Thanks to in-depth research done by Cenk Uygur of the Young Turks and Matt Taibi of Rolling Stone, I’ve come across some very sobering information on the mortgage settlement. It turns out that homeowners will still receive approximately $25B in the settlement, but most of the money is not coming from the banks that should pay for their illegal practices. As Taibi said, if the banks were to pay what they actually owed the public, they would simply go out of business. Because of certain statutes of limitation and the fact that the banks don’t currently own the homes they’ve foreclosed on (the pension funds do because the banks sold toxic MBS’ to the funds), the pensions will be paying the foot of the bill.
Now, you may be wondering, “If the banks don’t own the homes they are foreclosing, then why are they foreclosing on so many homes?” Well, I asked the same question. Because I’m not an expert in this field, I’ll let people who have worked in the industry do the talking—people like Cenk.
In the meantime, justice will have to wait a little longer for homeowners in America.
Have a look:
After receiving pressure from the Occupy movement, foreclosed homeowners and the Obama administration, five large banks and financial services have agreed on a mortgage settlement worth $25 billion.
Here’s a quick look at the facts behind the settlement:
- Banks include: Citigroup, Bank of America, JP Morgan Chase Co., Wells Fargo & Company and Ally Financial.
- 11M homeowners are under water (owe more than what their mortgage is worth)
- This deal helps about 1M people.
- The deal is worth a total of $25 billion
- Collectively, negative equity in the US is over $700 billion
- The average homeowner is under water by $50,000
- Banks have about three years to issue the money in the settlement
- People who sign up for the settlement (and pass will get about $1800 -$2000
You can make the argument that the banks lose because they are paying $25 billion to 49 state, excluding Oklahoma, but many believe this deal was weak and still doesn’t get to the heart of the problem which is foreclosure fraud.
The fraud by and not limited to Citigroup is quite astounding and has led to the loss of billions of dollars from the government. Specifically, more than a third of the mortgage loans by Citigroup went into default. But again, the fraud is much more pervasive and is not limited to Citigroup.
According to the FBI, there have been 1,220 indictments and 1,089 convictions of mortgage fraud.
According to AP,
The government said Wednesday that CitiMortgage had certified 30,000 mortgages for insurance provided by the Federal Housing Administration and submitted many certifications that were ‘knowingly or recklessly false.’
The mortgage problem has become such a pressing and ripe political issue that General Attorney Eric Holder and the Obama administration have launched what is called the Financial Fraud Enforcement Task Force (FFETF).
Overall, the change may not be as big as many would like, but it is a start. With the way Congress has been stalling any and every action by the Obama administration, I’m amazed that this got as far as it did.
Wisconsin Governor Scott Walker (R) has decided to use $26.1 million of the $140 million awarded to the state to balance Wisconsin’s budget. Missouri Governor Jay Nixon (D) has also joined in on the fun by using $40 million of Missouri’s $196 million share of the settlement for his state’s general funds.
Hang on though, you can’t leave Maine out of the party. Attorney General William Schneider has decided to use $5.7 million out of the $21 million for its general fund—$5.7 million the people of Maine were supposed to receive. The state averages about 6,000 foreclosures per year. You would think all of this money would go to the people who need it most.
Here’s to thinking…
In today’s political world, this is not even surprising. This recession has hurt the budgets of private businesses, governments and most importantly, the pockets of the people. It seems like this recession has turned into an opportunity for the government to cry wolf about “out of control spending.” It gives them an opportunity to slash public services and stall any efforts to increase revenue which will surely prolong the recession.
Like they care.
This blatant slap in the face should not be tolerated. It’s political corruption at its finest. I’m sure people will respond to my post by telling me “this is business as usual” and “what are you going to do?” This may be true and maybe there’s nothing I can do about it right now. But the least I can do is get mad and “report” on the blatant disregard for human life by the government we elected.