The likely terms of the imminent foreclosure abuse settlement between banks, the federal government and the state attorneys general are beginning to leak out. If the leaks are accurate, we're about to see another huge government give away to the biggest of the big banks, at the expense of foreclosure crime victims and the pretext of American justice.
The biggest of many problems with the settlement is that it would reportedly shield the big banks forever from any further investigation into fraud or financial misconduct. Asked Monday to clarify and update comments Attorney General Jack Conway has made about earlier drafts of the settlement, Assistant Deputy Attorney General and Communications Director Allison Gardner Martin provided Louisville.com with the following statement:
Attorney General Conway has joined several of his colleagues, including General Martha Coakley from Massachusetts and General Beau Biden from Delaware, in saying that he would not support any settlement of the robo signing mortgage foreclosure case that would give expanded civil or criminal immunity to banks or their executives.
The liability of the five largest banks would be limited to about $25 billion. Carla Goshen, writing for Examiner.com, calls this sum “laughable weighed against the sums of money that have been involved in frauds and bail-outs in recent years.”
$20 billion of the settlement would consist of principle write-downs and mortgage modifications for home owners whose houses are worth less than their mortgage. But it would only apply to the minority of mortgages owned by the banks. Mortgages that were sold to Fannie Mae or Freddie Mac would be excluded from the program. The New York Times says the last settlement like this was announced to be for $8.7 billion, between Countrywide financial and the states of California and Illinois, but never provided anywhere near that amount of relief to home owners.
The only amount that even looks like “fines” would be $3.5 - $5 billion that would be split by as many as 12 large banks, leaving no banks' ultimate liability at more than a few hundred million dollars. The New York Times says that $750 million would go to the federal government, about $90 million would go to bank regulatory agencies, and $2.7 billion would be split among the participating states. If all 50 states participated and the money was distributed evenly, that would mean less than $55 million per state. A small state like Kentucky would expect no more than a fraction of that.
Home owners who have had their homes foreclosed on since September 2008 would be paid $1,500. Amazingly, it does not appear that there would be any distinction between home owners who were victims of fraud and criminal activity by banks and home owners who were foreclosed on properly. Remunerating people who had nothing improper done to them is ridiculous, while $1,500 represents just a tiny fraction of the losses actual victims sustained due to bank misconduct.
Pendleton, Kentucky resident Glenn Augustine, one of a tiny handful of pro se litigants to win a foreclosure case at the appellate level based on evidence that the bank produced forged and falsified documents -- documents that the mortgage foreclosure industry routinely falsifies as a matter of standard practice -- has become somewhat of a self-taught expert in foreclosures. He has delved deeply not only into the legal process of making and foreclosing on home loans, but also the gap between the legal processes and the actual processes that have been used by the banking industry. Augustine says, “Banks have engaged in systemically fraudulent and illegal behavior, including fraudulent origination of mortgage loans, fraudulent over-inflated appraisals, fraudulent representations and warranties to investors, securitization failures, robo-perjury, robo-forgery, robo-notarizations, etc. The only way to stop these frauds and thefts is to investigate, charge, prosecute and, where appropriate, convict.”
Responding to reports that a settlement may be announced as soon as next week, Augustine urged Kentucky residents to immediately call Attorney General Jack Conway's office and insist that he stand strong in his opposition to any settlement that lets the banks off the hook. “Call him today. Call him right now”, Augustine implored. He continued, “The phone number for his office is (502) 696-5300.”
For those preferring e-mail, Jack Conway's office can be reached at email@example.com.
Louisville.com's The Arena section features opinions from active participants in the city's politics. Their viewpoints are not those of Louisville.com (a website is an inanimate object and, as such, has no opinions).
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