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Big Foreclosure Settlement Still Not Really, Truly, Finally Done

March 1, 2012 Leave a comment

 

It’s been 21 days since the government announced with great fanfare a $25 billion national foreclosure settlement with five big banks — long enough for three generations of houseflies to live, love and die.

But the deal, which resolves claims that the banks forged or “robo-signed” signatures to speed foreclosures and committed a host of other loan servicing errors, isn’t final until the government files it in federal court. Until then, the public is left to guess whether the settlement is as tough on the banks as the government claims and whether the promised enforcement mechanisms to ensure banks are playing by the rules have real teeth.

The final settlement document should spell out in exact language the rules of the deal. As of now, the government has released only a summary.

On Tuesday, Shaun Donovan, the secretary of housing and urban development, assured the Senate housing committee that finalizing the documentation was mostly a matter of “dotting i’s and crossing t’s.” No need to worry that the parties were still dickering behind the scenes, he said.

Donovan also said at the hearing that the papers should be filed in the federal district court in Washington, D.C., this week. But sources familiar with the drafting of the documentation say the filing date has likely been postponed again. Next week is now the target. These sources chalk up the delays to simple logistics: Dozens of state and federal agencies, plus the five banks (JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial), must sign off.

Why wasn’t all this done in advance of the Feb. 9 announcement? The Securities and Exchange Commission, for example, often files a court complaint against and announces a settlement with a company accused of financial misconduct on the same day.

The Department of Housing and Urban Development declined to comment through a spokesman, but a gathering flood of leaks about the status of the deal probably forced the government to announce too soon. As such, some delay is to be expected.

Still, each day that passes drives speculation about whether the deal is as set in stone as the government has led the public to believe. A recent regulatory filing by Bank of America with the SEC has added fuel to this argument.

“There can be no assurance as to when or whether binding settlement agreements will be reached, that they will be on terms consistent with the Servicing Resolution Agreements, or as to when or whether the necessary approvals will be obtained and the settlements will be finalized,” reads language in the bank’s annual 10-k filing.

Government officials who are collecting signatures and ironing out the details say emphatically that there are no substantive issues still to resolve. “This is not an accurate description of where we are,” a senior government official told The Huffington Post after reading the Bank of America language.

Wells Fargo, in its annual 10-k filing, did not include this kind of hedging language.

Still, the continuing delay and the Bank of America language are worth at least one raised eyebrow.

Big Foreclosure Settlement Still Not Really, Truly, Finally Done.

Bruce Judson: Why Inequality Matters: The Housing Crisis, Our Justice System & Capitalism

February 20, 2012 1 comment

Bruce Judson nails it again! Here is an excerpt from the Huffington Post article. Please see the link at the bottom to read the article in its entirety.

Extreme economic inequality is among the most destructive forces in a society. As inequality grows, it undermines the effective functioning of the economy, the basic tenets of capitalism, and the foundations of democracy.

Unfortunately, the housing crisis and now the housing settlement increasingly look like an example of how this mechanism works.

One of the central characteristics of highly unequal societies is that two sets of laws develop: One set for the rich and powerful and one set for everyone else. The more unequal societies become, the more easily they accept the unacceptable, and with each unrebuked violation, the powerful actors at the top of the society gain an ever greater sense of entitlement and an ever greater sense that the laws that govern everyone else don’t apply to them. As a result, their behavior becomes increasingly egregious.

In contrast, sustainable capitalism requires that all participants in a contract or bargain believe their interests will be enforced equally by the courts: Capitalism requires that Lady Justice wear a blindfold. When powerful players are permitted to alter established rules at will, capitalism ultimately collapses. Contracts and the idea of a fair bargain become meaningless as less powerful parties to an agreement know their rights will not be enforced. Over time, citizens lose faith in government and their own ability to thrive in what becomes a corrupt economy. This uncertainty leads the small businesses, which are so often cited as important to our economy, to shy away from new activities that might put them at the risk of unequal treatment.

I would suggest that the robo-mortgage scandal is a strong indicator that this type of unequal justice is now becoming ever more commonplace in America. Past bank abuses are typically discussed without a sense of outrage. They have, in effect, become a recognized practice of deception with no consequences. Here are three prominent examples from the past few years:

First, the robo-mortgage scandal was discovered. As powerful members of society, the banks effectively decided what laws they wanted to follow and disregarded others. The banks claimed that their violations were technical and harmed no one. Nonetheless, the activities of the banks constituted massive fraud, perjury, and conspiracy. Bank officials have testified in court that they filed as many as 10,000 false affidavits a month. These are effectively undeniable admissions of law-breaking on a massive scale.

It’s a federal crime, punishable by up of five years of imprisonment, to knowingly file a false affidavit with the court. From the perspective of the law, you are guilty of the same perjury, when you falsely testify in court or when you submit a false affidavit. In most states, filing false affidavits with the court similarly constitutes a felony offense of perjury.

If an individual citizen perpetrated this kind of massive perjury, he or she would be prosecuted. For illegal activities to take place on this type of massive scale, other serious crimes, such as conspiracy, are almost certainly committed as well.

Read the Full Version Here:Bruce Judson: Why Inequality Matters: The Housing Crisis, Our Justice System & Capitalism.