FT Alphaville gives us the Cliff note version of the national mortgage fraud bank settlement — available in easy to follow graphic or text form:

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Here is the breakdown:

Under the agreement, the five servicers have agreed to a $25 billion penalty under a joint state-national settlement structure.

Nationally:

• Servicers commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief effort options, including principal reduction. Servicers will likely provide up to an estimated $32 billion in direct homeowner relief.

• Servicers commit $3 billion to an underwater mortgage refinancing program.

• Servicers pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).

• Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.

• An independent monitor will ensure mortgage servicer compliance.

• States can pursue civil claims outside of the agreement including securitization claims as well as criminal cases.

• Borrowers and investors can pursue individual, institutional or class action cases regardless of agreement.

Category: Bailouts, Foreclosures, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

23 Responses to “Dissecting the Mortgage Fraud Settlement Agreement”

  1. Robert M says:

    “• An independent monitor will ensure mortgage servicer compliance.”
    Psst! Psst! Scrap metal for sale.
    Approximately 14,000 tons
    Call George C. Parker or William McCloundy @ 202-514-2000

    You may have recommended this but if you didn’t
    The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

  2. Northeaster says:

    If the Government and my State Attorney General negotiated the deal, it must be good for me, the TV says so.

  3. b_thunder says:

    The one aspect of the “Settlement” that is not talked about: the wholesale purchase of the votes of the delinquent homeowners and their families using the “bank” cash, which really is shareholder cash, which ultimately came from the taxpayer-funded bailouts.
    So, 1 million homeowner votes plus the votes of their families bought in large part by the taxpayer cash. I wasn’t going to vote in the elections – there’s noone running who i like or even tolerate watching. But this “settlement” makes me not walk, but run to the precinct and vote to get rid of the criminal underbosses Geithner and Holder and the Big boss who hired them.

  4. MayorQuimby says:

    I’m 100% against any form of bailout for anyone. Regardless..$25 Billion is truly nothing.

  5. Harney says:

    Observations/thesis:

    1. Only a Democratic President could advocate such a bad deal.
    2. Agreement generates a long-term capital loss to the “retained earnings of the American system” for a short-term gain for the political and media establishment (1%).

    - Looking at the top line of banks involved, and how humans behave within systems; a Rico case should be filed against the finance industry.
    - This deal is a typical SEC whitewash, no admission of guilt and no exposure of what occurred.
    - If someone compares the fruit of the bad behavior (industry profits and bonuses) to the penalties paid this is a great deal for the banks.

    Winners:
    Too Big to Fail firms
    President Obama – political talking point, campaign cash
    Democratic Party
    Political entrepreneurs
    Executive Branch
    Losers:
    American Citizens
    American economy
    American businesses that did not engage in damaging behavior.
    Accounting “profession”
    Taxpayers and fiscal conservatives – public insuring reckless behavior without compensation
    Capitalism – as an intellectual concept
    Future generations – increased debt and weakened political institutions.
    Legislative branch – MIA
    Judicial branch – selective enforcement, we do have bankruptcy and anti-fraud laws.

  6. GeorgeBurnsWasRight says:

    If I’m understanding the chart correctly, the people who have already gotten screwed out of their homes get just 6% ($1.5 billion of the total $25 billion) to spread amongst themselves. Is there some way to sue all of the parties involved- the state AGs, the banks and the so-called regulators?

    In the meantime, back to the most pressing issue in our nation, the argument about paying for birth control.

  7. Greg0658 says:

    all Houses of Washington GOP .. umm .. at least can’t blame cohesion for the future malaise .. then we will be One .. the msm will need another infusion mechanism – a $B+ from our hands to theirs – not in 2016 .. there’s a +

    fact is onT – I agree with the line (again) “full employment act for paperPs” not alot of help fixing the real malaise

    still recall reading/hearing the HankP line “if its really not needed – once you build it – its to late” and thats paraphrased because I haven’t been able to find it in the Google Store

  8. number2son says:

    If I hear one more government official crow about this being the only alternative to “years of litigation” or the noxious bullshit that this “helps homeowners now, not later” I’ll puke up my corn flakes.

    If the laws have been watered down since Bill Black’s day so that prosecution is more difficult, then goddammit, reform those laws.

    The current lack of leadership in this country is simply sickening.

  9. whskyjack says:

    I think the part of the settlement that pisses me off more than anything is the $2000 to people that were foreclosed on.
    If I read it right , the idiot next door neighbor, who quit paying on his mortgage and spent the money partying until the early morning hours, causing a summer of sleepless nights for the wife and I……………………. Grrrrrrr ………….

    Jack

  10. Moe says:

    Observations/thesis:

    1. Only a U.S. politician could advocate such a bad deal.

    Republican/Democrat: you cannot truly believe there is a difference these days…?

  11. theexpertisin says:

    The President and his clique have leaned much about pandering for votes from their Chicago roots. This settlement is but one of many schemes, past present and future in a not so subtle strategy to implement class envy – while still earning campaign cash from Big Banks and Wall Street.

    Very clever.

  12. Julia Chestnut says:

    I saw something interesting the other day — BAC was on the receiving end of an injunction in a settlement with the FTC for (essentially) fraud in putting inflated, illegal, and fake charges in people’s foreclosure statements. Thing is, they paid a fine, they went on their way – and the FTC came back and made them pay more, because in the intervening period they had violated the injunction against continuing to defraud people. And got caught again.

    So somewhere, in front of a court, we have BAC in contempt of an injunctive order as part of a judgment. If I understand correctly, doesn’t this get folded into the settlement? If so, does that mean that the court is deprived of the power to further enforce against BAC through a show cause or something? Because if they keep putting inflated, illegal, and fake charges on people’s mortgage and foreclosure statements, after having been caught, of course everyone should have ZERO confidence that it won’t continue to happen for the rest of eternity.

  13. DSS10 says:

    I went through the settlement and threw up in my mouth a little bit….. I could not find anything punitive in the settlement amounts and the way the funding was structured ensured that no one making a claim under the settlement could be aquatically compensated for their losses under the agreement. The state attorney generals should be forced to see how they have screwed those who have been raped by the banks. I used to do contracts in Ukraine and Belerus and this was the kind of shit settlement that you would find in the courts. I honestly feel that we are becoming a third world country.

  14. constantnormal says:

    Thanks.

    So about $20B of this goes into restructuring mortgages, which will keep homeowners making payments longer, and should reduce the number of foreclosures the banks are currently gagging and choking on … I see this as benefitting the banks at least as much as the homeowners …

    Pity that none of this applies to any mortgages originated by Fannie & Freddie …

  15. willid3 says:

    is there any thing in this agreement that requires te4h banks to provide all the information regarding what happened, so at the very least we can set up regulations or laws to avoid this in the future?
    it does seem like the regular bank walk, where they neither admit or deny any thing, but pay a small fine (considering the consequences for the banks without this, this penny’s on the millions of dollars). but it doesn’t solve the real problem. none of those who had mortgages that ever went to MERS, may ever be able to sell their house. since the title chain has been broken. and when lending to finance a house, banks won’t touch a house without a clean title.
    F&F didn’t originate any loans. ever
    they just buy the loans from those who do.

    and will the banks ever really abide by the agreement?
    they don’t exactly have a history of doing so

  16. reedsch says:

    Anybody have the total dollar amount of delinquent (90+ day) residential mortgages, so we can see what kind of percentage this $25B really is?

  17. constantnormal says:

    @willid3

    I think the existing laws and regulations already make it clear that much of what was done is illegal today … I doubt that better laws and regulations are the answer … better politicians and regulators might be though …

  18. carleric says:

    So the irresponsible get a $2,000 gift of taxpayer money….what a freaking joke…..another reward for stupdity and ignorance….I would say the word “Ignoranus” defines Holder, the entire state’s AG cadre, the Treasury Secretsry, the fed chief and the President …that is folks who are both stupid and assholes…how do we get rid of these clowns?

  19. constantnormal says:

    @reedsch …

    not a current number, and it was declining then (last fall), but …

    “Of the approximately 4 million mortgages that are either 90 or more days delinquent or in foreclosure, the number that are delinquent 90 days or more days has shrunk to levels not seen since 2008.”

    http://www.realestateeconomywatch.com/2011/10/seriously-delinquent-mortgages-hit-three-year-low/

    And I know that’s not a dollar amount, but you could throw a SWAG at it (let’s say an average mortgage balance of $80K – $160K, that ought to bracket it, I think) and come up with a range like $320M to $640M … so it looks large compared to the current foreclosure processing … however, if you assume that a like number are happening every month, and annualize if, we come up with a number in the $3.8B – $7.7B per year range, and we have a number of years of backlog to get through.

    But then this back-of-the-envelope calculation is for ALL delinquent mortgages, and as we have seen, a HUGE chunk of the problem mortgages are not covered by this. I think this should help a lot of the troubled mortgages originated and serviced by these banksters, at least those that have not been already raped. Those folks might get a check for “as much as” 2 grand tho’ … woo-hoo! That is, provided that their situation is covered by this arrangement.

    Mostly, it looks like something to help BoA deal with Countrywide victims, at least that’s how it appears to me. It’s not clear to me if accepting one of those puny checks would prevent a victim from participating in a class action or other suit down the road (but I’ll bet the banksters have moved heaven and earth to make it that way).

  20. willid3 says:

    @constantnormal , maybe better bought and paid ones (politicians). but not exactly doing any one but their bosses better

  21. bergsten says:

    You will be happy to know that, according to our local, worthless paper, California is getting $18B of the $25B. Guess the rest of you are screwed…

    Californians to get up to $18 billion in mortgage relief in settlement with nation’s biggest lenders

  22. Greg0658 says:

    bergsten maybe the bill is still wet – as I heard bits like below a day ago:

    “The total figure could grow to $40 billion if the next nine largest mortgage servicers sign on to the agreement, said Housing and Urban Development Secretary Shaun Donovan. In a best-case scenario, if all banks participate fully, the deal could be worth $45 billion to homeowners and victims of foreclosure.”

    http://articles.boston.com/2012-02-10/business/31040422_1_foreclosure-settlement-foreclosure-practices-servicers

  23. Francois says:

    Listening to Eric “Place” Holder (a.k.a The Puppet) if one divide the number of homes fraudulently foreclosed by robosigning by the amount of what the banks will REALLY pay (5 billion max, the rest SUPPOSEDLY being write-downs) it cost to a financial elite member 2,000$ in restitution to commit document forgery that would land an ordinary individual in a federal penitentiary.

    Haven’t we got the greatest country in the world or what?

    PS: If Eric Holder isn’t the worst US AG in several generations, you tell me who is.