Tag Archive: Foreclosures

May 09 2012

Huge Protests at BofA Shareholder Meeting Today. Pay Packages Approved, Proposals Defeated.

Bank Of America Protests Begin At Shareholder Meeting

Activists from Occupy Wall Street, the environmental movement and labor unions, along with victims of home foreclosures, have begun massive demonstrations at Bank of America’s shareholder meeting in Charlotte, N.C., on Wednesday morning.

[ … ]

Inside the Bank of America meeting, disgruntled shareholders [ … ] will force votes on proposals [ … ]

Outside the meeting, protesters promise a boisterous slate of events to draw attention to Bank of America’s relationship with the federal government, the coal industry and its long record of foreclosure abuse. Occupy Atlanta’s Tim Franzen said there are three marches planned, each with its own theme: the bank’s environmental record, the housing crisis and corporate accountability issues. The marches will converge into one big protest.

Dec 08 2011

Fighting Foreclosure Fraud State by State

The two of the lady state attorney generals took the stage on the talk shows discussing their actions to protect their constituents from the thousands of illegal foreclosures that are crushing their states economies. Massachusetts AG Martha Coakley joined Dylan Ratigan for a lively chat about her lawsuit against five major banks and MERS. Later, AG Kamala Harris explained to Lawrence O’Donnell on “The Last Word” her reasons for breaking from the not-50 State Agreement being brokered by the Obama administration.

The ladies are really on a roll. Just this week it was announced that Ms. Harris has teamed up with Nevada’s State Attorney General, Catherine Cortez Masto, to look into a wide array of abuses, including mishandled documents, shoddy loan servicing, and the questionable ways in which mortgages were bundled and sold to investors. Like New York’s AG Eric Schneiderman and AG Beau Biden of Delaware, the ladies see strength in numbers.

States take charge of “fraudclosure” crackdown

Battling Big Banks on Foreclosure Crisis

This is the hard work protecting consumers that the Obama administration refuses to do.  

Nov 30 2011

5,000 Illegal Foreclosures On Military Families: Up Dated

US lenders review military foreclosures

By Shahien Nasiripour in New York

Ten leading US lenders may have unlawfully foreclosed on the mortgages of nearly 5,000 active-duty members of the US military in recent years, according to data released by a federal regulator.

JPMorgan Chase and Bank of America this year reached legal settlements in which they agreed to pay damages to nearly 200 service members who claimed that their homes had been improperly seized.

Data released last week by the Treasury’s Office of the Comptroller of the Currency, which regulates national banks, shows that 10 lenders – including BofA, but not JPMorgan, which was not part of the study – are reviewing nearly 5,000 foreclosures of homes belonging to service members and their families to see if they complied with the law.

Dishonorably Discharged, with Pat Garofalo

Pat Garofalo reported this at Think Progress:

Back in April, JPMorgan Chase, which was not one of the 10 banks that the OCC examined, agreed to a $56 million settlement over allegations that it had overcharged members of the military on their mortgages. Chase Bank has even auctioned off the home of a military member the very day that he returned from Iraq. Two other mortgage servicers agreed in May to settle charges of improperly foreclosing on servicemembers.

Even without the banks illegally foreclosing, military members have been hard hit by the foreclosure crisis. Last year alone, 20,000 members of the military faced foreclosure, a 32 percent increase over 2008. The newly created Consumer Financial Protection Bureau is tasked with ensuring that military members are treated fairly by financial services companies – a job that is obviously necessary – but Republicans in Congress have, so far, refused to confirm a director for the agency, leaving it unable to fulfill all of its responsibilities.

Up Date: New York State Attorney General Eric Schneiderman has launched an investigation into military foreclosures under a NY State consumer protection law, the Martin Act, that gives him broad powers to investigate fraud.

Also, Congress is getting on the bandwagon, Sen. Jack Reed (D-RI), a member of the Senate Banking Committee, will be requesting hearings. From David Dayen at FDL:

It looks like even Congress is getting involved, or at least a few of them, because systematic illegal foreclosures on everyday people can be ignored, but systematic foreclosures on members of the military cannot. Jack Reed, a member of the Senate Banking Committee, will request a hearing on the matter. Brad Miller, who has actually been great on this issue and who sees it as a lever to open up a host of inquiries on foreclosure fraud, had a great statement yesterday:

   It is hard to see this as anything except a flagrant disregard for a law that has been on the books continuously since the First World War. The Servicemembers Civil Relief Act is very clear: if you’re in harm’s way in our nation’s military, you can devote your whole energy to our nation’s service without worrying what’s happening in a courthouse back home. And if you have a claim against someone in our military, you can wait until they get home and can defend themselves.

   The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings.

   The continued failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying Americans’ faith in their government and democracy. In a democracy, no one is too big to prosecute.

Schneiderman is doing the job that we would expect Eric Holder to be doing. Just where is Mr. Holder? We know where the president is, campaigning.

Nov 17 2011

Nevada AG Indicts Title Company Officers

Nevada Attorney General Catherine Cotez Masto has filed a 606 count criminal indictment against two title company employees for for supervising the filing of tens of thousands of fraudulent documents in a robo-signing scheme. This is the statement from Masto’s office (pdf):

   The Office of the Nevada Attorney General announced today that the Clark County grand jury has returned a 606 count indictment against two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.

   According to the indictment, defendant Gary Trafford, a California resident, is charged with 102 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor). The indictment charges d efendant Gerri Sheppard, also a California resident, with 100 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).

   “The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,”said Chief Deputy Attorney General John Kelleher.

   The indictment alleges that both defendants directed the fraudulent notarization and filing of documents which were used to initiate foreclosure on local homeowners.

   The State alleges that these documents, referred to as Notices of Default, or “NODs”, were prepared locally. The State alleges that the defendants directed employees under their supervision, to forge their names on foreclosure documents, then notarize the signatures they just forged, thereby fraudulently attesting that the defendants actually signed the documents, which was untrue and in violation of State law. The defendants then allegedly directed the employees under their supervision to file the fraudulent documents with the Clark County Recorder’s office, to be used to start foreclosures on homes throughout the County.

   The indictment alleges that these crimes were done in secret in order to avoid detection. The fraudulent NODs were allegedly forged locally to allow them to be filed at the Clark County Recorder’s office on the same day they were prepared.

Although the two Lender Processing Services employees, Gary Trafford and Gerri Sheppard, are deemed to be little fish there is speculation the Ms. Masto is using this as a hook to an go after the whales. Yves Smith at naked capitalism:

   That strongly suggests that Masto is, as we suggested earlier, using these indictments as a wedge to go after much broader abuses in the servicing industry. LPS’s biggest business is its Default Services Group, which both managed the operations of foreclosure mills (people with knowledge of LPS charge that the firm even kicks out certain standard form documents for foreclosure mill attorneys to file) and also often acted as the arms and legs of servicers in other arenas (for instance, managing, or more accurately, mismanaging property seized in foreclosure).

   LPS has always taken the position that anything it did was at the direction of and with the full knowledge of the servicers. If Masto is shrewd, her objective will be to audit LPSs’ software, since that will demonstrate pattern and practice, and it will be impossible for servicers to deny that processes embodied in ongoing, routinized activities were unknown to them.

David Dayen at FDL agrees that this may well be the first step in getting the higher ups who made, and are still, making a fortune on foreclosures:

LPS hasn’t been indicted, but you can see where this is going. We know enough now to know that this casual forgery and document fraud was official policy for the company. Indictments of Trafford and Sheppard will almost certainly not end there. Everyone who worked for LPS in Nevada will be culpable. [..]

The fact that they are LPS employees also suggests this is just a first step. This could be a way to get at the software that LPS uses to create documents, which would prove pattern and practice. LPS was central to the entire robo-signing scheme across foreclosure mill law firms and mortgage servicers. And they consistently maintain that they worked at the direction of the servicers and with their full knowledge. So that ropes in the servicers as well.

This is a very important indictment, and it shows how methodical Masto has been about going after widespread industry abuse. It’s only just beginning, but bravo for her.

As has been reported, despite the meager attempts at an agreement to settle this and exonerate the banks of any wrong doing by several other Attorney Generals, the robo-signing continues:

   Reuters reviewed records of individual county clerk offices in five states — Florida, Massachusetts, New York, and North and South Carolina — with searchable online databases. Reuters also examined hundreds of documents from court case files, some obtained online and others provided by attorneys.

   The searches found more than 1,000 mortgage assignments that for multiple reasons appear questionable: promissory notes missing required endorsements or bearing faulty ones; and “complaints” (the legal documents that launch foreclosure suits) that appear to contain multiple incorrect facts.

   These are practices that the 14 banks and other loan servicers said had occurred only on a small scale and were halted more than six months ago. [..]

   Reuters reviewed records of individual county clerk offices in five states — Florida, Massachusetts, New York, and North and South Carolina — with searchable online databases. Reuters also examined hundreds of documents from court case files, some obtained online and others provided by attorneys.

   The searches found more than 1,000 mortgage assignments that for multiple reasons appear questionable: promissory notes missing required endorsements or bearing faulty ones; and “complaints” (the legal documents that launch foreclosure suits) that appear to contain multiple incorrect facts.

   These are practices that the 14 banks and other loan servicers said had occurred only on a small scale and were halted more than six months ago.

Meanwhile, as Yves Smith pointed out this Summer, the bankers continue to lie to congress that they have stopped the practice:

We’ve heard numerous bank executives swear piously before Congressional hearings that those “paperwork problems” that led major servicers to halt or slow foreclosures on a widespread basis last year were “mistakes”. That was already a really big lies, since “mistake” means the practice was not deliberate and was presumably isolated, when in fact robosigning was a widespread, institutionalized practice.

14 major servicers then swore in consent orders earlier this year that they’d stop doing all that bad stuff. But with compliance weak (the banks get to hire the overseers!), they appear to have decided they don’t need to change their ways all that much. Indeed, the record of consent orders is underwhelming; for instance, both Nevada and Arizona are suing Countrywide for violations of past agreements.

Meanwhile the Obama Justice Department continues to try to sweep this massive fraud under the rug.

Yes, bravo, Ms. Masto.

Nevada Robosigning Indicment 11-16-11

Nov 09 2011

The Foreclosure Fraud Saga Continues

Some members of Congress have begun to make noise about the proposed settlement of foreclosure fraud by some state attorney generals that would give immunity to the banks. David Dayen at FDL reports:

Raul Grijalva and Keith Ellison, co-chairs of the Progressive Caucus, are the latest. It’s pretty hedged, however:

   “We applaud President Obama and the Justice Department for this effort to hold these banks accountable. However, a $25 billion settlement pales in comparison to the trillions of dollars in lost home equity, retirement savings and exploding public debt caused by these institutions,” Grijalva and Ellison said Friday in a joint statement.

   “Instead of immunity for Wall Street banks, let’s stand with the American people and demand a fair deal for homeowners.”

Dayen also makes a couple of salient points about the problems with this settlement and solutions:

The whole gambit just reinforces the randomness of the foreclosure crisis. Borrowers didn’t choose to get a bank-owned loan, or a loan sold to Fannie and Freddie, or a loan securitized and sold as part of a tranche of securities to a pension fund in Norway. But where their loan landed has a direct bearing on their outcomes. Who services their loan, another outcome under which they have no control, also matters. And what state you live in matters. If you’re in Nevada, for example, you may never face foreclosure no matter what your delinquency situation [..]

Just criminalizing the standard law governing foreclosures in Nevada has basically ended foreclosure starts. Lucky for Nevadans – but why are folks in the rest of the country in a different place? For all the talk of moral hazard, there’s nothing moral about the foreclosure process right now. If there were, there may also be something like justice or accountability.

The New York and Maryland Attorney Generals, Eric Schneiderman and Beau Biden lay out their strategy in dealing with what they see as a two pronged man-made mess, the housing market and the mortgage-backed securities market:

These two markets are inextricably linked. Any real effort to repair the damage caused by the collapse of the housing bubble must address the injury in both sectors. Tens of millions of homeowners and millions of investors – including retirees with money in pension and mutual funds – were devastated by this manmade catastrophe.

We recognized early this year that, though many public officials – including state attorneys general, members of Congress and the Obama administration – have delved into aspects of the bubble and crash, we needed a more comprehensive investigation before the financial institutions at the heart of the crisis are granted broad releases from liability.

We undertook such an inquiry, building on the work of many others. And we know time is of the essence. Homeowners and investors are suffering every day, and patterns of abuse and misconduct are continuing. We’re working hard to complete the first – and most critical – phase of our investigation before the end of 2011.

The key to our strategy to root out the conduct that triggered the biggest financial crisis since the Great Depression is recognizing that a comprehensive effort requires an attack from both sides – looking at harm both to borrowers and to investors. So we are investigating four distinct, but interdependent, areas of abuse. Only one of those areas is being discussed in the negotiations now under way among the banks, the administration and some of our colleagues.

These determined AG’s explain that they are investigating several areas:

  • misconduct by loan originators;
  • the aggregation, or pooling, of mortgages by major banks.
  • continuing abuses in the servicing of millions of mortgages
  • gross levels of misconduct during this process by a recording system called the Mortgage Electronic Registration Systems.
  • They conclude that while their AG colleagues “seek to settle these servicing-related issues, the financial institutions on the other side of the negotiating table have predictably sought releases that are as broad as possible from future liabilities, delaying the process.”

    Biden and Schneiderman state that they support the effort but they are not going to back down on the criminal investigation of securitization, origination and MERS:

    Reforming the servicing of mortgages is crucial. But these servicing abuses did not create the mortgage bubble. Robo-signing did not blow up the U.S. economy. Rather, these are symptoms of a more far-reaching and insidious problem.

    The American people deserve a full investigation and public exposure of the conduct that got us into the economic quagmire we face today. We must ensure that it never happens again. And we must restore public confidence that ours is a nation committed to the goal of equal justice for all.

    Every American deserves due process before their homes are taken form them that is just not happening for far too many. There is no excuse.

    Oct 03 2011

    Another Attorney General Exits Multi-State Mortgage Fraud Talks

    Last Friday California Attorney General,Kamala Harris, notified Iowa Attorney General Tom Miller and U.S. Associate Attorney General Thomas Perrelli that she would no longer be participating in the multi-state talks to settle the mortgage and foreclosure fraud by the nation’s largest banks.

    “Last week, I went to Washington, D.C., in hopes of moving our discussions forward,” Harris wrote. “But it became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated.”

    “[T]his not the deal California homeowners have been waiting for,” Harris adds one line later.

    AG Harris joins the list of state attorney generals who have balked at letting the banks pay a mere $20 billion to settle their liability in the housing crisis they created without any real criminal investigations. In her letter (pdf), she states her plans:

       I intend to continue to investigate the mortgage practices that I believe have contributed to the growing housing crisis in my state. Months ago, I began California’s independent work in this respect by establishing a Mortgage Fraud Strike Force, and I have given the Strike Force attorneys a broad mandate to investigate all stages of the mortgage lending process, from origination to servicing and foreclosures to securitization of loans into investments in the secondary market. I am committed to doing as thorough an investigation as is needed – and to taking the time that is necessary – to set the stage for achieving appropriate accountability for misconduct.

       I will also push for additional legislation and regulations that enhance transparency and eliminate incentives to disregard borrower’s rights in foreclosure. Many of these reforms have been identified in the multistate talks, and I hope that in good faith the banks will adopt these reforms immediately.

    While David Dayen doesn’t think that the legislation have a chance. he does say that public pressure has had a huge impact in pushing Harris to make this decision. It could also impact on her career, since she was rumored to be a possible replacement for US AG Eric Holder. Pushing hard against the Obama administration’s support of this agreement could take her out of consideration.

    Dayen concludes, and I agree, that:

    As for Tom Miller, his dream of getting the banks off the hook for their crimes is dead and buried. Without California and New York, you’re not going to be able to have a settlement that means anything. He’s probably looking for a way out right now.

    The investigations have to be followed through. But this is a victory so far for accountability and against the whitewashes that have characterized the nation’s response to systemic fraud in an increasing and troubling fashion over the past several years.

    Considering the success that Nevada Attorney General Catherine Cortez Masto had in a settlement with Morgan Stanley over mortgage practices that essentially garnered about $57,000 for some 600 to 700 Nevada homeowners, AG Harris’ withdrawal from the negotiations is a wise choice for Californians.

    Sep 22 2011

    Another Attorney General Joins Foreclosure Fraud Investigation

    There have been a couple of new developments in the foreclosure fraud investigation that was initiated by New York State Attorney General Eric Schneiderman. The coalition of state AG’s who want a real criminal investigation and oppose the 50 state settlement proposal of Iowa AG Tom Miller has grown by one with Kentucky’s AG Jack Conway adding name. From David Dayen at FireDogLake:

    The latest AG to stand with Schneiderman and against the attempts to whitewash the fraud of the big banks is Kentucky AG Jack Conway. He is up for re-election this year, and is known nationally by virtue of his unsuccessful challenge to Rand Paul for Senate in 2010. Conway, in conjunction with the Progressive Change Campaign Committee, sent an email to supporters aligning himself with Schneiderman.

       The same Wall Street banks whose irresponsible actions led to our nation’s economic collapse are now pressuring all 50 states to give them legal immunity. The banks want to block any criminal or civil accountability for actions that have yet to be investigated.

       Attorneys General from Delaware, Minnesota, Nevada and New York have been fighting back. Today, I want to make a clear statement in support of Wall Street accountability and against immunity for banks – and I ask you to join me on this statement:

       “Today’s economic crisis was caused by Wall Street acting improperly. Every American has paid the price – with families losing their homes, investors losing their money, and many Americans losing their jobs. There should be absolutely no criminal or civil immunity given to banks for activity that has not yet been investigated.”

    Several things are important here. Kentucky didn’t really have a big housing bubble – Conway is supporting this on principle, rather than in service to a wide swath of dispossessed and struggling borrowers who are victims of fraud. Second, he writes this in the context of an election which has tightened up minimally. So he obviously finds this to be a winning issue on the campaign trail. Third, it would be tempting to just ignore a proposed settlement that isn’t going to happen. Conway sees political advantage in stamping on this process, which is already flailing.

    In another development in Nevada, an attorney has filed criminal charges against Wells Fargo accusing the bank of forging loan documents:

    In court papers filed this month in Clark County District Court, attorney Dave Crosby alleged bank employees committed forgery and fraud in making a $350,000 loan to a father of four who was unemployed at the time.

    “They forged signatures, they backdated documents,” Crosby said. “We’ve got them cold.”

    Crosby said the bank has presented two deeds of trust for the same property. One bears the signature of Olivia A. Todd, who on Jan. 27, 2010, was identified as an assistant secretary with MERS, Inc., a mortgage servicer from the Phoenix area and a co-defendant in the lawsuit.

    But on Feb. 16, 2010, Todd’s signature appears on a second deed of trust, where she is identified as the firm’s president. Both assignments were notarized as authentic, Crosby said in court papers.

    Crosby made his allegations in a request to have a judge review three failed mediations between him and his clients, Ryan and Mical Henderson of Las Vegas, and lawyers with Wells Fargo, formerly Wells Fargo Home Mortgage.

    Buried deep in the story was this interesting note:

    Nevada Attorney General Catherine Cortez Masto is expected to file criminal charges against bank and title company employees, as well as notary publics, over allegations of robo signing.

    The paltry deal of $20 billion by AG Miller that would let the banks off the hook for most civil and criminal liability seems hardly adequate when you really examine the scope of the fraud nation wide.  

    Sep 06 2011

    No Liability For Banks

    It is becoming quite apparent the New York State Attorney General Eric Scheiderman was right about the 50 state AG negotiations to settle the mortgage backed securities fraud. It will shield the banks from liability despite denial by Iowa Ag Tom Miller and others that it would not:

    “The negotiation committee, working on behalf of all 50 states, does not have any intention of constraining the office of the New York attorney general in any way, has not tried to do so and could not do so,” Miller said. “Schneiderman was removed from the executive committee because he has, over the last several months, undermined our efforts to reach an agreement.”

    In a Financial Times article on Labor Day by Shahien Nasiripour puts an end to that myth:

    The talks aim to settle allegations that banks including Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial seized the homes of delinquent borrowers and broke state laws by employing so-called “robosigners”, workers who signed off on foreclosure documents en masse without reviewing the paperwork.

    State prosecutors have proposed effectively releasing the companies from legal liability for allegedly wrongful securitisation practices, according to five people with direct knowledge of the discussions.

    Some state officials have expressed concern that they have offered the banks far too broad a release from liability. . . . . .

    The worry over the states’ counterproposal stems from its treatment of loan documents. The term sheet proposes to release the banks from legal liability over how mortgage documents were maintained, prepared and transferred, people familiar with the matter said.

    Though the counteroffer attempts to release the banks from liability with respect to home repossessions, and explicitly states that the release does not include securitisation claims, the language is broad enough in that it could prevent state officials from bringing securitisation claims in the future should they sign up to the agreement.

    At the heart of securitisation claims, which involve missteps in how home mortgages were bundled into bonds, are allegations that the banks did not properly maintain and transfer documents from one step in the complicated chain to the next.

    If banks are released from liability regarding documentation practices, some industry officials believe they would be able to evade state lawsuits directed at how they bundled the loans into securities.

    Robert Sheer observed This proposed a settlement for a pittance of $20 billion is chump change compared what the banks reaped in “direct cash subsidies, virtually zero-interest loans, and the Fed took $2 trillion in bad paper off their hands while the banks exacerbated the banking crisis they had created through additional shady practices.

    Matt Taibbi noted, too, that the banks are getting off the hook for really odious offenses:

       The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

       This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty… and will also get to know for sure that there are no more criminal investigations in the pipeline.

    ship

    To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

    The White House and AG Miller are doing everything in their power to discredit Schneiderman and block further investigations that could lead to recovering more than 20 pieces of silver.

    Sep 05 2011

    Holding The Banks Accountable

    President Obama’s jettisoning the EPA regulations dominated the Friday news dump. What was buried in the usual media hullabaloo was this:

    FHFA Sues 17 Firms to Recover Losses toFannie Mae and Freddie Mac

    Apparently the FHFA has found something that this White House hasn’t, the courage to hold the banks accountable for the losses from the sale of mortgage backed securities (MBS) to Fannie Mae and Freddie Mac. The suit surpasses the $20 billion settlement that the 50 state AG settlement is reportedly attempting to extract from the banks for a liability release over ALL issues in foreclosure fraud.

    The lawsuits cover $105 billion worth of securities, and FHFA wants returns on some portion of the losses taken on the securities, which they attribute to illegal actions by the banks when they sold the MBS (specifically, misrepresentations about the underlying loans). Earlier reports said that the losses for Fannie and Freddie on private-label MBS came to around $30 billion, so that’s probably around what they will ask for. The LA Times story puts it at $41 billion in losses. Whatever the number, this is more than the 50 state AG settlement is reportedly attempting to extract from the banks for a liability release over ALL issues in foreclosure fraud. And this is just a representations and warrants case.

    This may derail the 50 state AG attempts at an agreement that absolves banks from any liability:

    The biggest banks are already negotiating with the attorneys general of all 50 states to address mortgage abuses. They are looking for a comprehensive settlement that will protect them from future litigation and limit their potential mortgage litigation losses.

    “This new litigation could disrupt the AG settlement,” said Anthony Sanders, finance professor at George Mason University and a former mortgage bond strategist.

    Banks may be more reluctant to agree to a settlement if they know litigation from other government players could still wallop their capital, he said.

    As David Dayen so astutely observes:

    . . . . FHFA is just a canary in the coalmine for the losses and the liability that these banks are holding because of their actions in mortgage origination, securitization, and servicing. You cannot have a banking sector with this many liabilities and expect a robust, well-functioning economy. This action is necessary for the rule of law as well as for the health of the nation.

    (emphasis mine)

    Even better would be some of the people involved being held responsible and sent to prison.

    Aug 22 2011

    On The Wrong Side Of The Rule Of Law

    Once again the President who campaign on the restoration of the rule of law falls on the wrong side. The New York Times writer, Gretchen Morgensen, revealed in an article that the Obama Justice Department and Housing and Urban Development were putting pressure on New York State Attorney General Eric Schneiderman to drop his investigation into the banking industries foreclosure fraud that led to the economic housing crisis:

    Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, according to people briefed on discussions about the deal.

    In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.

    Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

    But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

    In other words, this is going to take too long and we have an election to finance. Please, do not piss off the banksters, they’re the only ones with money.

    Obama administration doesn’t want to help the homeowners or prosecute those who committed this fraud, as David Dayen so bluntly states, they want to “white wash the fraud”:

    The White House must think that if they can get Schneiderman, the AG with the most leverage over the talks by virtue of New York’s important position with respect to mortgage securitization, to bend, they can roll the rest as well. The WSJ article says that federal officials have a Labor Day target date for a settlement, and that they’ll continue “outreach” to all AGs. I bet they will.

    The banks want at least 40 states signing off on this settlement before they agree to it. I can think of at least 10 AGs right now who wouldn’t agree to the broadest terms. Democrats Madigan, Schneiderman, Delaware’s Beau Biden (the VP’s son, who has joined Schneiderman on his intervention into the Bank of America settlement with investors over mortgage backed securities), Massachusetts’ Martha Coakley and Nevada’s Catherine Cortez Masto are on the record against a broad liability release in one way or another, and others like Washington’s Rob McKenna (R), Colorado’s John Suthers (R), California’s Kamala Harris, and even Utah’s Mark Shurtleff (R) and Michigan’s Bill Schuette (R) have active investigations or lawsuits on this issue. That’s an incomplete list off the top of my head. And if you add Republican anti-government types who don’t want to see any monetary penalty at all, you might not get to 25 in favor.

    Of course this has earned a couple of people the dubious honor of not being named “wankers” but two of the worst people by Dayen and our man of few words, Atrios.

    From Dayen the honor goes to Kathryn S. Wylde, board member of the Federal Reserve Bank of New York:

       The lawsuit angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public. Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement {…}

       Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street – love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

    And from Atrios, his honor goes to HUD Secretary Shaun Donovan for this gem:

    In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks. … In an interview on Friday, Mr. Donovan defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners. But he said he had not spoken to bank officials or their representatives about trying to persuade Mr. Schneiderman to get on board with the deal.

    Remember HAMP? Right. They just want to help.

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