5 banks in $26B settlement with feds over abuses

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ALBANY, N.Y. - New York and California have agreed to sign the proposed settlement between U.S. states and the nation's biggest mortgage lenders over foreclosure abuses, according to a source close to the negotiations.

Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial agreed to the settlement — for an estimated $26 billion as of Wednesday for lowering homeowners' mortgage principal, refinancing, a reserve account, and checks to homeowners. According the New York Times, federal officials hope the value of the aid will eventually reach $39 billion.

However, the banks were seeking releases from further legal liability, which have been one subject of negotiations for the past several days with state attorneys general who wanted to pursue investigations.

The settlement grants immunity from civil lawsuits brought by the attorneys general against the lenders over narrowly defined "robo-signing" cases.

$26B mortgage deal reached: Who benefits?

The source, who was not authorized to disclose the agreement before an announcement expected Thursday or Friday, said other holdout states — Delaware, Massachusetts and Nevada — all have or are imminently expected to also agree.

The source said the agreement will enable authorities to pursue all claims over mortgage-backed securities that collapsed. It lets them use facts from robo-signing claims in securities, insurance and tax fraud cases.

It also preserves the lawsuit filed last week by New York Attorney General Eric Schneiderman that accused some banks of deceit and fraud in using an electronic mortgage registry that allegedly put homeowners at a disadvantage in foreclosures.

Schneiderman's office declined to comment Wednesday night. New York has some 118,000 "underwater" borrowers whose homes are worth less than their mortgages and would expect to get $136 million as a guaranteed cash payment from the settlement.

California, with more than 2 million underwater borrowers, would get $430 million. Florida would get $350 million and Texas $141 million.

Most states had already backed the nationwide settlement stemming from abuses that occurred after the housing bubble burst. Many companies that process foreclosures failed to verify documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures — an action known as robo-signing.

The deal would be the biggest involving a single industry since a 1998 multistate tobacco deal. It would force the five largest mortgage lenders to reduce loans for about 1 million households. The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth.

The deal includes $2.7 billion in guaranteed cash payments altogether, and estimates of $1.5 billion for payments to victims of wrongful foreclosure, $3 billion from a refinance program and $32.3 billion in homeowner benefits from loan modifications.

[Jkinge]

I personally think that bankruptcy is much better than foreclosure. You seem to bounce back from bankruptcy a lot faster now days. They have secured credit cards and all kinds of ways to rebuild you credit. But foreclosure is more like an event that even with recovered credit, could keep you from buying another home. Even if the information is no longer on your credit report after seven years, your lender is still going to ask you is you had any previous foreclosures or not. There's an article below that talks about using loan mods and/or bankruptcy to stop the foreclosure process that I liked.


http://www.reversemortgagelendersdirect.com/reverse-mortgage-calculator/
http://www.reversemortgagelendersdirect.com/reverse-mortgages-pros-and-cons/
http://www.reversemortgagelendersdirect.com/reverse-mortgage-disadvantages/

[cannuc]

It is urged in the strongest possible terms...Those who receive paper work in exchange of some money not to sign any paper work that contains the Words,,,"MERS will be held blameless" or MERS shall have the authority to foreclose."
Mers through their loobyists have managed to insert the above phrase in the setttlement in order to continue doing the damage of separating the note from the mortgage... and get away with the crime...

[ammo17]

ALRIGHT now lets see if our INJUSTICE DEPARTMENT,will prosecute any of these people for pulling the biggest PONZI SCHEME in our country`s history.madoff got 150 years for billions,these people cost us trillions.

[Jhihmoac]

Regardless of whatever has transpired, banks will not be generous with home mortgage loans nowadays...

[irreverentasever]

What great role models for democracy and capitalism. The bottom line is politicians of all persuasions turn a blind eye, slap them on the wrist and say try not to do that again.

[tiredofliberals]

People don't realize that they did all this under the direction of congress telling them to give loans on stated income and to people who could not afford it

[1pheasant1]

Will you ever grow tired of making excuses for the bankers?

[josephp5]

That's completely untrue---a cover story promoted by the banks in an attempt to derail the Dodd-Frank reforms.

But it should be obvious to anyone who was alive in 2005: Do you remember not being able to open your mailbox without a dozen flyers falling out or turn on your radio without hearing a Countrywide Finance commercial---all urging people to refinance now while the going is hot? What there a government regulation was forcing them to do that? Of course not! The banks were actively searching for anyone, qualified or not, to refinance their mortgage (they even had a "liars loan" for people who needed to exaggerate income to qualify). Banks new they could do this because, thanks to the housing bubble, they could repackage the junk into "Collateralized Debt Obligations" so they didn't stink so badly, insure them with worthless "Credit Default Swaps" to make them look safe, get their buddies at credit rating agencies to give the junk a thumbs-up, and sell them to suckers. It's that simple.

[credibility2]

While in part this is a positive move in the right direction, many are still troubled that so many individual borrowers were liars, frauds, and imbeciles. Many who ended up getting duped went into the situation knowing full well they didn't qualify, given their financial status. Many of these people also lied and misrepresented their work, credit and other financial aspects. Many also were greedy figuring the expanding housing market valuations would continue and they could make a lot of money quickly by getting a home and then quickly selling it for a substantial profit. Many of these same individuals didn't even bother to seek legal counsel or even get several quotes on mortgage contracts and rates. There wasn't any excuse for this ignorance other than laziness and taking a vested interest in their asset. Many so-called lenders were also intimidated and threatened by the federal government (Dem policies, Fannie and Freddie) into throwing these mortgages to the masses in an attempt to turn a privilege into a right and entitlement. Banks, Fannie, Freddie, current laws, and especially the general public need
to change. Responsibility is shared and the homeowner needs to take ownership of their own responsibility in all of this. Thus far, they haven't and are being excused by the government. Their errors on many levels are just as egregious as what the big bad lenders did to them. Ignorance and laziness aren't excuses.

[1pheasant1]

Ignorance and laziness aren't excuses.
******************************************
Yet you use them to defend the bankers. Those poor crooked bankers.

[josephp5]

If the banks and the borrowers share responsibility, then why did only the banks got bailed out?

[RichZubaty]

Peanuts. The only good news is that apparently this does not forestall criminal lawsuits against the bank fraudsters. But who besides Schneiderman has the cojones to pursue that? Jail the Bankers. Fines do not work. They need to see the inside of a cell before they'll stop their fraudulent/criminal activities.

[hammertime2]

Just what we need more slapping on the wrists lets just face it we are all just sheep getting slaughtered. $2000.00 what the hell do you buy with that , listen up gov heads people need to go to prision, david j stern of ft lauderdale should be first, followed by marshal watson and so on , these banks will not do what the gov asked them to do they will still lie and cheat you do not belive it, i have just sent evidence to several senators and congressmen with a recorded message from my case back in 2003 , it seems that gmac now (ally go figure that cover up ) lost my files and never told anyone this is a big cover up and with that recorded message i hope they listen, check out the rip off report .com for the tons of complanits.

[bileven]

Question is, how much did it cost the lobbyists to get the sweet deal for the bankers?

[saabnut]

This is a $7.2 billion deal. The "$32.3 billion in homeowner benefits from loan modifications", is a write-down that will occur regardless. The loan modification will only benefit the banks, by keeping an unsustainable mortgage in "current" mode.
The depression ends when the bankers go to jail. As long as there is no justice, the masses will remain in depression mode.