New York Getting Ready to Prosecute Banks for Violations of Settlement

At the end of the day everyone knows everything. If you start with the premise that the securitization of debt was a farce and that the necessary element of the false securitization of mortgage loans was the foreclosure of those loans, then you move one step closer to understanding the mortgage and foreclosure mess and a giant step forward to understanding and implementing a solution. All the actions, statements and myths promulgated by the Wall Street banks become clear, including their violation of every consent decree,order and settlement they ever made with respect to mortgage loans.
Attorney General Schneiderman of New York seems to understand this and he is taking the mega banks to task for violating a settlement that looks like pennies on the dollar. He doesn’t care why they violated the $26 Billion settlement but he is taking action for their consistent violation of the settlement. But I care about the reason and so should you. The reason is nothing less than the obvious: the mega banks expose themselves to liability that far exceeds the terms of the settlement.
In any normal circumstances when a big company enters into a settlement that amounts to pennies on the dollar, the company rushes to make the settlement final by paying the money and performing the actions required in the agreement. Thus they commit illegal acts and get away with it by entering into an agreement that looks big but doesn’t put them out of business. They are nothing but anxious to put the settlement behind them.
So why are the mega banks refusing to abide by a $26 billion settlement on a multi- trillion theft? The answer by pure logic and my sources is that if the banks actually performed on the material portions of the agreement they risk going out of business. Why?
The answer is arithmetic. The purpose of the settlement was to stop illegal foreclosure practices and compensate those who lost their homes in illegal Foreclosures (as opposed to simply reversing the Foreclosures and starting over again which is what any court of law would require if there was an admission that the documents and claims in foreclosure were false).
Arithmetic is the answer. Without Foreclosures, the banks cannot support their claim of failure of the mortgages. If the loans are reinstated then the “sales” of loans and mortgage bonds become immediately subject to an accounting and to payback to investors who bought empty bogus bonds issued by a trust that existed in name only. If the loans must be considered performing loans because of any of the reasons contained in those multistage settlements, consent decrees,orders and agency settlements, then the banks must reimburse the insurers, buyers and counter-parties on hedge products like credit default swaps.
Thus satisfactions the settlement agreement exposes the banks to a reduction in their tier 1, tier 2, and tier 3 capital such that the reality and empty underbelly of the banksia displayed for all to see. Those banks and are not nearly as big as they say they are and must be resolved by the FDIC because they actually do not have the minimum capital requirements that all banks must have to continue operations. That is why the Brown bill in the U.S. Senate is dead on right.
If the Foreclosures were invalid there is only one way to correct them, just like any title problem. Correct the defect In Title by reversing the foreclosure or get an affidavit from the homeowner joining in some correction of the corrupted title resulting from fake Foreclosures.
With trillions in liability at stake of course the banks are violating the settlement agreements and consent decrees. All they can do is try to control state and federal action by providing photo opportunities and planted articles around the media to make people feel good. But neither the housing market nor the economy will get the stimulus necessary for a full recovery until the truth is addressed instead of pretending you can fix this mortgage and foreclosure mess with Tiny settlements and promises that nobody intends to keep.
Wells Fargo, BofA threatened with lawsuit over mortgage allegations
http://www.bizjournals.com/dallas/blog/morning_call/2013/05/wells-fargo-bofa-threatened-with.html

Eric Schneiderman: Banks Have ‘Confidence’ That Law Enforcement Is Not Taking Violations ‘Seriously’
http://www.huffingtonpost.com/2013/05/07/eric-schneiderman-banks_n_3226992.html

BOA DEATHWATCH: MEMORANDUM OF UNDERSTANDING IN PLACE FOR TWO+ YEARS

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COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

EDITOR’S NOTE: Put BOA on the endangered species list. The regulators entered into secret “MOU” in May, 2009 where the Bank was put on notice that it was operating without sufficient capital and that its management was not meeting standards of the industry. With the upcoming slew of “defaults” and BOA’s balance sheet showing assets that are either non-existent or vastly overvalued, the time is nearing for government action. The minimum is a psinoff of Merrill Lynch, but the writing is on the wall and the Bank is headed for extinction because it cannot raise minimum capital requirements to offset the write down of the mortgages it is claiming or the buy-backs demanded by Fannie and Freddie.

The effect on the housing market and foreclosures in general is difficult to measure at this time. BOA is resisting compliance with the MOU and the OCC Consent decree, which are interrelated. If the mortgages they claim on their books don’t actually belong to BOA (which many don’t, in my opinion) then their capital will plummet and the only answer will be nationalization or resolution under the Dodd-Frank Act. Whatever hope they had to survive is being diminished by their arrogance.

It will be especially interesting to see what happens to Quality Loan Service which is controlled by BOA. QLS serves as the “Substitute trustee” in tens of thousands of foreclosures in non-judicial states. It is the equivalent of BOA declaring by fiat that it is the creditor when they never loaned any money nor did they buy the loans, and then naming itself as the “independent trustee” on the deed of trust. Plenty of problems with that scenario. Whoever takes over that function will have a Madoff-like mess on their hands potentially requiring reversal of tens of thousands of foreclosures.

WSJ: BofA warned by regulators

by CalculatedRisk on 11/22/2011 12:35:00 AM

From the WSJ: BofA Warned to Get Stronger

Bank of America Corp.’s board has been told that the company could face a public enforcement action if regulators aren’t satisfied with recent steps taken to strengthen the bank … The nation’s second-largest lender has been operating under a memorandum of understanding since May 2009 … In recent months, regulators met with Bank of America’s board and said they wanted to see more progress … Otherwise the informal order could turn into a formal and public action …

This would be a huge addition to the “Unofficial” problem bank list (We only include banks operating under a formal action on the list). A formal action would mean greater restrictions – and would bring more negative publicity to the bank.

Earlier:
Existing Home Sales in October: 4.97 million SAAR, 8.0 months of supply
Existing Home Sales: More on Inventory and NSA Sales Graph
Existing Home Sales graphsE

 

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