Glory, Hallelujah!!!
I am speechless!! This is great!!!
Well, until you really read the information a big thud comes upon you. As in, business as usual, as in no accountability but all deniability by banks, as in wrap this up because it can become a sore thumb in any re-election bid.
But, I was excited for a hot minute!! Now, not shocked at this deal, it is what we have witnessed the past 2-1/2 years from the Obama Administration.
The premise of this deal sounds solid, good but as you read it, if you were one of these homeowners is this good enough?
The bottomline is this:
Described as a "shock and awe" approach, the deal would accomplish the four goals set out by state and federal policy makers and regulators as part of their multi-agency investigations into abusive mortgage practices by the nation's largest financial firms: punish banks for violations of state law and federal regulations; provide much-needed assistance to distressed borrowers; stabilize a deteriorating housing market; and dissuade firms from abusing homeowners in the future.
The modified mortgages could cost the five financial behemoths -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial -- as much as $30 billion, according to sources. Combined, the five firms handle three out of every five home loans, according to newsletter and data provider Inside Mortgage Finance.
It also could lead to reduced mortgage payments or lowered loan balances for nearly two-thirds of the 4.7 million delinquent homeowners who have yet to fall into foreclosure, according to data provider Lender Processing Services.
Forget those who have lost their homes due to malfeasance, fraud, trickery and theft by these financial institutions. Your loss will remain ignored, not recognized and part of collateral damage in the art of "CYA", Washington, D.C. style. Sorry, but that is what is going to happen.
What this deal WILL DO is to help homeowners who are delinquent modify their mortgages, forgive the principle and any balances on second mortgages/home equity loans will be written down or possibly eliminated.
All of this has to be ok'd by the federal government/agencies, banks, financial institutions, along with the states. Why the states? Well, many states have started legal processes against many of these financial institutions on behalf of their constituents.
In the meantime, the financial institutions, along with the federal government want this over and done with. Why? Well, the public dislike and mistrust of banks is clear, especially since these thieving robber barons was directly responsible for the fall of this country's economy. This the public understands VERY WELL. For the Obama Administration, they want this continuing talking point OFF THE TABLE. Their position will be, "see we have held the banks accountable and are helping millions of Americans to restructure their loans in a fair and timely manner." Not having this deal will continue to be a black eye to the Obama Administration, as they will be perceived as doing nothing and "In Like Flynn" with the banks. Remember, the public don't like the banks.
Meanwhile, banks, while eager to put the controversies over wrongful home repossessions and "robo-signing" behind them, do not want to be the only firms that pay for what could be a mass mortgage principal forgiveness scheme. They want government-owned mortgage giants Fannie Mae and Freddie Mac, which own or guarantee more than half of all home loans, to participate in any initiative that calls for lowering homeowners' loan balances. Fannie and Freddie's regulator has been reluctant to allow them to participate, citing his responsibility of minimizing the cost of the bailout to taxpayers, people involved in the talks said.
The Obama administration wants a quick resolution to the probes, and is putting pressure on the small group of state attorneys general leading their investigation to wrap it up, sources said. On Tuesday, Treasury Secretary Timothy Geithner told a Senate committee that "all parties have a stake in bringing this to resolution as quickly as possible."
"It's very important that we try to bring this to bed as quickly as we can," Geithner told the Senate Banking Committee.
If all goes well, this could go over well with the voters, maybe. But for those wanting an investigation from this Administration, IT AIN'T HAPPENIN'.....
Investors, homeowner advocates and law enforcement officials hoping for a deep investigation into allegedly widespread mortgage abuses by the nation's largest financial firms may ultimately be disappointed.
Lastly, the banks are still in charge where D.C. is concerned. They definitely will not sign any agreement with
new rules and procedures attached, nor will they pay
any new penalty fees that will not clear their name
(I am not kidding about this).
But the banks won't sign any agreement that forces them to abide by new rules and pay substantial penalties that doesn't clear them of liability or at least significantly lessen the chance of a state-brought lawsuit, sources familiar with their position said.
In fact, the banks are crafting their own proposal. Did we think this would not happen?
In the long run, the Obama Administration must show that they have done something in regards to the financial institutions because this continues to be an anger point with voters out here. The banks don't want a full investigation and all their dirty laundry out for us to sniff and become even angrier, especially since that dirt will be legal documents with legal signatures, with financial executives still bringing in billions and no accountability like "hand cuffs" on these crooks. Oh, no, don't expect that to happen.
This is about the best that will come of a preliminary deal and I mean preliminary because as we know, deals change, whether we like it or not. This will be a public slap to the banks, while the banks will continue business as usual, which in the end is a sad state of affairs for government working and not protecting the public. The government does not work for the people, they work for the status quo and we all know who they are.
Elizabeth Warren says it the best about this mortgage mess:
“If there had been a cop on the beat with the authority to hold mortgage servicers accountable a half dozen years ago, if there had been a consumer agency in place, the problems in mortgage servicing would have been exposed early and fixed while they were still small, long before they became a national scandal,” Warren said in testimony before a House Financial Services subcommittee. She is point person for setting up the new Consumer Financial Protection Bureau.
If the Financial Regulation Bill had real teeth in it, we would have started to see real change. But, again, the status quo always win.
Updated by icebergslim at Wed Mar 16, 2011 at 11:47 AM PDT
This is why the Obama potential arrangement is bogus, per Badabing:
So what is the Administration’s source of leverage against the banks? In theory, it has a ton, starting (as we have pointed out in meetings with the Treasury) violations of REMIC, the IRS rules that govern securitizations (the investors would be charged but the violations result from bank failures to adhere to their representations in the pooling and servicing agreements; they have a basis for litigation, and this is a nuclear weapon level of threat). We raised it twice in an August meeting with Treasury when officials, including Geithner, piously maintained that there was little they could do about servicers. The questions about using IRS violations to bring servicers to heel were pointedly ignored. And we knew then that the issue had already been raised directly with a senior enforcement officer at the IRS who knew the REMIC rules and was initially very interested. The result? The report back was that the matter had gone over to the White House, which said it did not want to use tax as a tool of policy. Ahem, didn’t Obama swear to uphold the laws of the land?
But the bottom line, and it certainly has been consistent with the Administration’s posture, is that it sees its authority over the banks as being narrow. But the Huffington Post article mentioned consumer law violations, and the 2003 FTC/HUD action against miscreant servicer Fairbanks was based on a broad range of violations. Perhaps the powers that be revisited some of the thinking behind that action. One can only assume they have a real smoking gun; this sudden show of spine (even if the effort falls vastly short of a sound course of action) is very much out of character (although Treasury has been bloody-minded in its Volcker rule negotiations with banks, so this is not completely without precedent).
The Administration’s argument may also be that if the banks do widespread mods, they can also get consumers to waive their rights to litigate. That may be the real rationale for a broad-but-shallow strategy. No Federal or state governmental body can waive a private party’s right to seek recourse. But do the banks buy that they have real liability from chain of title issues? They appear to be in deep denial on this front, given the lack of investor lawsuits. But we are told that the reason that those who have studied the question haven’t acted isn’t that they think they have a weak case, but if they prevailed, it would blow up the banking system, which isn’t exactly in their interest. But if they came up with a more limited basis for action, they might well proceed if only to pressure servicers to do meaningful principal mods.
The whole article is worth reading and shows us again, why this type of negotiating from the Obama Administration is horrendous. Of all things that Barack Obama campaigned on was making Americans whole again from the fraud of the financial institution. Well, that is not happening and this is NOT, "change anyone can believe it." But it is for the status quo, "business as usual".