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Bank Of America Details The Mortgage Foreclosure Settlement

Tyler Durden's picture




 

Most people read the headlines (and heard Obama tell us) today that the federal government and 49 state attorneys general reached a $25bn agreement with the five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. It seems that many people are unclear on what the implications of the various aspects of the settlement are and so we present Bank of America's concise summary of the costs, commitments, penalties, and scope of the long-awaited agreement. Theoretically this by no means closes the book on bank litigation liabilities, as BofA discusses, but we note that after all initially rallying they ended with a mixed performance post the settlement announcement (which admittedly seemed well telegraphed) as WFC rallied modestly (+0.2% from the 10amET announcement), with Citi (-1.2% from the announcement), BofA (-0.85%), and JPM (-0.4%) underperforming.

Stock performance post the 10amET press announcement of the settlement shows an initial 'relief' rally followed by all but Wells Fargo ending lower for the day.

 

$25bn agreement with 49 AG’s and federal government

The federal government and 49 state attorneys general reached an agreement with the five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses (Table 1). The agreement requires servicers to implement comprehensive new mortgage loan servicing standards and to commit $25bn to resolve violations of state and federal law. These violations include servicers’ use of “robo-signed” affidavits in foreclosure, deceptive practices in loan modifications, failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court. The settlement will be filed as a Consent Judgment in the United States District Court for the District of Columbia and remain in effect for three-and-a-half years.

We believe that the servicers have largely provided for their respective settlement commitments and do not expect there to be a material incremental impact to future profits from this agreement – although costs associated with the implementation of and compliance with new mortgage servicing requirements will most likely increase servicing expenses, in our view.

77% of settlement commitments are non-cash ($19.1bn)

$19.1bn of the $25bn settlement amount will be provided toward various forms of financial relief to borrowers (i.e., non-cash debt forgiveness):

  • At least $10bn for principal reduction on loans that are either delinquent or at imminent risk of default and owe more on their mortgages than their homes are worth.
  • At least $3bn for refinancing loans for borrowers who are current on their mortgages but who owe more on their mortgage than their homes are worth.
  • Up to $7bn for other forms of relief, including forbearance of principal for unemployed borrowers, anti-blight programs, short sales, etc.

Although we have not yet seen the details, servicers will receive only partial credit toward their individual commitments for certain of the above activities (e.g., $100 of forgiveness may not equal $100 applied against the $20bn total). Crediting rates were said by the DOJ to be higher for loans held on a bank servicer’s balance sheet vs. crediting rates for mortgages serviced for others under private RMBS transactions. GSE-related mortgages are not included in this settlement.

For this reason and because banks will have greater flexibility to modify loans that they own (vs. those serviced for others under Pooling & Servicing Agreement constraints), the Justice Department estimated that approximately 85% of principal reductions would be on bank-owned mortgages. Each servicer must fulfill its commitment within three years, 75% within the first two years.

 

Cash costs ($5.9bn) are manageable

Cash payments to the federal and state governments will serve two purposes:

  • $1.5bn will be used to establish a Borrower Payment Fund to provide cash payments to borrowers whose homes were sold or taken in foreclosure between 1/1/08 and 12/31/11, and who meet other criteria. This program is separate from the restitution program currently being administered by federal banking regulators related to restitution for financial harm caused by wrongful servicer conduct. Borrowers will not release any claims in exchange for a payment.
  • $3.5bn will go to state and federal governments to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs.

Noncompliance will be costly

Compliance will be overseen by Joseph A. Smith, who will serve as Monitor in enforcing the consent judgment. He is currently North Carolina’s Banking Commissioner. The Monitor will oversee implementation of new mortgage servicing standards required by the settlement. He has the power to impose penalties of up to $1mn per violation (or up to $5mn for certain repeat violations) and publish regular public reports that identify any quarter a servicer fell short of the standards imposed in the settlement.

The scope of the settlement is not broad

Although the settlement resolves certain violations of civil law, the US and state attorneys general preserved the right for further legal action in the following areas:

  • Criminal. The US and the state attorneys general can still pursue criminal enforcement actions
  • Securities claims. The agreement does not prevent the US from pursuing action against the banks related to misrepresentations of the quality of loans that were packaged into MBS or the conduct that is the focus of the new Residential Mortgage-Backed Securities Working Group. The states have also preserved their rights to bring actions related to securitization activities and MERS.
  • Loan Origination claims. The US retains its full authority to recover losses (and assess penalties) caused to the federal government when a bank failed to satisfy underwriting standards on a government-insured or government-guaranteed loan with certain exceptions.
  • Borrower claims. The settlement does not prevent any claims by individual borrowers who wish to bring their own lawsuits.

Oklahoma negotiated a separate settlement

The Attorney General of Oklahoma negotiated a separate $18mn with the five largest servicers. We do not have the breakdown of settlement commitment by servicers.

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Fri, 02/10/2012 - 00:28 | 2144739 amsterdam
amsterdam's picture

Got Mortgages comin up the whazoo!
Pay up bitchez!

 

Fri, 02/10/2012 - 00:45 | 2144771 HedgeAccordingly
HedgeAccordingly's picture

This calls for a celebarting bitchez - http://hedge.ly/gFWVSm

Fri, 02/10/2012 - 09:06 | 2145262 Thomas
Thomas's picture

This is such a bad joke. They are taking credit for write downs that were inevitable. The small amount of cash is provided to them by bailout funds. They are playing us for fools, which maybe we are. I grow more despondent with each passing month over the state of the nation and the world. Very Orwellian.

Fri, 02/10/2012 - 00:32 | 2144748 ebworthen
ebworthen's picture

Once you go for the cash settlement the criminal charges won't stick.

A sellout, complete and total sellout by State AG's.

Fri, 02/10/2012 - 06:35 | 2145040 StychoKiller
StychoKiller's picture

Who watches the watchers?  Apparently, NO ONE!

Fri, 02/10/2012 - 00:35 | 2144754 Stack Trace
Stack Trace's picture

This is bullish for banks, right?

Fri, 02/10/2012 - 08:28 | 2145157 Schmuck Raker
Schmuck Raker's picture

Who else?

Fri, 02/10/2012 - 00:50 | 2144779 alien-IQ
alien-IQ's picture

750,000 borrowers wrongfully foreclosed upon will get a $1,800-$2,000 check if they sign up for it, the equivalent of saying to them “sorry we stole your home, here’s two months rent.”

Better luck next time sucker.

What a deal huh?

Here's another article on this topic NOT written by a bank...if anyone is interested:

http://www.informationclearinghouse.info/article30485.htm

Fri, 02/10/2012 - 03:11 | 2144919 vast-dom
vast-dom's picture

+1. this settlement is as transparent as it is vile. the question becomes why do anything by the book and legal anymore when the gov and banks have essentially broken every law and semblance of decency¿

Fri, 02/10/2012 - 11:28 | 2145829 MachoMan
MachoMan's picture

If I had been foreclosed on, I would scrounge around to find an attorney that would take it on contingency...  and then get him to start a letter writing campaign to try and shake down the foreclosing party for lack of standing and a void judgment...  pay up or I'll void your judgment...  it's worth way more than $2k...  my guess is $10k easy, as a floor...  for more expensive homes ratchet it up accordingly.

You could also get an attorney to do a certain amount of tasks for a fixed fee less than the settlement amount...  and then roll them bulls he'll hit.

In other words, this settlement is fucking retarded (and not remotely entered as a reasonable fiduciary would negotiate on behalf of his or her constituency), given no one even has to agree to take the money...  it doesn't fix the chain of assignment issues...  disproportionately benefits retarded states...  and virtually all the money is ethereal write downs (which I'm sure have been OK'd with the IRS to be deductible)...

What the fuck was settled?

Fri, 02/10/2012 - 11:50 | 2145939 Silver Dreamer
Silver Dreamer's picture

When will Americans wake up and realize the banks are the government?

Fri, 02/10/2012 - 03:30 | 2144927 BlackholeDivestment
BlackholeDivestment's picture

Alien IQ, two months rent?? ...uh here inside the Beltway Bandit that will get you one month in a one bedroom, one tank of gas and one week of food maybe.

Fri, 02/10/2012 - 07:09 | 2145067 smlbizman
smlbizman's picture

what happens after the mortgage and value of house achieve equal delusion, temporarily.... than, i realize there is no chance of this....but what happens when the house is 20% less next year.....does it work  like the baltimore city pension system were the losses keep getting replaced with the CITIZEN'S TAXES FROM THEIR LABOR  or is it a 1 time shot?...

and does the 8k rebate come into play ?

and is the reduction income?

and....and...never mind, i'm sure those guys covered all the bases.... 

 

 

 

Fri, 02/10/2012 - 09:30 | 2145284 krispkritter
krispkritter's picture

Does anyone know if the writedown on principal is going to be taxed? The IRS has had their hand(or should I say iron fist) out for ANY supposed 'benefit' to taxpayers in the past.  Any forgiveness of debt(outside of bankruptcy I presume) was taxed as income as I understand it. So Average Joe gets backdoored by the IRS when he's thinking he's 'won' this battle?

Edit: http://money.cnn.com/2011/04/15/real_estate/taxes_mortgage_debt/ Mortgage Forgiveness Debt Relief Act expires in 2012? 

Fri, 02/10/2012 - 10:20 | 2145526 shushup
shushup's picture

Don't forget about the principle write downs for the millions on unemployment. How much are they getting in gift of equity while other paid to get equity.

This country now officialy sickens me.

Fri, 02/10/2012 - 00:50 | 2144785 boiltherich
boiltherich's picture

What a fucking scam, banking, nice work if you can get it.

Homeowners lost 8 trillion in residential equity mostly through malfeasance by bankers and the Fed, and the resulting buy off to use their get out of jail free card is a 25 billion settlement, that is three one thousandths of the damages they did.  (0.00312)

My mortgage was 130,000 when I walked away in 2009 and mailed the keys back, at this time the house has dropped to $68,000 in value, with all the fees and late payment assessments and etc. the balance is now around 145k so that the loan to value ratio is over 200% and they think I am going to go back into the place if they offer me a $10,000 write down of the principal? 

They could write down the principal to the market value of 68k, lower the interest rate to 4%, forgive all late fees and arrears so my credit score heals, and kiss my fucking ass and I would still tell Chase to go fuck themselves.  They ripped me off in 2009 and they will never have to opportunity to do it again no matter the consequences.

Fri, 02/10/2012 - 00:59 | 2144794 alien-IQ
alien-IQ's picture

That 25 billion figure is not a cash figure. The cash payout is a small percentage of that.

So it's even worse than it looks.

It's a complete gangbang of homeowners and former homeowners by the bankersters and their political whores.

Kleptocracy. Kakistocracy. Strumpetocracy. Call it what you will...just don't call it a capitalist democracy....because it ain't.

Fri, 02/10/2012 - 01:30 | 2144851 Max Fischer
Max Fischer's picture

 

 

You defaulted on your mortgage?

Rick Santelli - who's infamous rant kick started the Tea Party movement - thinks you're a "loser."  

Max Fischer, Civis Mundi

 

Fri, 02/10/2012 - 01:35 | 2144857 Vic Vinegar
Vic Vinegar's picture

Pretty much anyone who reads ZH has been a fan of Rick Santelli at one time or another.  But I don't get your point or trolling attempt, whichever it is.  Pls explain.  Tnx!

Fri, 02/10/2012 - 01:54 | 2144877 kalasend
kalasend's picture

Walking away from apparently losing position is not a loser. But signing that contract to buy the house at overblown price is.

Fri, 02/10/2012 - 02:25 | 2144901 We need Geronimo
We need Geronimo's picture

"People are corporations, too".

 

Strategic long-term business decision.

Fri, 02/10/2012 - 04:28 | 2144961 hidingfromhelis
hidingfromhelis's picture

That's just chock full of win!  

Like the Mortgage Bankers' Association strategically defaulting on their headquarters?  If it's good for the goose...

Fri, 02/10/2012 - 11:22 | 2145807 boiltherich
boiltherich's picture

You think I give a fuck what Rick Santelli says on TV?  I have watched him and he has been probably the most populist voice on CNBC, but what he thinks or says has no bearing on reality in my case and millions of others, his job is to help TPTB fool the world into levitating a set of markets far above their natural value with no connection to fundamentals or reality.

As to the idea that it was the public, like me, that was wrong by overpaying for shelter, I agree that if price are too high people should wait to buy till they drop, I did wait, but it was the bankers and their master manipulator the Fed that made the funds and terms available to the public which produced the hyper inflated real estate market.  The house I bought was originally priced at over $200k and many of the 52 units in my subdivision were sold at that price, I looked at them and said no, they were too high and would come down, then I would buy.  A year later they were at $129k a $75,000 drop, and that was well below the cost of materials to build them or the insurance value.  I was right that they were overpriced and I was right that they would drop, but nobody could have foreseen that the prices would drop from $205,000 down to $65,000. 

What prices do going forward is of no concern to me, I am out and I have been had, only a total moron would agree now to further abuse.  Accepting a half assed bank offer for a bit of a write off on principal that does not even cover the increased balance because of foreclosure fees and late fees and etc. would be like a woman going back to her wife beater husband after he promises never to hit her again. 

If you are sick and tired of getting screwed by the banksters and being a debt slave it is up to YOU to not play their game.  It may be that my refusal of their most generous offer (ow, I spit coffee through my nostrils) will be seen as a refusal to play ball now that the so called ball is in my court, and that can be viewed as anti social, but the offer is just a ploy to get people to agree to debt slavery.  They seek to repair the RE market and get house (asset) prices to reinflate because they have them now marked to myth, as they mature and come due they have to be remarked to a real number and very often that means as much as a 90% loss if not more.  This agreement is a major step toward convincing people that the market is now cancer free, the bottom is in, and they will buy only to find in a few years that it was a fake bottom and they will again lose trillions in equity as before. 

If you want to be guilt-tripped into this trap by the likes of Rick Santelli then by all means go for it, it is a free country (or used to be) but I assure you I have no intention of spending my last 15-25 years on this ball of muck paying banksters every spare dime for the right to live in a house I no longer want. 

Fri, 02/10/2012 - 11:39 | 2145890 MachoMan
MachoMan's picture

Why are you apologizing?  the ability to break a contract is inherent in the business transaction...   If you can simply turn in the keys without your creditor having recourse against you, then it sounds like to me that you made a helluva deal (probably much cheaper than rent while you were in the home).  Folks, like me, in recourse states, well...  our analysis is a little bit different (although, coincidentally, our housing prices probably don't have as far to fall, go figure, right?).

However, you should definitely whine about the government taxing you to pay the bank for making a bad business decision...  they drafted the contract, they lost fair and square...  not your problem until the law stepped in and made it your problem.  Moral hazard.

Fri, 02/10/2012 - 07:24 | 2145081 twotraps
twotraps's picture

boiltherich....your plan would work if you were a bank or had a Large Banking Lobby to work a deal for yourself in Washington.....otherwise, not.

Fri, 02/10/2012 - 08:16 | 2145124 jplotinus
jplotinus's picture

"
Vote up!
17
Vote down!
-1
What a fucking scam, banking, nice work if you can get it.

Homeowners lost 8 trillion in residential equity mostly through malfeasance by bankers and the Fed, and the resulting buy off to use their get out of jail free card is a 25 billion settlement, that is three one thousandths of the damages they did.  (0.00312)

My mortgage was 130,000 when I walked away in 2009 and mailed the keys back, at this time the house has dropped to $68,000 in value, with all the fees and late payment assessments and etc. the balance is now around 145k so that the loan to value ratio is over 200% and they think I am going to go back into the place if they offer me a $10,000 write down of the principal? 

They could write down the principal to the market value of 68k, lower the interest rate to 4%, forgive all late fees and arrears so my credit score heals, and kiss my fucking ass and I would still tell Chase to go fuck themselves.  They ripped me off in 2009 and they will never have to opportunity to do it again no matter the consequences."

Settlement doesn't preclude individual claims. I'd recommend going after Chase.

Fri, 02/10/2012 - 08:45 | 2145198 jwoop66
jwoop66's picture

How'd they rip you off?

Fri, 02/10/2012 - 12:10 | 2146040 boiltherich
boiltherich's picture

Back when they first announced HAMP I called them to discuss a mortgage modification, to see if I was eligible for a lower interest rate, they said that they were not permitted to discuss any modifications till a mortgage was 90 days in arrears, and you like I did would have gotten the distinct impression of wink wink nod nod in the voice of the bank rep.  In other words, you had to default in order to get a modification, the lady said she could "not advise anyone to stop paying their mortgage just to get a modification but until I was 90 days late she could not discuss it."  So, I stopped paying for 90 days. 

When I called them back 3 months later I was told that the HAMP program was only for those current on their payments and besides, I made too much money since my mortgage payments were only 26% of my income.  But, in the meanwhile late fees and arrears had made catching back up almost impossible.  And while all this was going on my insurance company had taken out my insurance premiums twice in June 2009 putting me into a temporary but severe bind, when I had gone in to make my payment at the AllState office my agent told me that in future if I paid by automatic checking withdrawal I would get an additional 10% discount on my policies, I went ahead and paid by debit card because the payment was due but I told the agent I would come back in a week or so and sign up for the deal for future payments.  I went back the next week and signed up, then went camping for a few days up at Crater Lake, when I got home I was overdrawn and I could not find out why because the online banker was down for the switch over from WaMu to Chase. 

When I was finally able to access the account again it turned out that my insurance agent had signed me up for the auto pay thing and the AllState computer immediately hit my bank account for the premiums even though I had paid by debit card a full week previous, but they sat on the original payment so that the computer system thought I had not paid.  And because it was Chase now not WaMu in charge of my checking they had a policy of screwing you for every last dime in your account, fees that were accrued but not posted for 48 hours so that you in effect could not know how much money was needed to bring the account out of the negative.

I kept putting money in the account and they just kept taking it for fees, NSF, and this was based upon a measly 5 transactions on debit that all together did not total 20 bucks, but in the end they took $918 in fees and fees on fees, for that, for a mistake my insurance company made.  Had I made the error I would have paid reasonable fees and called it a lesson learned, but $918 bucks for something I did not even trigger?  Well, it happens that my mortgage was with Chase, so I felt I had leverage to get them to reconsider the outrageous fees given that it was a provable mistake by AllState that caused the problem with two identical transactions two days in a row, one an ACH and the other a debit, I told Chase that they would either rescind most of the fees or I would just never again make a mortgage payment, and if they wanted to forego $360,000 in house payments (P&I over 29 years) in order to screw me today for $918 then they were free to make their choice in the matter. 

Surprise surprise, they did not then or now give a shit, and surprise surprise I never made another house payment.  And I was OK with it too because I would have been paying on a house that was deeply under water in only one year of ownership. 

But, later that year in November when it was getting time to either move out or face involuntary eviction at a time of their choosing I had to decide what to do, there was rumor of a new modification program, I called Chase and did a workout deal where I would resume payments at the original terms and they in turn would put the arrears and late fees and such onto the end of the contract so that my credit score would no longer show late payments and my FICO would heal up.  They agreed to this effective the January payment of 2010 and told me to go ahead and send in the payment and they would send me a form to sign to make it all official.  I sent the money in and guess what they did with it?  Yep, they stole it, another 1000 clams from the dumb guy in Oregon that fell for their scam AGAIN!  They applied the entire payment to their own invented late fees, not a cent of it went to principal or interest. 

When I called them to see WTF the chick on the line said "I don't know who would have made such an arrangement because it could not have been done, in order for such a workout agreement to have been done the USDA (Rural Development) which backs your mortgage would have had to sign off on it and that would take at least 6 months." 

It was at that point I just told her fuck it, I am done, keep the money, keep the house, and go stuff them up your ass.  I moved out two months later.  And I will never ever under any circumstances do business with a federally chartered bank in the USA.  If I ever own a house again it will be because I paid cash for it, thus the Powerball ticket in my wallet, because if you are ever going to live free and and be treated as a person with dignity you must have money and in the USA now your chances of getting that via work and ethics are nil.  You have a better chance at peace and security through the lottery than through the sweat of your brow or the workings of your fine mind.  I am just relieved that I only do have another 10-20 or so years left of this bullshit before I clock out on this old bitch of a planet. 

Fri, 02/10/2012 - 00:51 | 2144786 Catullus
Catullus's picture

Greatest bankster president since Morgan-backed Teddy Roosevelt.  In the end, a taxpayer in Texas is subsidizing a mortgage in California via Fannie and Freddie (FHA).

Maybe BofA can do a victory lap for the Countrywide settlement in CA and AZ. 

Check's in the mail, Obummer.

Fri, 02/10/2012 - 09:27 | 2145312 krispkritter
krispkritter's picture

What's ironic at this point is that it looks like Wall Street and the banks are supporting Romney, who is Obama(in white face)...we are so fucked...

http://www.reuters.com/article/2012/02/02/us-usa-campaign-wall-street-idUSTRE81100Y20120202

Fri, 02/10/2012 - 00:56 | 2144795 Lone Deranger
Lone Deranger's picture

Okay, time to go see if my mortgage was robo-signed.  That way I can tap into this latest vote getting entitlement.  My bank will be forced to cut a check from a secret issuance of bernank-bucks.  Woohooooo life is wonderful with our Robin Hood president who also has a Nobel Peace Prize.  Dammit - he's amazing!!!

Fri, 02/10/2012 - 11:48 | 2145930 MachoMan
MachoMan's picture

Are you underwater?  Have you been making your payments?

Fri, 02/10/2012 - 00:58 | 2144799 palmereldritch
palmereldritch's picture

Well, you know what they say, There's no closure like a fraudclosure...

Or is it Feudal me once, shame on you...feudal me twice...?

Fri, 02/10/2012 - 00:59 | 2144803 Aquarius
Aquarius's picture

Does anyone remember when all this became visisbled back in 2006/7 the MSM with all following suit, calling those individual homeowners/mortgagees all sorts of nast names - like scumbags and the like and to be thrown out of their houses and homes immediately? Today, when we find that the villians and frausters were always and still are the Bankers and the financial cockroaches that scurry around doing their bidding, there is no outrage, just forgiveness.

I do not expect the AG's to take up their options to further legal recourse; they have sold the Law of the Land out; Sold! The foundation of the USA economy, that is to say, the private ownership of property will remain a high risk undertaking for amny years to come. Your "leaderhsip" working for you (sic) /offsarc

But then, as said elsewhere, the Banks have shot thmselves in the foot as the residential mortgage business is done sow here do they go from here? Expect many Banks to collapse now and rents to get to reasonably affordable levels and expect more people to rent rather than take on the high risk of a mortgage and the further risk of having the home foreclosed by another Bank.

Banks are in a bear market as far as reidential loans are concerned so they better snap back into lending to small businesses - this will be far better for all the economies.

Fri, 02/10/2012 - 02:21 | 2144897 Vic Vinegar
Vic Vinegar's picture

Buddy,

  1. I don't remember that back in 2006/2007 the MSM was calling homeowners "scumbags".  Perhaps my memory is faulty.
  2. "Amny" ain't a word.  At least it ain't one I never heard of.
  3. This sentence: Banks are in a bear market as far as reidential loans are concerned so they better snap back into lending to small businesses - this will be far better for all the economies. is so painfully naive it...nah, nevermind.  

I'm in an up-with-people mood tonight/it's a full moon.  So maybe all the world needs is a few more space monkeys reading your blog?  

http://verbewarp.blogspot.com/

Fri, 02/10/2012 - 01:01 | 2144806 longdong silver
longdong silver's picture

Whatever it takes for the half breed  new world order puppet to get re elected.

Fri, 02/10/2012 - 01:00 | 2144807 qqqqtrader
qqqqtrader's picture

 

 

1. Close your bank account if you have one in the 5 largest banks. (I DID)

2. Vote for someone other than whose already in office. (I WILL)

Fri, 02/10/2012 - 01:32 | 2144812 TruthInSunshine
TruthInSunshine's picture

Obama = Bush = Clinton = Nixon = Truman = FDR = Wilson

All slaves, owned lock, stock & barrel, along with the "elected Congress," by The Money Masters.

Deep Capture is complete.

 

Keep deluding yourselves, anyone still on stuck in the mindset that they have a true choice via anything remotely democratic and therefore viewing current events through a left-right paradigm (set up by The Money Masters, who own 'both' of America's alleged political parties).

Fri, 02/10/2012 - 01:02 | 2144813 YesWeKahn
YesWeKahn's picture

I will vote for Obama this time. He takes care of rich people and poor people.

Fri, 02/10/2012 - 01:03 | 2144815 dwdollar
dwdollar's picture

You're pretty naive if you expect any justice to be served in this police state.

Fri, 02/10/2012 - 01:03 | 2144816 longdong silver
longdong silver's picture

Bawny Fwank is going to take it up the ass for creating this mess.

 

Fri, 02/10/2012 - 03:52 | 2144937 mkhs
mkhs's picture

pwomises,pwomises

Fri, 02/10/2012 - 08:56 | 2145229 smlbizman
smlbizman's picture

you mean like dodd when he resigned.....

their is truly only 1 alternative

Fri, 02/10/2012 - 01:06 | 2144818 Seasmoke
Seasmoke's picture

i dont think the people are going to take this one on the chin without fighting back......this one feels different (and some power people better have plan B)

Fri, 02/10/2012 - 01:05 | 2144823 Jefferson
Jefferson's picture

So most of that $25 billion ($19.1 billion) is going towards mortgages they were going to have to end up writing off anyway?

OMFG!

Fri, 02/10/2012 - 01:06 | 2144825 graymnzrc
graymnzrc's picture

Bull$hit, a lot of these home owners should be held responsible for what they did. Acknowledged that somehow, someway the connected bankers and fraudsters will escape some justice over this, however, the whole psychology of "I am a victim" is total, utter Bullshit! Quit blaming other people for co-ercing you into doing something that wasn't a good decision.  It's your life! You are responsible for protecting you!

Does anyone remember Buyer-Beware? And the whole argument of "I didnt know what I was signing" is crap too.

The reason why you didnt know what you were signing is because you didn't pay attention in school or you were too envious of your friends to live within your means.

Not my fault that you are an un-educated dumb-ass, why should I pay for you?

High Business Risk = High Business Rewards (or Failures) (Spoken from a man who tried and failed, ME)

AMERICA IS LOST!

Fri, 02/10/2012 - 01:17 | 2144840 alien-IQ
alien-IQ's picture

It's interesting how your anger and indignation seems solely focused on the people and not the banks.

Fri, 02/10/2012 - 06:43 | 2145046 StychoKiller
StychoKiller's picture

You're only seeing the Truth from a SINGLE point of view...

                       Excerpt(s) from "The Big Short":

"In Bakersfield, CA., a Mexican strawberry picker with an income of $14,000/yr and no English was lent every penny he needed to buy a house for $724,000."

"By May 2007, however, there was a growing dispute between Howie Hubler and Morgan Stanley.  Amazingly, it had nothing to do with the wisdom of owning $16 Billion in complex securities whose value ultimately turned on the ability of a Las Vegas stripper with five investment properties, or a Mexican strawberry picker with a single $750,000 home, to make rapidly rising interest payments."

"'Who takes out a home loan and doesn't make the first payment?' asked Danny Moses, putting the matter one way.  'Who the fsck lends money to people who can't make the first payment?' asked Eisman, putting it another."

Fri, 02/10/2012 - 07:41 | 2145097 Burr's 2nd Shot
Burr's 2nd Shot's picture

I think you buried the headline, if you will.

Amazingly, it had nothing to do with the wisdom of owning $16 Billion in complex securities whose value ultimately turned on the ability of a Las Vegas stripper with five investment properties, or a Mexican strawberry picker with a single $750,000 home, to make rapidly rising interest payments.

The answer to Moses and Eisman is "Everyone who recognizes a demand with little to no consequences for failure." 

I am unconvinced that the remedy here is to give the Mexican or the Stripper their properties and a check for $2,000.  I would think that removing the securitization apparatus and forcing banks to keep mortgages on their books would curtail abusive lending practices.  If you eliminate Fannie and Freddie guarantees, you eliminate the incentive to make bad loans, or at least, increase the pain of making bad loans.

Banks and borrowers share in the blame game, but ultimately they were just participants in a market that the government created.  And, of course, the government is the only player unpunished after this blow-up.

Fri, 02/10/2012 - 08:43 | 2145191 flattrader
flattrader's picture

Bingo!

>>>I would think that removing the securitization apparatus and forcing banks to keep mortgages on their books would curtail abusive lending practices.<<<

That is the only way this crap will never happen again.  When everyone abdicates their fiduciary responsibility because ultimately it will be sliced and diced and rolled up into one big shit sausage and sold off, no one from the apparaisers and the loan originatorst to the "salesman" who pawned-off MBS and CDO globally are culpable.

The predators are to blame here. The strawberry pickers and strippers were just the last and dumbest prey in this game.

Santelli is an idiot and a tool...just like his minions of fat-assed, middle-aged Tea Partiers who are too busy supporting the agenda of the predator class to understand they are being circled by the very same wolves.

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