Archive for mortgage meltdown

Elizabeth Warren Reads Riot Act to Holder for Not Prosecuting Big Bank Mortgage Fraud


Elizabeth Warren gobsmacked

Today the Justice Department filed a lawsuit against the Texas voter ID law. That is welcome news, and it's great to see Attorney General Holder step up like that. However, he needs to be equally aggressive with prosecuting bank mortgage fraud.

Your Daily Dose of BuzzFlash at Truthout, via my pal Mark Karlin:

Okay, so Senator Warren actually wrote a polite, detailed letter to Attorney General Holder. There was no shouting or acrimony. [...]

It may be professional in tone, but Warren's letter is a direct challenge to the criminal impunity and limited fines that the DOJ has provided to Wall Street and their multiple schemes to defraud both mortgage borrowers and investors.

The Huffington Post featured the letter, which bluntly states:

I am concerned that this might be yet another example of the federal government's timid enforcement strategy against the nation's largest financial institutions. I believe that if DOJ and our banking regulatory agencies prove unwilling over time to take the big banks to trial or even require admission of guilt when they cheat consumers and break the law -- either out of timidity or because of a lack of resources -- then the agencies lose enormous leverage in settlement negotiations.

There are a number of federal agencies involved in the lax regulation and minimal punishment (no jail time) of the financial industry for its role, particularly in the creation of a toxic subprime mortgage scam that played a key role in the economic collapse that burst open in the autumn of 2007.  [...]

However, some readers have written e-mails blaming mortgage borrowers for their own plights.  This may be accurate in some cases, but the massive defaults that have occurred have come from so many different kinds of lending fraud that it is difficult for the average consumer of news to keep up with them.  And it is proven that minority communities were targeted for fraud and manipulation by lenders.

To name just a few, banks targeted minority communities for second "balloon" mortgages without fully disclosing the terms or expanding mortgage payments.  Banks re-possessed homes through robo-signing of foreclosure notices without examining if the houses were actually behind in payments or the details of the chain of ownership.  Bank employees were told not to speak publicly about the deceptive practices employed to push usurious lending.   Banks would make "adjustment" agreements with some under the water homeowners only to sell blocks of mortgages to secondary lenders who wouldn't honor the agreements and, instead, sold the foreclosed homes and properties to investors such as the Blackstone Group. Even investors were not fully informed of the risks of bundled mortgages. [...]

One key factor that Warren alludes to is that by not appropriately applying legal sanctions against those who abused the mortgage system, citizens are left to think that the mortgage holders are solely at fault, because the DOJ is protecting the mortgage lenders rather than those struggling to save their houses, families and dreams from predatory and deceptive practices.

Please read the entire post here.


VIDEO- President Obama: "We have reached a landmark settlement with the nation's largest banks."


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 Here's the headline:

(Reuters) - The biggest U.S. banks will provide about $25 billion in relief to distressed homeowners, as state and federal officials hold lenders responsible for taking illegal shortcuts during foreclosures and for other deceptive practices.

Here's some perspective via David Dayen's post that is filled with information:

I’ve done the math on this before, and you’re talking about $20,000 (when homes are on average underwater $50,000) for 1 million borrowers (when there are 11 million underwater). If Donovan is correct about 2:1 maybe you’re at $30,000-$40,000. And the banks have three years.

There will be plenty more to say about this once we get all of the facts of the claim. In addition, this will have to go before a federal judge to sign off on the settlement. And we won’t know for many years whether this promise on loan modifications, unlike all the others, will take. But it’s going forward. And now the only hope for accountability and justice for the crimes of the financial crisis lie in some scattered lawsuits grandfathered in and Schneiderman’s RMBS working group. One thing is clear – the banks relieved themselves of a significant portion of liability at a price they believe they can easily handle.

This is so not my area of expertise, but while there are some positives, I'm feeling queasy.

Thom Hartmann just now on his radio show, slightly paraphrased: "They know that without this deal, the banks could drop a billion dollars into the election and wipe out the Democrats."

Thank you, Citizens United.


Why I love my state: California calls $25-billion mortgage settlement "inadequate"


I am so grateful to live in a state that isn't completely bonkers. Emphasis on completely. Los Angeles excluded (Yes, I'm from L.A.).

Remind me to send Kamala Harris a thank you card.

Via the L.A. Times:

Calif. Atty. Gen. Kamala D. Harris' office has called a proposed $25-billion settlement with the nation’s mortgage industry “inadequate.”

"We've reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California,” Shum Preston, a spokesman for Harris, said in a statement. “Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners and meaningful enforcement that ensures accountability.  At this point, this deal does not suffice for California." [...]

Schneiderman was appointed Tuesday by President Obama as co-chairman of a new investigative effort that will try to coordinate existing federal and state probes into mortgage practices before the financial crisis. Schneiderman promised Wednesday to move aggressively.

A spokesman for Schneiderman said in a statement that the New York attorney general would not sign onto a foreclosure settlement that would limit his ability to carry out investigations of the mortgage crisis.

A thorough investigation is a must, and even $25 billion is, indeed, inadequate.


State of the Union address gives Pres. Obama chance to lay political traps for congressional Republicans


Nothing like seeing some GOP feathers ruffled, especially after all their obstruction and obsession over making President Obama a one term president.

Via The Hill:

President Obama will use this year’s State of the Union Address to draw a clear line between himself and congressional Republicans. He’s looking forward to a slew of television shots showing grim-faced GOP lawmakers reacting with stony silence to policy pitches he hopes will resonate with middle-class voters in an election year.

The White House has said in no uncertain terms that Obama’s path to another term will be cleared by open conflict with a Republican-controlled House that is deeply unpopular with voters, so observers expect a pugnacious Obama to take the lectern in his last State of the Union Address before the November election. [...]

This will give Obama an opportunity — with the lights and attention on him — to show that he’s the adult in the room, and as Democratic consultant Karen Finney put it, to show that “Republicans have been childish. 

The White House denies that it will be a campaign speech, saying that the president's focus will be policy. Oh, and there may be a mention of this (via Housing Wire):

President Obama could mention in the State of the Union address Tuesday new developments in the negotiation between mortgage servicers and government officials, according to two members of Congress. [...]

"There seems to be evidence that he may do something," said Sen. Sherrod Brown, D-Ohio, in a conference call with reporters Monday, "and we hope 'the something' is launching a wider investigation."

Rep. Brad Miller, D-N.C., said rumors were floating around Washington that the president may even announce the settlement, though he couldn't confirm that. ... Justin Ruben, executive director of the progressive group, said Monday in a recent survey of previous Obama supporters, 60% said they would be unlikely to help him this November should the settlement become a "sweetheart deal for servicers."

Let the pre-rancor begin....