services Program. Our housing counselor ensured that we did not lose our home and that our rights were protected throughout this difficult process. I applaud Attorney General Schneiderman for making sure other families can fight back, and get the help they deserve.”
The following are statement from individuals dealing on the ground with the foreclosure crisis regarding the Attorney General’s provision of funds from the Ameriquest settlement:
“We are incredibly grateful to the Attorney General for supporting the Foreclosure Prevention Services Program,” said Mark Ladov, Counsel for the Brennan Center’s Democracy Program. “This program has a strong track record of improving outcomes for working families at risk of losing their homes, and is a critical investment in New York State’s economic recovery. Attorney General Schneiderman’s intervention helps ensure that this vital work will continue. We look forward to working with the Attorney General to aid struggling families and address New York’s foreclosure crisis.”
“Homeowners across this state are struggling in these tough economic times. We owe a debt of gratitude for Attorney General Schneiderman’s bold action that will give the working families in our community a fighting chance,” said Darius G. Pridgen, Senior Pastor of the True Bethel Baptist Church and Member of the Buffalo Common Council. “By allocating resources for foreclosure prevention services, the Attorney General has once again stood up for those who need our help the most.”
“We applaud the Attorney General for making funds available to the Foreclosure Prevention Services Program and providing legal assistance agencies an opportunity to continue providing direct assistance to homeowners in default and foreclosure,” said Deborah Boatright, Northeast Regional Director, NeighborWorks America. “The Attorney General’s smart, bold action will make a real difference in the lives of countless New Yorkers who are struggling to get by and hold on to their most precious possession.”
“Attorney General Schneiderman must be applauded for funding legal services to help struggling homeowners facing foreclosure,” said Rev. David K. Brawley, Senior Pastor, St. Paul Community Baptist Church. “Communities like East New York, Southeast Queens, Mount Vernon and other neighborhoods throughout the state have been hit hard by the mortgage crisis, and this bold action will protect hundreds of families who are at risk for teetering over the edge. The Attorney General understands the depth of this problem, and has come up with a creative way to help safeguard our state’s future.”
In March, Attorney General Schneiderman directed another $2 million from the settlement with Steven J. Baum P.C., and Pillar Processing, LLC for the same purpose. Again, these funds are replacing funds that were set to run out and allowing legal services providers to keep their doors open.
The following are statements from individuals on the ground dealing with the foreclosure crisis regarding the funding for legal services from the Baum settlement.
Rebecca Case-Grammatico, Senior Staff Attorney, Empire Justice Center said: “Empire Justice Center applauds Attorney General Schneiderman for his successful settlement with the Stephen J. Baum Law Firm and his continued support for advocates assisting homeowners facing foreclosure. We truly appreciate that settlement funds from this case will be committed to providing much-needed funding for legal services to help correct the injustices in many of these cases which are still pending in the courts. We look forward to continuing to work with the Attorney General to deliver justice for the homeowners of New York.”
Elizabeth Lynch, Staff Attorney, MFY Legal Services said: “We applaud the Attorney General’s leadership in making these entities accountable to the people of New York State. For too long, foreclosure law firms like Steven J. Baum P.C. have wreaked havoc on homeowners, and this settlement sends a signal that New York State will not tolerate such improper conduct. But Steven J. Baum is not off the hook yet. MFY represents a class of people adversely affected by his deceptive practices and our clients look forward to vindication of their rights.”