Feb. 2012 Mortgage Settlement
"So are they off the hook entirely? No. One reason the deal is relatively small is that it doesn’t fully end the banks’ legal liability. New York AG Eric Schneiderman, for instance, is able to move forward with his lawsuit.
Is this a gamechanger for the housing market? No. The effects of this deal are likely to be rather modest. In terms of direct help for consumers, the aggregate impact will be quite minor." by Feb 9
"Also unclear is how far the agreement can go in helping borrowers who are trying to hold onto their home. In addition to granting principal reduction, the deal would offer struggling homeowners relief by changing the terms, or refinancing, loans. Those dollars amount to a pittance when you consider the millions of homeowners in need of help, Golant said. "If you do the math, that's a few hundred million per state. That's not enough to change anything."
Included in the settlement are new rules designed to reform the policies and practices among the mortgage companies, mainly banks, that manage the loans on a daily basis and assist struggling borrowers.
The states' ability to enforce the deal remains one of the great unknowns"
NOT QOTD: If we make the banks pay too much, we’d have to bail them out… again by Feb 9
"Under the terms of the settlement, the banks would pay $25 billion to participating states. California is reportedly receiving a total of $6 billion to $15 billion in the settlement.
Potentially more significant, the banks would agree to forgive some mortgage debt owed by struggling borrowers through what's called "principal reduction." The remedy is nearly universally hailed by economists on the right and left as a way to revive the ailing housing market and rescue the nation's struggling underwater borrowers: More than 20 percent of mortgage holders in the United States owe more on their loan than their home is worth." by Feb 9
"If you’re a bank shareholder breathing a sigh of relief, then, don’t. The only thing you’re protected against, now, is lawsuits over robosigning.
What’s happening here is that the mortgage settlement is at heart largely just encouraging banks to bring their balance sheets closer to reality — which is something they’d have to do sooner or later in any case. Indeed, insofar as principal reductions can increase the value of a mortgage, this deal is actually making banks money, over the long term.
So think of this as that rarest of settlements, one which really is a win for all sides. The attorneys general get a big deal, homeowners who got foreclosed upon get $2,000 apiece, and the banks get to do the kind of principal reductions they probably have wanted to do for a while, but while getting significant immunity from prosecution at the same time." by Feb 9
"The prosecutors & regulators still have the right to investigate other elements that contributed to the housing bubble, like the assembly of risky mortgages into securities that were sold to investors & later soured, as well as insurance & tax fraud.
Officials will also be able to pursue any allegations of criminal wrongdoing. In addition, a lawsuit Mr. Schneiderman filed Friday against MERS, an electronic mortgage registry responsible for much of the robo-signing that has marred the foreclosure process nationwide, & 3 banks, Bank of America, JPMorgan Chase and Wells Fargo, will also go forward.
Along with how broad the releases would be, California’s attorney general, Kamala Harris, also pushed for her state to be able to use the state’s False Claims Act. That would enable state officials & huge pension funds like Calpers to collect sizable monetary damages from the banks if officials could prove mortgages were improperly packaged into securities that later dropped in value." by Feb 9