Big $25 Billion National Mortgage Settlement is a FARCE!

Yesterday, the first report on the progress of the National Mortgage Settlement was released.  A few investigative journalists are reviewing the report with a critical eye and writing up informative articles like the one by David Dayen at FireDogLake.com here.  The main problem with the settlement as most of us saw was there really wasn’t a penalty.  The great majority of the $25B was going to be not cash paid by these fraudulent banks but instead credits for things they were and are still doing. For example, if a bank approves a short sale and waives a deficiency from someone who they were never going to be able to collect from anyway, that portion of the deficiency that is waived is applied as a credit to that banks “penalty.”  The bank sells the house at fair market value which is better than what it would have gotten post foreclosure and somehow this is a penalty to the bank?  Since when is doing what you were doing anyway, doing what is in your best interest, and getting credit for it, a penalty!?!?

In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest loan servicers:

• Ally/GMAC
• Bank of America
• Citi
• JPMorgan Chase
• Wells Fargo

The settlement is supposed to provide as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest multistate settlement since the Tobacco Settlement in 1998.

Joseph Smith, the former North Carolina Commissioner of Banks to head the oversight agency for this settlement.  His agency, Office of Mortgage Settlement Oversight, has a website with a form to log complaints of ongoing issues that were part of the settlement.  The five banks listed above are prohibited from committing the acts that were the basis of the settlement.  What are some of these acts might you ask?  The settlement was widely called “the robosigning settlement” which many bank friendly regulators and politicians dismissed as “punishing the banks”.  Let’s take a look at a sampling of crimes behind the misnomer “robosigning settlement”.

Here’s the main list, then each main category has a detailed checklist to allow for more information on the wrongdoing.  The layers upon layers of options allows for a glimpse of the nature, scope, and depth of impact foreclosure fraud and securitization fail continue to have on our nation’s economy, courts, land recordation system, and citizens’ constitutional property and due process rights.

• Foreclosure Problems
• Documentation Problems
• Fee Issues
• Loan Modification and Other Loss Mitigation Issues
• Customer Service Issues
• Third Party Provider Issues
• Military Personnel Issues
• Bankruptcy Issues
• Force-Placed Insurance Issues
• Community Blight Problems
• Tenant Rights Issues
• Other (please specify below)
• None of the Above

Let’s look into the Foreclosure Issues category a little further.

• Please specify the Foreclosure Problem(s)
  • Documentation Problems in Foreclosure
  • Failure to Provide Opportunity to Avoid Foreclosure
  • Servicer Foreclosed While Loan Modification/Loss Mitigation Application or Appeal Was Pending or Otherwise in Error
  • Servicer Engaged in Other Collection Efforts While Loan Modification/Loss Mitigation Application Was Pending
  • Notice Issues Involving Foreclosure
  • Other (please specify below)

Now, let’s look into Documentation Problems in Foreclosure category a little further.

• Please specify the Documentation Problem(s) in Foreclosure
  • Factual assertions in legal filings were not accurate, complete, or supported by competent and reliable evidence
  • Affidavits, sworn statements, or declarations were not based on personal knowledge
  • Affidavits were not based on affiant’s review and personal knowledge of assertions, did not set out facts that servicers reasonably believed would be admissable in evidence, or show that the affiant was competent to testify
  • Forms of affidavits, sworn statements, and declarations were not standardized or if standardized, did not comply with applicable law
  • Affidavits, sworn statements, and declarations did not accurately identify the name, employer, or title of the affiant
  • Affidavits did not fully comply with state law
  • Affidavits were false or unsubstantiated
  • Affiant was an entity, not an individual
  • Affidavit was not hand signed, except for permitted electronic filings, or signature was not dated
  • If affidavit inaccurate, not properly notarized, or not based on personal review or knowledge, servicer failed to take appropriate action in pending case to substitute such affidavit with new one or to provide written notice to borrower or counsel
  • Servicer failed to demonstrate right to foreclose in court filings
  • Servicer lost note and failed to use good faith efforts to locate it
  • Servicer intentionally destroyed or disposed of original note
  • Servicer assigned mortgage without appropriate legal authority or accurately reflecting the completed transaction
  • Servicer failed to send borrower, no later than 14 days prior to referral for foreclosure, a statement containing right to foreclose, an account statement, an ownership statement, and a loss mitigation statement outlining efforts to mitigate loss, or if no mitigation efforts were undertaken or offered, an explanation why the borrower was ineligible for a loan modification or other loss mitigation
  • Other (please specify below)

Seems like more than just “robosigning”.  All this fraud and no real fines…. What a disgrace