Bank of America, other banks move closer to ending mortgage mess

What will my former neighbors say, I wonder? The ones whose mortgage went into default despite his best efforts to find work in place of his supervisory position that ended in the Great Recession. His wife had worked, but she wen unemployed earlier. Long story short: the mortgage they comfortably paid monthly eventually became too heavy a burden. Not that the lender cared.

Fully three years later, I wonder how they will respond to this “news” that a still-profitable bank as been dinged for US$3.6 billion.

what we must not forget is the unmitigated greed of countrywide, ames, and all the other mortgage brokers working outside of fannie and freddie that created the mortgages that led directly to the second depression. we must not forget and we must insure that companies like this can never work unregulated again.

As long as the borrowers were delinquent, who cares if they processed each case individually or in batch?

The taxpayer bailout of B of A was something in the neighborhood of $100+billion. $3.6 billion is a drop in the bucket…and no body went to jail!

And still no one goes to jail ? Hmmmm. Someone needs to talk to the DOJ.

@cmebark i believe bofa rec’d 45B with further promises if necessary due to the merrill lynch buyout. to their credit all $45B was paid back by 1/2009. i do believe that some people at merrill lynch and countrywide should have gone to jail. honestly i’m thrilled with the 3.6B fine. no sense kicking them when they’re down. just regulate the snot out of them all from now on so this doesn’t get repeated again. banks should be in banking only, not high risk ventures. that’s what we guarantee them for. go back to glass-steagal.

@jaham do you ever read an article before you comment?

why should anyone go to jail? what did they do wrong? lend money to people who decided for whatever reason not to pay it back, and then had the audacity to try to collect what was owed? Sadly enough, the lending crisis was brought on by the federal government with its housing policies. But, politicians and the media that supports them can’t admit to that- its much easier to blame it on the big bad banks… (it helps to remember that absolutely no one was forced to borrow money- people did it themselves, and used the proceeds to buy nice things they couldn’t afford. sadly, the people who borrowed more conservatively are the ones who effectively have to pay for the stupidity of others.)

Ausa4 it was not the mortgages that created the housing debacle – it was the high risk mortgage credit swaps and derivatives that aig created. further, not one fannie or freddie mortgage was able to be used in these high risk ventures (which somehow got AAA ratings from S&P). for every dollar in foreclosed mortgages there was $50 lost on derivatives and credit swaps. you are totally wrong about blaming the govt housing policies – it was the lack of policy and regulation outside of fannie and freddie that created the problem. typical right wing wanna believe. but it’s easier to blame everything on “the govt” isn’t it?

Jcfl wrote “@cmebark i believe bofa rec’d 45B with further promises if necessary due to the merrill lynch buyout. to their credit all $45B was paid back by 1/2009.” BOA also has paid out billions in the last 3 years for other reasons. Then here is another $10 billion payment. JP Morgan loses billions and Jamie Dimon shrugs it off. No big deal. The other main banks have had the same payouts.

Is the money in these articles for the last three years actually paid out or just wallpaper to make the illusion of it real being paid. What are they charging on loans, 30-35% APR?

“Fannie Mae and its sibling, Freddie Mac, have been pushing banks to buy back loans they sold to the two companies that never should have been sold to them because the loans did not meet the companies’ criteria for purchasing”

Must be nice. They buy something they later regret so they force the seller to buy it back. It was *their* job to make sure the loans met their criteria before purchasing them!

Obviously there are no laws to protect people from corrupt banks and bankers. White collar crime seems to pay and handsomely..

but what was the crime? lending people money? being on the wrong side of a trade? those aren’t crimes. If banks were foreclosing on people who were actually paying back what they owed, that would be a crime. But, guess what, that isn’t what happened. Blaming the banks is entirely misguided. No one forced anyone to borrow money.

BillDexter writes: “banks were actually making loans exactly as they were allowed to under Barney Frank’s rules!”

And what ‘rules’ would those be? The ones you heard about on AM radio? TEA Talk 1170?

How does Barney Frank, a single House rep out of 435 members, make his own secret banking rules that managed to go undetected by Bush’s executive branch, and that only you and the other AM radio listeners seem to know about? Can you send us a link to these secret Barney Frank rules that the banks were somehow bound to, but no one can find in writing? :)

@alkalinestate
the nerve! expecting facts from the faith based belief system that is the republican party! how dare you! gotta love your sarcasm though lost on the you-know-who.

AlkalineState cannot find the Affordable Housing Requirements and the Community Reinvestment Act in writing. I’m sure he tried. I’m sure he cannot find any documentation about how he pushed Fannie and Freddie into a larger market share by undercutting rates and lowering standards, either. Well, if you have never seen any such documentation, I guess it doesn’t exist. :) Hey, perhaps we could apply the same thinking to Bush’s tax breaks for the wealthy! No? Okay, okay – those were HIS secret rules and they went undetected by the House and Senate.

It’s really sad to see so many people – especially young people – so deeply indoctrinated in the liberal spin that they can’t even see the basic forces at play. So many people actually believe that the banks must have committed some criminal act and that everything was fine until they did. That’s not to say that derivatives were a good idea, but that’s the burden of the institutions that invested in them. Why do you care? Are you a shareholder? If not, then it isn’t really your business what risky investment they made. If the investments fail, they take a loss. How is that a crime?

So not all of us are naive enough to swallow these convoluted lies. Derivatives trading in no way affects the contract between the lender and the mortgagee. ‘Robosigning’ never processed a single foreclosure that was wrong or even premature. Liberals would like these two lies to be the basis of popular support for them. They hope you either don’t know or don’t care that it is THEIR policy that they are trying to blame on the banks. Meanwhile, the government is normalizing ‘bail outs’ of institutions – and then wringing ‘settlements’ out of these same institutions without actual criminal charges – with no public disclosure as to what they are really doing and why.

But as long as you knee-jerk blame the banks. . .

jcfl, alkalinestate, etc: you guys seem pretty knowledgeable, and I like facts too, so please be specific: what laws were broken? (Of course I know it has become fashionable in our country to try to find someone else to blame things on since no one wants to be responsible for themselves, but really, what law was broken by lending people money who wanted it?) And, for those that don’t think Mr. Frank was directly involved in creating the policies leading to a debt bubble, please google his name, and read anything to do with FNMA, Freddie MAC etc etc.

@usa4
i have always contended that had glass-steagall not been overthrown in 1999 by a gop majority the second depression would not have taken place. glass-steagall was passed in 1933 to place a wall between banking and investment companies, which successfully prevented another depression for over 65 years. we did not remember the first depression and repeated our mistake. we were told in 1999 that these industries could police themselves and glass-steagall was overturned. there’s a good one. so to answer your question, the laws and regulation that should have been in place were removed, and we now know the result (again). and to repeat myself, the largest share of losses this time were in credit derivatives and credit swaps; not in the underlying mortgages, which incidentally were not from freddie or fannie pools since they are well regulated. continuing to blame one gay democrat house member for the entire financial industries greed while his party was in a 5 year minority position stretches the imagination to its limits. the failure rate on cra mortgages was and still is far less than those subprime outside of fannie and freddie, and the vast majority of those outside couldn’t even meet fannie and freddie requirements. but then again you’re going to believe whatever keeps the faith based reality alive.

@wildabeast
i believe your timeline is a little off. the gop controlled both the house and senate from 1995 until 2006. so please enlighten me on how two members of the minority party could singlehandedly “reform the industry” when they had absolutely no power to do so?

Not entirely true, jcfl, as far as the pool of mortgages held by freddie and fannie.
I didn’t mention any of this to blame one party or the other. It was a perfect storm with a lot of underlying precursers.
Too much of the dialog here is just repeating the political party talking points which gets very old and does nothing but feed anger and egos.

USA4, I don’t see where in the above statements I made a claim that a law was broken. And hey, maybe Bank of America is paying out an 11.4 billion dollar settlemnt, not to make the investigations go away, but because they’re really nice and they like to give money away. Possible :)

BillDexter, the Affordable Housing Act and the Community Reinvestment Act were signed in 1992 and 1977 respectively. They have about as much exclusivity to Barney Frank as they do to Orin Hatch :)

Try again. Your contention was that B of A got into this mess by acting in accordance with ‘Barney Frank’s rules.’

What rules?

@wildabeast
what was not entirely true relative to fannie and freddie pools? can’t help noticing you berate party talking points when that was all you have offered.

I mentioned the repeal of Glass Steagall, the lowering of loan standards by banks, freddie and fannie. I mentioned there were many other precursers to the financial collapse.

To be more correct, Fannie and Freddie suffered more from the results of the meltdown, as did many other people that did qualify for their loans but suffered loss by the collapse of the housing industry and in many cases, their livilihood.

Peace my brother, carry on

Perhaps more likely than BofA being nice guys is that ‘federal regulators’ are now in the business of negotiating money for favors with the big financial and pharmaceutical companies. I don’t know, but I see a lot of ‘settlements’ reported in the news without seeing any actual charges for these settlements to be a result of.

Given that we now claim to have never stated that any crime was committed – yet we approve of a settlement anyway – I don’t know what else to think. Any non-partisan enlightenment on this point?

BillDexter, the banks did not have to settle. Settlements are voluntary. They only happen if both parties agree to the conditions of the settlement. No?

@billdexter
can we agree that a settlement agreed to by both sides is far better than a contracted lawsuit where the lawyers are the only ones who come out ahead in the end?

As a previous underwriting executive @ Countrywide, I can state categorically that laws were knowingly broken. Fraud is still a criminal activity. Countrywide knowingly sold what they determined through rigorous analysis to be bad loans. The credit-rating agencies – Standard & Poor’s, Moody’s and Fitch – should have rated these pools of toxic mortgages as junk, not triple-A. It is completely bogus that the quality of these loans could not be determined. They were – in great detail – and still on [computer] record and accessible by a number of people who should know better if they wanted to know better.

It’s interesting that the hundreds of relatively low-level brokers who faked data on loan applications weren’t charged with crimes, much less the executives that encouraged and/or knew about it (wink, wink). There were also the executives who knew about the Countrywide Loan Underwriting Executive System (CLUES) that ground through the application data and came up with “NOT RECOMMENDED” loans that were then granted and immediately sold to Fannie Mae and Freddie Mac.

Fraud, fraud, fraud and lots of conspirators throughout the chain from brokers, through Countrywide, through Fannie Mac and Freddie Mac through the Wall Street Brokers through worldwide investors… It’s obvious that the three monkeys were part of the chain or served as the inspiration for a massive conspiracy of fraud. In another sense, Angelo Mozilo could be considered the embodiment of or the icon for the fraud. He’s retired with millions, his fines paid entirely by Bank of America. (No criminal charges even suggested) Crime does pay handsomely when you’re in the too-big-to-fail financial services industry.

“- -both parties agree to the conditions of the settlement.” Yes. Of course. So what charges are they settling?
“- – better than a contracted (protracted?) lawsuit where the lawyers come out ahead in the end?” Better in general civil suits like divorces or personal injury suits, yes, agreed. Again the question: what charges are they settling?

BillDexter, who said anything about charges? This is a civil case, not a criminal case or even a regulatory case. This is between two banks. The plaintiff (Fannie Mae in this case) was alleging damages due to B of A’s misrepresentation of the loans they were selling. B of A sold them as loans, had the paper of loans, but they turned out to be bizarre pyramid schemes with very few assets and a whole lot of money counted twice.

B of A, for their part says: “Not true. We did everything right. So right in fact, here’s 11.4 billion to shut up and dig no further.”

So…. We can all make of that what we want. But those parties signed it and the only person bringing up the notion of ‘charges’ here is you. Far as I can tell.

You speak of Fannie Mae as though it is a private entity. It is not. If this were a private matter between two private entities one would have to file charges against the other in court. This is not court, it is ‘negotiations’ forced upon a private entity by the government. So no charges were filed but the government HAS decided that they ARE guilty of misrepresentation. Guilty without a trial. You insinuate that they must know or agree or admit that they are guilty as (not) charged or else they wouldn’t agree to settle.

Okay.

In an interesting similarity, negotiations were reported in the news in the 2000’s concerning widespread (but not formally charged) discriminatory lending practices against the lenders with deep pockets. Attorneys General threatened fines – and they brought their lending practices in line with Fannie Mae, sharply reducing the traditional qualifications for a mortgage to comply. This was the beginning of ‘junk’ loans. So, the big lenders made ‘em at the government’s strong arm request, Fannie Mae took ‘em to free up more capital, the market overheated, the bubble burst and now, what, Fannie Mae is an innocent victim? This ‘settlement’ proves it?

I guess if you believe that then we just have to agree to disagree. My guess is that we can revisit this whole concept soon and often, as the U.S. government ramps up ‘negotiations’ and ‘settlements’ like an old time protection racket.

Where does that leave me? Husband left and ended up in divorce. I begged BOA to let me refi or modify and instead they raised my payment. I wanted to stay in my home. Ended up having to walk away and surrender in bankruptcy because they are such hard hearted people. They did not care at all about what I had to give up. The house is still sitting empty and they have not foreclosed, which means I am not in this settlement. They should have to work with me. I offered a lower payment since I had lost so much income. Now my home sits empty. Just ignorant on their part!

Politics aside, the settlement numbers for the robosigning part of the deal are way, way too low and nothing yet has been done on the criminal side. To have your home foreclosed on the basis of falsely signed documents, is enormously bad. You not only lose your house, you lose your credit rating, you pay moving expenses, you pay for temporary housing, you pay enormous legal fees. If you were temporarily out of work, you likely find that you can’t get another one because many employers check your credit rating.

Falsification of documents is criminal fraud. Making low level employees to carry out fraud on an organized basis is criminal conspiracy and racketeering. Under RICO can’t the government pretty much just confiscate everything?

I don’t think that we can send everybody who falsified a document to prison – too many people in jail already. However, probation and a criminal conviction on their record is appropriate for most and prison time for the bosses.

Both financially and criminally this settlement just says white collar crime pays even if you do get caught.

Need to get rid of the Adjustable Rate Mortgage or the housing market will crash again. obuma was to stupid to do it. Gave trillions to the banks so they could get their mu lit million dollar bonuses.

At about $800 a claim what a rip off. Solves the problem for the banks and gov’t; not those injured.

Let the banks fail or fire all in charge

BillDexter, B of A does not have to settle. Settlements are voluntary. If they’re just being bullied here (as you contend), and Fannie has no basis in their suit…. B of A could blow them off, go to court and prevail. So why don’t they?

Here’s a wild guess as to why a bank would pay 11.4 billion to make a lawsuit go away. Because they’re guilty. Their lawyers know they can’t win because the facts point toward even greater payouts in judgment. Their lawyers advised them to cut the check now and have it go away. Just a wild guess.

For millions of people the “mortgage mess” is not close to being resolved. It’s nice to know that one of the too-big-to-fail banks thinks they’re near the end. They’ve paid pennies on the dollar of their liabilities and they can move on to their next set of scams. That’s success! Oh, happy day! Crony capitalism reigns!