AG Settlement: 3 1/2 cents on the dollar


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EDITOR’S NOTE: Calculated Risk has the right idea but the wrong calculation. It is relying on published reports of underwater houses and the amount they are underwater. The true figure is at least $1.4 trillion, which would make the settlement around 1.75 cents on the dollar. And it does not include all the foreclosures that went forward even though the homeowner was seeking modification that would present affordable payments and a better return to investors than foreclosure.

This so-called settlement is nothing more than a public relations stunt. It insures that money and politics will continue to be mixed together. It is virtual amnesty. An attorney general is charged with protecting citizens of the state.

by CalculatedRisk SEE ARTICLE

I missed this last week from Adam Belz at the Des Moines Register: Iowa AG says mortgage settlement should be done by Christmas (ht Kevin)

Iowa Attorney General Tom Miller said Thursday a settlement between almost all state attorneys general and the five largest mortgage servicers should be finalized before Christmas, with or without California.

The deal, which Miller has been trying to negotiate since March, would release the five servicers – Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo – from legal claims on past home loan servicing and foreclosures. The deal would not prohibit individuals from suing the banks, or government prosecutors from suing banks over issues related to the packaging of home loans into mortgage-backed securities.

In return the banks will agree to pay for what Miller calls “substantial principal reductions” for homeowners who are underwater, and agree to a set of mortgage servicing standards, interest rate reductions, and cash payments to some homeowners who’ve alrady gone through foreclosure.

>And from Bloomberg today: Ex-Cuomo Aide Said to Be Among 4 Foreclosure-Monitor Candidates

Steven M. Cohen, who was the governor’s secretary, is one potential foreclosure monitor, according to the person, who declined to be identified because the negotiations are secret. That person said North Carolina Commissioner of Banks Joseph A. Smith Jr. is also a candidate, as did a second person who asked not to be identified.

Selection of a monitor is one of the final issues to be worked out between the banks and state and federal officials, said the people. Selection of the monitor is a key issue for the regulators because success of the agreement will largely depend on his or her work, one of the people said.

Other candidates are Nicolas P. Retsinas, a former assistant secretary of the U.S. Department of Housing and Urban Development, and ex-Federal Deposit Insurance Corp. Chairman Sheila Bair, one of the people said.

The discussion of possible principal reductions is too optimistic. They are discussing something like a $25 billion settlement (including California) and only a portion would be for principal reductions. Currently, according to CoreLogic, homeowners with negative equity (including 2nd liens) are an aggregate $699 billion underwater. Even if the entire settlement went to principal reductions, the average underwater homeowner would only see a few percent of their negative equity eliminated.

The major impact from this settlement on the housing market would be to reduce the number of seriously delinquent loans – either by modifications (including principal reductions) or through foreclosures. Currently, according the LPS

13 Responses

  1. “Iowa Attorney General Tom Miller said Thursday a settlement between almost all state attorneys general and the five largest mortgage servicers should be finalized before Christmas, with or without California.”

    Only “settlement” needed is moratorium on all foreclosures until full disclosure of accounting trail and paper trail from origination. Penalties, damages and jail for fraud. Then adjust amount due true creditor to match that creditors true books – every single mortgage paid on time or not.


  3. […] AG Settlement: 3 1/2 cents on the dollar […]

  4. And yet these molesters who raped the millions still do not go to jail

  5. (Reuters) – U.S. securities regulators sued six former executives at Fannie Mae and Freddie Mac on Friday, including ex-CEOs of both mortgage finance companies, saying they misled investors over exposure to risky home loans.

    The U.S. Securities and Exchange Commission sued three former executives at Fannie Mae and three at Freddie Mac. The civil charges were brought in two separate lawsuits filed in U.S. District Court in Manhattan.

    The SEC accused former Fannie Mae CEO Daniel Mudd, former Freddie Mac CEO Richard Syron and four other defendants of knowingly approving false statements to investors that drastically misrepresented the extent of the firms’ exposure to toxic mortgages.

    Spokesmen for Mudd and Syron did not immediately respond to requests for comment.

    The SEC said both firms have agreed to cooperate with the agency and have agreed to admit responsibility for the alleged conduct, without agreeing or denying that they are liable. The firms have also entered into non-prosecution agreements with the agency, the SEC said.

    Freddie Mac and Fannie Mae have been propped up by $169 billion in federal aid since they were rescued by the government in 2008.

    The cases are SEC v. Daniel Mudd et al., No. 11-9202 and SEC v. Syron et. al No. 11-9201, U.S. District Court for the Southern District of New York.

    (Reporting by Basil Katz, editing by Gerald E. McCormick and John Wallace)

  6. WASHINGTON (AP) – The Securities and Exchange Commission has charged six former top executives at Fannie Mae and Freddie Mac with civil fraud, saying they misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust.

    By Susan Walsh, AP
    Former Fannie Mae CEO Daniel Mudd testifying on Capitol Hill in December 2008.
    By Susan Walsh, AP
    Former Fannie Mae CEO Daniel Mudd testifying on Capitol Hill in December 2008.
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    Those charged include the agencies’ two former CEOs, Fannie’s Daniel Mudd and Freddie’s Richard Syron. They led the companies when the housing bubble burst in late 2006 and 2007. The four other top executives also worked for the companies during that time.

    Fannie and Freddie own or guarantee about half of U.S. mortgages, or nearly 31 million loans. The Bush administration seized control of the mortgage giants in September 2008.

    The SEC announced the civil charges Friday in federal court in Manhattan. It’s seeking disgorgement of any profits and penalties against three former executives for each of the government-sponsored enterprises that underwrote and sold billions of dollars worth of subprime mortgages during the housing boom.

    The SEC said the executives knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

    The SEC said Fannie Mae and Freddie Mac each have entered into a non-prosecution agreement with the commission.

    It said each corporation agreed to accept responsibility for its conduct and not contest the agreed-upon statement of facts. They did not admit nor deny liability.

    Lawyers for Mudd and Syron couldn’t be reached


    Companies Agree to Cooperate in SEC Actions

    Washington, D.C., Dec. 16, 2011 — The Securities and Exchange Commission today charged six former top executives of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) with securities fraud, alleging they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

  8. “”Of course, there are critics… They argue that public banks would put public money at risk. Would you be surprised to know that most of the critics are bankers?”

    “That’s why you don’t hear them talking about the $100 billion they lost for the California pension funds in 2008. They don’t talk about the foreclosures that have wrought havoc on communities and tax revenues. They don’t talk about liar loans and what kind of impact that’s had on the economy, employment and the real estate market — not to mention local and state budgets.””

  9. Bottom line, if you are more than 10 % under water the you were molested, raped and robbed. Only a few AGs understand.
    This is consumer abuse at it’s best . We were all touched unappropriaey by the Wall Street and the banks. Yet the government participates by pretending to be blind to the abuse. Home owners can no longer live a peaceful life in this country. We have been scared for the rest of our lives. Thank you Phil, Bill, and Alan.

  10. On 21 / 12 / 2011 is a Court day on the class action lawsuit
    CHASE HELOC account .
    Lets pray for the Judges , to make the right decision

    On the CHASE Class action : Credit Card Minimum Payment ,the
    last days of OPT OUT is January , 30 , 2012

  11. Contact your AG and your reps. and senators and oppose the settlement on the grounds that the amount is inadequate and that banks must not be given amnesty if humanity is to survive as a species.

    When that kind of conduct is allowed to remain unpunished, the message becomes very clear and simple:

    1) Everything goes.
    2) Take what you want and when you steal, better steal a lot from a lot of people.
    3) Always buy people in authority ahead of time.
    4) There is no such thing as “dirty money”. Laundering is never wrong. Just make sure it’s not in prostitution or drugs (the big moral things we keep harping on to people.) Other than that, laundering is good for your health.
    5) Don’t count on government to uphold the law.
    6) Kids don’t matter for the survival of a country. If they die for want of a decent shelter in the midst of winter, so be it. That’s completely in line with the Penn State scandal.

    I shall be kissing America goodbye in the near future. You all might want to get a passport: you’ll need it soon.

  12. Wow. Pennies on the dollar, business as usual. Up in NH it was anything but business as usual yesterday but we shall see….

    A NH State Rep and public speakers indicate that New Hampshire Superior Court Judge Marguerite Wageling may face Impeachment as a result of her actions in the fraudulent foreclosure case of NationStar v. Marie Miller. She ignored a prior Court Order compelling production of the original wet ink note and mortgage:

    Several NH Judges ignore all principles of common sense, law and specific court orders when it comes to holder in due course and standing to sue for foreclosure, writ of possession, etc.

    Then AG and current U.S. Senator Kelly Ayotte was aware of the facts in this case and sat on her hands, the same way she ignored the forgery of a title insurance producer’s name to a mortgage, and was soundly blasted at a Town Hall meeting last month where she stammered in responding to a simple OWS question.

    And the same way she ignored the indicators for the FRM Ponzi scam that was the deadliest consumer fraud case in NH History. Just the facts.

    This is a game changer. Not many states have a Judicial redress panel like NH and I’m certain that many bad judges would love to get rid of it. Wageling was a no-show, having nothing to say for herself. Now we shall see what the Legislature has to say.

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