homeowners

National Mortgage Settlement is a Big Fat Pig in a Poke

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pigpokeThere are new revelations on the 50 state mortgage fraud settlement. From The Financial Times:

A clause in the provisional agreement – which has not been made public – allows the banks to count future loan modifications made under a 2009 foreclosure-prevention initiative towards their restructuring obligations for the new settlement, according to people familiar with the matter.

The existing $30bn initiative, the Home Affordable Modification Programme (Hamp), provides taxpayer funds as an incentive to banks, third party investors and troubled borrowers to arrange loan modifications.

The settlement is estimated to be $40 billion. The fines are only $5 billion of this, which implies U.S. taxpayers are on the hook, not the banks, for $30 billion. So instead of getting any justice that using people's homes, their shelter and main life investment as a gambling chip and paper chase game is wrong, once again we get to pay for financial folly while banks pocket the cash.

Naked Capitalism has put up a top 12 list of things wrong with the foreclosure fraud settlement. Here's reason #1:

Where's The Note? Shock and Awe for Big Banks


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Michael Collins

Big banks have stopped foreclosures in 23 states due to legal challenges to their ownership of mortgage notes. On Wednesday, JP Morgan upped their total to 41 states in which foreclosure operations had ceased.

Why the halt in foreclosures? It seems that the banks have ignored long established state property and title procedures and may not actually own the title to the homes subject to foreclosure (and others subject to the same procedures).

Calculated Risk quoted a JP Morgan spokesman saying,

"We've identified issues relating to the mortgage foreclosure affidavits and those include signers not having personally reviewed the underlying loan files but instead having relied upon the work of others. … And there are circumstances where affidavits have not been properly notarized" Oct. 13.

Failing to "personally review" loan documents means that asserting that the review took place was perjury. This happened for countless mortgages. Failing to properly notarize mortgage signatures violates state property law. It could also be seen as negligence by investors in the mortgages.