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EDITOR’S NOTE: In the first real step toward reality, the megabanks have entered talks with the attorneys general of all 50 states to establish the fund. The primary focus at this point appears to be victims of fraudulent foreclosure. There is no precedent for this in banking history anywhere. It is similar to BP’s payments to spill victims or Germany’s payment to survivors of the holocaust. Apparently for all their bravado, the megabanks are getting the picture and the states are getting a taste for the lifeblood they need pumped back into the economy. —- Neil Garfield
States, mortgage lenders in talks over fund for borrowers in foreclosure mess
Washington Post Staff Writers
Wednesday, November 17, 2010; 12:03 AM
State attorneys general and the country’s biggest lenders are negotiating to create a nationwide fund to compensate borrowers who can prove they lost their home in an improper foreclosure, state and industry officials said.
The fund would present a solution for both sides, helping banks avoid lengthy and costly court challenges from homeowners and aiding state investigators in their efforts to seek relief for homeowners who were wronged, the officials said.
Discussions are continuing over the size of the fund, who would administer it and what kind of proof homeowners would have to present to get access to the money. But there is a consensus between the lenders and state officials that some sort of financial remedy is necessary to avoid the turmoil that could result from homeowner challenges.
Any settlement between the banks and attorneys general almost certainly would force lenders to put more resources into modifying the loans of homeowners who missed their payments, rather than rushing toward foreclosures, state officials said. The banks could also be barred from foreclosing on homeowners while simultaneously negotiating mortgage modifications.
The fund, the first of its kind in the mortgage industry, would mirror victim-compensation efforts set up in recent years in response to the BP oil spill in the Gulf of Mexico, the shootings at Virginia Tech and the terrorist attacks of Sept. 11, 2001. Those were all administered by a specially appointed czar, Kenneth Feinberg, who had the tough task of figuring out what each victim should receive.
Iowa Attorney General Tom Miller, who is leading a joint, 50-state investigation, declined to comment Tuesday on the specifics of the group’s negotiations with the banks but said that hammering out details could delay a final agreement for a few months.
Miller said that’s because the remedies being discussed go far beyond the problem of “robo-signing” and into deeper problems facing the mortgage servicing industry.
“We want to be more creative and figure out a way to make the system better,” Miller said in an interview. “For instance, rather than having them pay a huge amount of fines, much of that money [could instead] go to adequate resources to make this work.”
A quick settlement may be the best solution for the industry, homeowners and state and federal investigators, given the uncertainty the foreclosure mess has cast on the health of the banks and, more broadly, the housing market, officials said.
“It is in everyone’s best interest to get this settled and behind us,” Bank of America chief executive Brian Moynihan said Tuesday at a financial services conference in New York.
Biggest firms targeted
The attorneys general have been negotiating with each bank separately but pressing for similar terms. The state officials have been focusing on the three largest servicers – Bank of America, J.P. Morgan Chase and Wells Fargo – hoping agreements with those companies will serve as a model for others.
Each side sees a fund for distressed homeowners working differently. Among the most contentious issues, besides how much each lender would contribute, are the time period to be included and who would decide which homeowners deserved access to the fund.
Another unresolved issue is whether banks will reduce the principal for borrowers whose homes have dropped dramatically in value over the past few years. The financial industry last year fought against legislation that would allow bankruptcy judges to order such modifications.
Even as they acknowledged some problems in their foreclosure processes, executives from the biggest banks have argued that they are properly seizing homes from borrowers who missed payments. But the courts are still grappling with whether the sloppy or forged paperwork in many foreclosures amounted to fraud and whether those cases should be thrown out.
At a hearing of the Senate banking committee Tuesday, Chairman Christopher J. Dodd (D-Conn.) took banks to the task.
“Many in the industry were too quick to call these problems ‘technical’ and to insist that nobody is losing a home to foreclosure without cause,” Dodd said.
He called all parties involved to work together to “finally put an end to the housing crisis.”
“Even the industry now acknowledges that the current mortgage-servicing business model is broken and is simply not equipped to deal with the current crisis,” Dodd said.
Added Sen. Jon Tester (D-Mont.): “I’m going to remain very concerned about the scope of this problem, the impact it could have on our financial system and on the housing market. . . . It strikes me that some of the biggest servicers have been a little bit glib about [the] potential magnitude of these risks.”
Frustration at hearing
The frustration wasn’t confined to the dais. As David Lowman, chief executive of Chase Home Lending, delivered prepared remarks saying how serious his company is taking the foreclosure issues, how executives “regret the errors in our affidavit process” and have “worked hard to correct these issues,” a protestor in the audience rose and shouted, “That’s a lie! That’s a lie!”
Another unfurled a banner reading “Dave Lowman lies.”
One senator after another recounted tales of homeowners expressing their frustration with the mortgage-modification process. Many have been confused by the fact that even as they try to negotiate modifications with servicers, the foreclosure cases pending against them continue unabated.
Miller, the Iowa attorney general, said Tuesday that the multi-state probe would seek to end such practices. He added that he and his staff in Des Moines had met twice with officials from Bank of America and that such negotiations would continue with that firm and others, such as J.P. Morgan Chase and Ally Financial, that have admitted serious foreclosure paperwork problems.
“There’s still a long ways to go, and still a lot of things to find out and a lot of discussions to have,” Miller said. “But as I’ve said just about every time I’ve talked about this, the goal once we got in this mess is: How can we come out of this mess better off than when we started?”
chaa@washpost.com dennisb@washpost.com
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud |
I have Been ripped off for years now I am in Ch 13. I don’t know what to do all ever do is pay lawyers. every one seems to have a plan but im still getting messed over now the Court BK is messing me over then at the end of the plan where will i be. does any one know. all every one does is rip me off when will it stop
John T Deane 352-246-6623
Gee, my false foreclosure happened in 99. Wonder how far back they might go to right some of the wrongs.
I CAN NOT believe (actually I can) that they’re trying to put a band aid on this. A slap on the hand and clean up your mess and please don’t do that again!?
A COMPENSATION FUND?!!! I am totally outraged and if they get away with this without prosecution they will do it again!! Don’t you and I suffer for our wrongdoings? A principal reduction to offset their crimes???
I personally have been fighting our foreclosure for 2 years come January. We were slyfully evicted this past July 4th weekend. Ironic timing I would think. Didn’t have time to file an Injunction with the Supreme Court.
Here, when they evict you, if you’re not out in 48 hours they show up with a moving company and sheriffs and move your belongings and family out to the road, but did get to file my case with the Supreme Court after we were semi settled.
The other side (Indymac, Deutsche and Onewest) have responded and I have replied just last week. The case is now pending.
And I agree with FACTS THAT WILL BLOW YOUR MIND. How are we so privileged to pay more and more taxes to make our government larger and wealthy and pay for bailouts of institutions that have been breaking the laws and taking that TARP money overseas to profit (something wrong with this picture) we didn’t even have a say so or a piece of the action.
I argee that the homeowner will not benefit from this PONZI sceme. I know of someone that got “a settlement” from Ameriquest and it was for 52 lousy dollars. That’s it. NO DEAL.
LeeAnn,
How do I find your site? I would like to show my support.
The victims will never see any compensation resulting from any settlement.
Case and point, the California AG Settlement vs. Countrywide/BofA. I’ve yet to hear of anyone who received a loan mod from that useless settlement. Where is all that money! It sure the hell isn’t being used to modify loans.
We need to start a campaign to push the AGs to investigate, not settle.
lucy,
Finally someone else who is looking at the bigger picture, but screw reshaping we need to start from scratch abolish state federal Constitutions and all use what we have learned and start from the ground up. I’m finally getting around to my online petition to do just this, am going to take a nap now but will post later.
LeeAnn,
God be with you. Be safe, you are not alone and we don’t want to lose you.
Concerned,
You know we could always look at this, is as bribery. Especially, when supposedly it’s for us, the state AGs are the ones negotiating the deals (when they could have done it loooong ago when Mass.’s AG went after Fremont, Litton, Goldman Sucks), as long as we say nothing and just watch what happens, if they accept then their ALL busted. Because we’ve been seeking justice in courts everywhere, the AGs say something and all the sudden “oh here’s some hush money make a fake fund, fool the homeowners into signing up for ‘eligibility’ but actually releasing us from ‘liability’ like with ‘loan modifications'”. Don’t fall for it, if they take that money, we take them all to court. That’s admissions of RICO and witnessing of bribery and corruption baby. (not calling you baby, you know)
I really do not see HOW a victim’s compensation fund solves any of the problems where the defective paperwork and resultant clouded titles exist.
I can understand a fund to help those who have no clouded title issue but were wronged in other ways.
The clouded title issues will not go away with just setting up a fund.
I saw that the actual testimony by three experts recommended funding the Dodd act where there is a provision that would advance funds for borrowers’ legal fees to fight foreclosure.
THAT is what is needed, possibly also at the STATE level, since the federal program is unlikely to be funded by a banker-controlled house and senate.
I am starting a hunger strike today, to try forcing a moratorium on evictions until there is more oversight with the foreclosures. You can read about our story on my site. I think this will get a lot of sympathy and attention at this time, and that was just what I am aiming for. I don’t want to do it, but…..today we are getting evicted after a circus of a foreclosure with all of the textbook mistakes. Couldn’t afford a lawyer, too many medical bills. But this is a way to help ourselves and others. Wish me luck. The little they make on our old house with not be worth the ill will they will generate. And this idea could catch on. Historically hunger strikes have been a great way to bring about change peacefully.
http://theeconomiccollapseblog.com/archives/12-facts-that-will-blow-your-mind-federal-employees-and-members-of-congress-are-getting-rich-while-those-of-us-who-pay-their-salaries-suffer
12 Facts That Will Blow Your Mind – Federal Employees And Members Of Congress Are Getting Rich While Those Of Us Who Pay Their Salaries Suffer
Do you remember the days when getting elected to Congress or choosing to work for the government was referred to as “public service”? The idea was that you would be making a sacrifice for the greater good of the country. Well, those days are long gone. Today, getting elected to Congress or working for the federal government is a good way to get rich. Median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009, and yet the personal wealth of members of Congress and the salaries of federal workers (especially at the higher levels) continue to explode. A lot of corrupt politicians and federal fat cats are raking in stunning amounts of cash, and we are the ones paying the bill. There is certainly nothing wrong with making a lot of money, but does it seem right that so many of our “public servants” are getting filthy rich while so many of the rest of us are barely getting by?
Posted below are 12 facts that will blow your mind. Most Americans have no idea just how obscenely wealthy many members of Congress are, and most Americans are totally clueless about how cushy some of these U.S. government jobs are. If there is one place in America where the good times are still rolling (other than Wall Street), it would have to be Washington D.C.
Members of Congress and employees of the government are supposed to work for us. We are the ones who pay their salaries. But today, they are the ones “living the dream” while most of the rest of us scramble just to survive from month to month….
#1 According to an article in the Hill, House Speaker Nancy Pelosi’s net worth soared from $13.7 million in 2008 to $21.7 million in 2009.
#2 In 2005, 7420 federal workers were making $150,000 or more per year. In 2010, a whopping 82,034 federal workers are making $150,000 or more per year. That is more than a tenfold increase in just five years.
#3 More than half of the members of the U.S. Congress are millionaires.
#4 The total compensation that the U.S. government workforce is going to take in this year is approximately 447 billion dollars.
#5 Today, all members of Congress earn at least $175,000. This is far, far more than the average American makes.
#6 60 percent of the federal government workforce is represented by labor unions.
#7 The median wealth of a U.S. Senator in 2009 was 2.38 million dollars.
#8 In 2005, the U.S. Department of Defense had just nine civilians earning $170,000 or more. When Barack Obama took office, the U.S. Department of Defense had 214 civilians earning $170,000 or more. In June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.
#9 Insider trading is perfectly legal for members of the U.S. Congress – and they refuse to pass a law that would change that.
#10 According to a recent study conducted by the Heritage Foundation, federal workers earn 30 to 40 percent more money on average than their counterparts in the private sector.
#11 When you factor in such things as retirement and health care benefits, the compensation gap between federal workers and private sector employees gets even larger. Just consider the following quote from the Heritage Foundation study mentioned above….
“Including non-cash benefits adds to this disparity. The average private-sector employer pays $9,882 per employee in annual benefits, while the federal government pays an average of $32,115 per employee.”
#12 The personal wealth of members of the U.S. Congress collectively increased by more than 16 percent from 2008 to 2009.
So can the U.S. government continue to afford to shell out nearly half a trillion dollars to federal employees every single year?
Of course not.
The truth is that the U.S. government is flat broke and yet most of our politicians still seem extremely resistant to consider anything that would even slow down the wild spending that has been going on.
So what do we get for the $447 billion that we are spending on federal workers every single year?
Not a whole lot – unless you consider paperwork, bureaucracy and a gigantic pile of ridiculous regulations to be a good thing.
America needs a fundamental shift in attitude. Instead of expecting a “nanny state” to take care of us, we should desperately try to reshape the federal government into a much smaller entity that will finally get off our backs.
We have been living beyond our means for decades, and we cannot afford to pay for this bloated behemoth of a government for much longer.
Hopefully Americans will wake up and do something about this nonsense before it is too late. Because right now the federal government has become an out of control monster that is gobbling up everything in sight.
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