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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 -

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:

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: 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!
Vote down!
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...

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


  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?

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


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?


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)


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


>>>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.

Fri, 02/10/2012 - 12:45 | 2146200 Boxed Merlot
Boxed Merlot's picture

Another interlocking piece to this puzzle is the insatiable appetite for these sausages due to exorbitant amounts of investment capital from government pension funds, (whose members are exempt from SS malaise), trying to make free market returns from socialist money garnering. If not for this activity, proper supply and demand would have maintained reasonable price discovery points and realized the insoluble nature of these devices.



Fri, 02/10/2012 - 01:21 | 2144846 Seasmoke
Seasmoke's picture

well its not hard to see why you were a failure

Fri, 02/10/2012 - 09:11 | 2145272 jwoop66
jwoop66's picture

I agree, gray.   I'm fuckin mortified when I read this shit on ZH.   I'm no fan of banks, but nobody made anyone sign anything.  I have a few humble properties that I rent and live in.   I had to initiate the process every time.   I had to look for them over the course of weeks or months. I then had to go through all the crap to get the loans.  I don't remember even  one rich bankster making me do anything.  I knew I was taking the risk and I went forward. 

I broke five ribs about twelve years ago and couldn't work for a while.  I went in to foreclosure on a number of properties.  No bailouts.  No help from the Govt.   I pulled it out of my ass and managed to keep all my properties.  To this day I'm still doing well with them.  If the shit hits the fan, I will take responsibility unless someone steps in and physically sabotages me.   

All through the early 2000's I was amazed at the multitude of new houses being built.  I remember talking with many folks over the years who were suddenly interested in real estate investment.  People who only talked sports and other vacuous nonsense were suddenly experts on real estate and mortgage rates and appreciation etc.   As soon as the shit hits the fan, everyone is suddenly a victim.   Fuck you all!   You took a risk and failed.   Now get up and walk it off and move forward.    

Lets not forget all the "racist" banksters six or seven years ago who were dragged in front of congress to answer to barney frank and shirley jackson(or whatever that idiots name is).  Back then the banks weren't loaning to enough people!     Now it's all their fault!

Fri, 02/10/2012 - 01:10 | 2144830 YesWeKahn
YesWeKahn's picture

After reading this, I think this is a complete bullshit. Only bank owned mortgages qualify for the loan modifications. Look, banks have sold pretty much all their mortgages to FNM/FRE. The remaining mortgages are probably without an owner. Basically the settlement is just the cash portion of it: 5 billions. So, the result of the game is a clear win for banks:

Banks 7 : USA 0


Fri, 02/10/2012 - 01:21 | 2144843 Seasmoke
Seasmoke's picture

i have read on other websites that people are saying BOA sold their mortgages just in the PAST MONTH (and all were concerned of what was coming out today could be the reason.....looks like they were correct to be concerned !!)

Fri, 02/10/2012 - 12:30 | 2146131 FreeNewEnergy
FreeNewEnergy's picture

Seasmoke, you are spot on. My friend in SC said her 1st mortgage was sold by BAC to Banker's Trust (Yeah, there's a real oxymoron for ya) back in December.

Them there scoundrels at BAC really know how to screw the pooch.

Fri, 02/10/2012 - 01:26 | 2144850 ghostfaceinvestah
ghostfaceinvestah's picture

Plus, WFC and JPM were already reducing principal on the Option ARMs they acquired in buying Wachovia and WaMu, because they already took writedowns when they booked the portfolios.  It will be interesting to see if they get retroactive credit for principal writedowns they already gave.

Fri, 02/10/2012 - 01:11 | 2144833 oogs66
oogs66's picture

So not paing was better than paying?

Fri, 02/10/2012 - 01:43 | 2144842 ayanni
ayanni's picture

So Goldmans Litton Loan Servicing division can access these monies to help their customers reduce their principal and thus increase the performance (decrease delinquency) of the portfolio?

Edit - Oops, make that Ocwen.  Forgot, Ocwen bought Litton from Goldman.  Ocwen - bottom feeders.

Fri, 02/10/2012 - 01:25 | 2144848 Benjamin Simon
Benjamin Simon's picture

As for me I am feeling rather bullish.  Everything is as it should be. Further, I just found a way to make my own champagne.  Pour cheap chardonay in your seltzer bottle, fire of the co2 and VOILA!  Champagne fit for the Obama administration.

Fri, 02/10/2012 - 01:32 | 2144856 Civil Shepard
Civil Shepard's picture

Silly sheeple.  BAC knows they'll side-step this settlement.  BAC will shed/scuttle servicing of any mortgage where it wishes to avoid write down or refi.    Pursue a refi unfavorable to BAC and you promptly recieve an unexpected letter saying the mortgage has been sold and now has a new servicer..... an unknown, fly-by-night servicer created to dump problems on.  My family member who was "working" with BAC just recieved said letter.   BAC side-step underway.

Fri, 02/10/2012 - 01:51 | 2144873 Yen Cross
Yen Cross's picture


Fri, 02/10/2012 - 01:52 | 2144874 Dre4dwolf
Dre4dwolf's picture

TLDR: Banks are bad, Government is worst.


Govt takes money from banks

Govt gives money back to bank

Home-Owner still gets screwed  + Pays higher taxes



That about sums up the "settlement".


Where are the injured parties represented in this settlement? how does this make their lives any better? you know

the people that have already been wrongfully/fraudulently foreclosed on and lives ruined?

What about the people that CANT AFFORD to pay their mortgage DUE TO THE ECONOMIC ENVIRONMENT THE BANKS CREATED?

Inflate currency (make loans=Print money) = Jobs created/Businesses started, people get false feeling of security and "growth", so they take on new debt, new risk.

Deflate currency (stop lending) = Taxes, and interest suck money out of circulation, not enough money to go around, costs rise businesses lay people off / tank/go under.... now you have a bunch of broke people in homes that are worth 50% of what they were just a year or two before.


Banks get homes "for free" because it costs them nothing to "lend money" into existence, home owners get shafted out of their labor (essentially making it so that they spent the last 10 years of their lives "working for free" for the benefit of the "banks and government".


You know what I say? take your debt and shove it! im refuse to pay into this garbage of a system... screw you guys! Im going home!

Fri, 02/10/2012 - 02:02 | 2144880 props2009
props2009's picture


reversal coming with 11 successive candles of negative candles in ES on hourly.

Fri, 02/10/2012 - 07:34 | 2145089 twotraps
twotraps's picture

honestly?  $125/month for 'levels'

Fri, 02/10/2012 - 02:08 | 2144887 non_anon
non_anon's picture

sold out so the cover up can continue

Fri, 02/10/2012 - 02:52 | 2144916 Fish Gone Bad
Fish Gone Bad's picture

As if I really needed any more reasons to hate B of A.

Fri, 02/10/2012 - 03:23 | 2144924 Dead Canary
Dead Canary's picture

Someone want's to strip Greenspan of his Knighthood. GREENSPAN HAS A KNIGHTHOOD! Jesus Jumpin Christ on a pogo stick! Those limeys are dumber than I thought.

Fri, 02/10/2012 - 06:38 | 2145043 autonomos
autonomos's picture

Should we give consideration to David Harvey's work (although he's a marxist - I know) ?


Fri, 02/10/2012 - 07:07 | 2145064 Moe Howard
Moe Howard's picture

This entire forum seems to be infested with malcontents and extremists. Next thing you know, you aholes will be saying I should be purchasing physical Au, Ag & Pb.

All we need to know about the banksters is contained in this old proverb:

Give a man a gun and he will rob a bank; give a man a bank and he will rob the world.

Fri, 02/10/2012 - 07:32 | 2145085 Snakeeyes
Snakeeyes's picture

One more time. Borrowers defaulted on their loans. The lender/servicer is entitled to the house as collateral. Sure, the foreclosure process was lousy, but don't lose sight of the fact that the borrowers defaulted in the first place.

It only became a problem when HAMP went into effect, creating a myriad a rule and then the rules kept changing. And be honest, if YOU loan money to a stranger and they called and an asked for you to reduce the balalnce or cut the promised rate in half, you YOU do it? Probably not.


Fri, 02/10/2012 - 07:52 | 2145107 twotraps
twotraps's picture

What about 'forging' peperwork that said they had title to the house?   I am confused on this, seriously, I was under the impression that the banks were making loan willy nilly collecting fees and selling paper, with no clue or proof their own paperwork was in order or not since there was too much money to be made originating.  

Fri, 02/10/2012 - 08:20 | 2145134 Northeaster
Northeaster's picture

Once again for the learning impaired:

This issue was not about legal foreclosures, it was about the Rule of Law in regards to Property Law/Rights that predates the birth of this country on ILLEGAL foreclosures. Any 1L student learns in property law that "all real estate transactions MUST be in writing". That covenant was broken through massive fraud.

You either follow the law, or you don't, this issue highlights the extremes banks went to, to NOT FOLLOW THE LAW.

Fri, 02/10/2012 - 15:10 | 2147004 MachoMan
MachoMan's picture

actually there are an incredible amount of exceptions to the statute of frauds...  the most notable of which is part performance...

Fri, 02/10/2012 - 13:11 | 2146260 boiltherich
boiltherich's picture

"...if YOU loan money to a stranger and they called and an asked for you to reduce the balalnce or cut the promised rate in half, you YOU do it? Probably not."

Yes Snake, you do it if the alternative is the whole amount gets zeroed out and the borrower walks away never to be seen again, and that by the way is not a morality issue, it is a business issue.  The borrowers in the great American housing bubble Greenspan blew make a BUSINESS decision when they walk away from a mortgage, no more no less.  And it is Greenspan more than any other single person responsible for this, sure people demanded loans for houses, but bankers had underwriting guidelines they chucked the moment they smelled a few extra dollars, and government insiders like Frank and MANY others (so stop with the thinly veiled homophobia OK?)  applied pressure too, but Greenspan was supposed to be immune from such political pressure, that is why the Fed was made independent in the first place (supposedly). 

More than any other person Greenspan had both the knowledge and control of the money supply and lending, the bubble in RE could not have been blown by accident nor without his active approval.  It also could not have been crashed without his active participation and control. 

And those here that claim default is a morality issue not a business decision refuse to admit that people like myself were NEVER once treated in a moral way by banks, I was screwed, lied to, and flat out robbed, and though it was legal it was morally just as much theft as if they had stuck a snub nosed 38 in my ribs and demanded cash.  Why you think this is a "moral" issue for borrowers in this matter but a business matter for banks, and that I have a moral obligation but Chase does not is one of the basic problems that keeps the mess from getting untangled. 

And it does not even matter what you think anyway, I did my part in the contract and I feel that the bank did not, so end of contract.  Now, multiply that by 20 million homeowners and guess what, you and your bankster pals are the ones with a problem.  One of the most fundamental concepts in western contract law is equality of fairness in the contractual relationship, and fairness is predominantly the burden of the party in a superior position, i.e. the banks.  As long as I was paying my mortgage payments I had a legal AND "moral" right to expect fair treatment in return, without that the contract was fraudulent and void. 

Fri, 02/10/2012 - 14:57 | 2146935 waterhorse
waterhorse's picture

Is that you, Angelo?

Fri, 02/10/2012 - 07:45 | 2145100 twotraps
twotraps's picture

Sorry for the same old rant but Honestly!!!!!!!!!!!!   Reading an article by BAC about BAC concerning a supposed 'Settlement' of its own and other banks Fraud???  WTF.   Got some other articles for you....and authors.


JPM, Ins and Outs of Silver Investing

UAW,  The Need for Smaller Govt in Tough Times

GM, The Need for Stronger Rules Protecting Corporate Bondholders

GS,  Crazy Bonus Plans Have Got To Stop

Oh, and some other research articles....BAC downgrades MS, MS downgrades Citi, MSFT thinks AAPL has lost the plot, and finally from the FED....Its All Transitory.


Fri, 02/10/2012 - 08:14 | 2145120 Northeaster
Northeaster's picture

Here is how the Rule of Law now works:

Banks steal hundreds-of-thousands of homes through massive fraud/forgery document production, usurping the law in some states = $25 Billion "get out of jail free card."

Average American steals/embezzles $500 = A felony in most states, at minimum probation, maybe lose your job, maybe your house, maybe even go to jail, as the District Attorney's Office WILL prosecute you.

Welcome to your Plutocracy.

Now what?



Fri, 02/10/2012 - 08:28 | 2145156 twotraps
twotraps's picture

Northeaster, agree.  Car theft is a felony right?  After the shock of it, another glaring example of how fucked it all is....the pressing question is how to work with or around it.  I have very little mortgage but am directly impacted through the 'value' of what happens on my street.  They are messing with 'value', that extremely fragile market concept.  

Fri, 02/10/2012 - 09:59 | 2145434 daveeemc2
daveeemc2's picture

Only in america can you agree to finance a home you cannot afford, not pay a debt u promised to pay,live in a home for months (and sometimes years) for free, when u get eviction notice, take all appliances (u didn't pay a for), copper from elec lines in wall (u didn't pay for), cabinets (u didn't pay for), and for all these troubles, get a 2000$ check (ultimately) from US govt with an appology from american taxpayer for the inconveniences and hardships they caused you.

Gawd bliss amarika

Sun, 02/12/2012 - 13:21 | 2150948 boiltherich
boiltherich's picture

With all due respect Dave E Relativity, that post is full of shit.  Turns out that happens in many other nations, and the checks when they do go out (remains to be seen if they will, for how much, and who will get them) are very small compensation for the total rape and loss of the rule of law in America by the corporate gangsters who make the Mafia look like an amature numbers racket. 

Fri, 02/10/2012 - 10:00 | 2145436 Alex Kintner
Alex Kintner's picture

Matt Taibbi has reversed his opinion on this one as well. Says this is another bailout as big as TARP was if you consider all the liability the banks are relieved of. Video:

Fri, 02/10/2012 - 10:31 | 2145570 Shizzmoney
Shizzmoney's picture

Notice the trend that Dodd, Frank, and Gov. Daniel in Indiana all have in common? They passed legislation that everyone hated; and then left right after doing so.

This "hit-n-run" type of shit is a problem.  Affected me as well when Bill Frist passed the UEIGA (killing online poker). 

When is the corruption going to stop?

From Dylan Ratigan:

And housing values are still declining so far in this "recovery", throwing more homes underwater. In terms of an investigation, the Savings and Loan crisis used roughly 1000 FBI investigators to uncover fraud -- this task force taking on a crisis forty times more severe will employ 10 FBI agents.

There's a reason this is so inadequate to the problem at hand. For the last three years, the policy has been to impose a political solution to a math problem. It hasn't worked. America simply has too much mortgage debt to pay back. Serious economic thinkers across the spectrum, from Democrat Alan Blinder to Republican Martin Feldstein to New York Fed President William Dudley, believe that there is only one solution -- writing down the enormous creaking mound of debt. This solution is currently off the table, because writing down these unsustainable debts could cost our fragile banks enormous sums of money and possibly lead to a restructuring of one or more of our major banks. Avoiding this clear policy choice has resulted in our economy falling into a Japan-style "zombie bank" torpor, with debts carried on the books at full value which everyone knows will not be paid back at par.

This crisis of American political economy in the form of excess mortgage debt is preventing a more powerful economic recovery. Three years after Ben Bernanke used the term "green shoots" to describe a recovering economy, job growth hasn't really revived in any meaningful way. In fact, this is by far the worst recovery we've had since the end of World War II. The best way to measure this is not through traditional unemployment indices (which can be gamed), but by asking the question of how many Americans are working as a percentage of the population. In 2007, this was 63 out of 100. Today, it's a full five percentage points lower. The ratio hasn't been this bad since the early 1980s recession, and remember, we're in a recovery. And the labor force participation rate is dropping, which is a long-term bigger crisis.

Fri, 02/10/2012 - 12:21 | 2145848 RexZeedog
RexZeedog's picture

Everyone is missing the big picture here:

1. These banks (buddies of the govt) get out of the line of fire, by "settling" these issues... But what's being settled? Govt claims that fraudclosure practices broke govt laws?...

2. People who were illegally foreclosed and lost their houses, do NOT get them back under this.

3. This is nothing but the Govt., coming in and shaking down some street-corner crooks (these banks) for a piece of the action.

What about the homeowners who lost the foreclosure battle to an illegal foreclosure?  Those people do not get their houses back, unless they individually litigate and win.

But what does this settlement do?  It takes the RICO angle off the table.  By choosing to NOT prosecute these banks under RICO (and a slam dunk it would have been) and instead "settling" these issues as civil fines, the GOVT removes from the equation a conviction against them.  When an AG signs off on a civil-settlement, that state is barred from bringing criminal charges against the settling party for anything arising out of the same set of facts.

Had there instead been some RICO prosecutions & convictions, if later a private homeowner brought a private action, he could then have simply pointed to that conviction, added his particularized facts, and secured a judgement.  A RICO conviction would have made all of the lawsuits for illegal foreclosure indefensable...

That's what this settlement is all about - to f*ck the small litigant out of the extra leverage which would have helped him win somewhat easily.

These AG's are a bunch of c*cks*ckers...


Fri, 02/10/2012 - 15:09 | 2146999 MachoMan
MachoMan's picture

This big picture has been discussed ad nauseum...  not only after this settlement but in contemplation of a settlement long ago...

I think there is also an important thing to add regarding the people who lost their homes to an illegal foreclosure...  THEY WERE FUCKING IN DEFAULT.  Why would a settlement give them houses back they'll just lose instantly when they fail to make the requisite payments again?  I think you misunderstand what a settlement is designed to accomplish...

Sat, 02/11/2012 - 13:56 | 2149384 RexZeedog
RexZeedog's picture

You are mistaken that they were in default. They were in arrears on the loan, not default on the illegally assigned mortgages. Because MERS is fraudulent and robosigning occurred, the assignments are not valid.

The only party who can assert an action or press for a default, is a lawful holder of the combined note/mortgage.

Because the notes and the mortgages have been split apart and the robo-assignments via MERS are not legally valid, the assignments to the servicers who pushed the late-paying homeowners are also not valid.

For this reason, there has not been any lawful finding that these homeowners defaulted on anything. Indeed, there's not even been any lawful finding that they were in arrears, though common sense dictates they were.

Do you not understand why holding the lline on this issue is so important?

Were it not for the bifurcation of the notes/mortgages from each other and the illegal assignments at MERS, the wildly huge growth in MBS securitizations could not have taken place, and buckets of essentially free money would not have been lavished onto migrant workers to buy $750,000 homes.

By forcing the Fraudclosure assignment violations back against those who committed them, this would force the MBS food-chain to be rolled-back and the large banks (ie; the Squid, BAC, C, etc.) would all have to be liquidated to pay for the damages.

Reckless sociopaths at the FNM & FRE/Wall St./MBS nexus started a forest fire in the economy which still burns today and I would gladly let a million deadbeats keep a home for free, if that's what it takes to put the boot of pain on the MBS Fraudsters and Ponzi banks.

You have NO IDEA where the fault lies if you are griping about deadbeat homeowners. The real thieves here are located at the Wall St./MBS nexus.

Sun, 02/12/2012 - 12:16 | 2150849 MachoMan
MachoMan's picture

This is patently retarded.  A default is where you do not perform an obligation in your contract...  if you do not make your scheduled payments, then you're in default.  In other words, there need not be any reference to any other party for a default or breach to be present.  A court only acknowledges the breach and orders an appropriate remedy.  The breach exists before court involvement.

What you're trying to do is create a revisionist history and a back story for people not making their payments.  To determine whether your theory holds water, please answer the following as honestly as possible: did homeowners who disputed the assignments pay their note payments into the registry of their local courts of general jurisdiction and ask the court to determine the real holder?  Here's another, did homeowners, generally, receive notice of assignments?  [I can say I personally did when it was assigned from local bank to boa to fannie and then serviced by boa].  Well, if you don't contest the assignment, then guess what, you waived the ability to withhold payment (and fraudulent concealment only works with very, very specific facts, of which virtually no one will qualify).

Further, and more practically speaking, if you gave homeowners back their houses and expected them to make their old payments, COULD they?  [hence the only way to overturn foreclosure judgments is to void them, where a meritorious defense need not be shown...  generally by fraud on the court (which is completely different than fraud on another party, which does not void a judgment)].  A better question might be, why would they want to...

And no, two wrongs don't make a right...  not only do you punish all the fucktard creditors who were playing brewster's millions, but you also punish the donkeys taking the loans (and because of their relative positions, the latter are, proportionately speaking, going to take dramatically less of a hit than the former).

I'd say I know more about the issue than most...  I do a lot of real estate law...  and I am confident that I completely understand where fault lies...  (everywhere).  By stepping in and nannying all of the deadbeats, you are ensuring this process can repeat itself...  or, at least, half of the equation.  Do you want to know why another crazy ass credit binge didn't happen after the great depression?  Because the sorry motherfuckers that had to weather that storm didn't forget it for the rest of their lives...  too bad their kids and grandkids forgot the lesson.  Now I get to trudge through it, the cards having been dealt before my birth.  Thanks donkeys.  

PS, until a judgment is invalidated, it's real and enforceable...

Sun, 02/12/2012 - 13:51 | 2150994 boiltherich
boiltherich's picture

This is patently retarded.  A default is where you do not perform an obligation in your contract

Clearly it is you that has no interest in knowing or learning anything about the law MM.  One cannot default upon a contract that is invalidated by the illegal activities of the other party.  A contract that is not valid is not a contract, without an enforceable contract there is no default.  Failure to understand this is how did you put it?  Retarded. 

Mon, 02/13/2012 - 08:16 | 2152916 MachoMan
MachoMan's picture

There's a really, really significant issue you've overlooked...  when an assignment is invalidated, IT DOES NOT ALSO NECESSARILY INVALIDATE THE UNDERLYING MORTGAGE.  In other words, the obligation to pay remains...  the only question is to whom...  hence why a failure to pay monthly note payments into the registry of the court is tantamount to default.

In those instances where mortgages have been invalidated, it was done out of penalty for fraud upon the court...  and this is RARE, even among lack of standing cases.

PS, what you're talking about is a "prior breach," which may excuse further performance...  however, you'll have to stretch to find a cause of action for the mortgagor...  rather, failure to properly assign a note is more likely to be the primary cause of action of an assignee, given privity.  [no damage to a mortgagor unless multiple assignees seek to recover the note payments].  There really haven't been alot of appellate decisions regarding mortgagors using assignments as a shield for any further liability or obligation...  rather, they're all about determining whether the foreclosing party had standing at the time of foreclosure...  big difference.

Sun, 02/12/2012 - 13:44 | 2150982 boiltherich
boiltherich's picture

Rex, you said:  "People who were illegally foreclosed and lost their houses..." and that is true, a fact without contention, but I just want to add emphasis to your point by saying "those people" equal in excess of 99% of mortgage holders foreclosed upon, because there were several facets of fraud the banks were involved in, not just the forgeries and robosigning.  They knowingly filed false documents with the SEC when they issued securities backed by these loans, they knowingly withheld vital information from ratings agencies (though those were complicit as well after payoffs were received), they knowingly mislead investors they sold to even as they bet against the investments they sold calling them pieces of shit in internal memos, they knowingly mislead home buyers who contrary to popular right wing opinion did not borrow too much for houses because they were assured by everybody all they way up to Greenspan himself said house prices could never drop (implying they would never be allowed to drop).  They even had the gall to outright use occupied dwellings as collateral in multiple cusip securities knowing the truth had to eventually come out but knowing also that when it did the damage would be so huge that the government would be forced to choose between a bailout and an amnesty sweeping it under the rug, or a total collapse in western finances. 

In western law if any party to any business knowingly withholds information or facts impacting the other party to the transaction we call that fraud and the contract in total is voided by it.  The fact that my mortgage would be sliced and diced and sold multiple times to multiple parties was one of many facts withheld from me, I owe nothing to anybody in this shit deal even though I am accused of being the bad guy over my decision to strategically default. 

I, and I think most foreclosed upon people, would happily trade my $2000 bribe to shut up when (if) it arrives in return for an honest government that sets and enforces the laws and sends criminal banksters to jail for a very long time.  Sadly I am not optimistic so I will cash that check and put it towards getting the fuck out of this country.  I am thinking beaches in Costa Rica/Nicaragua. 

Mon, 02/13/2012 - 08:21 | 2152925 MachoMan
MachoMan's picture

You've stated a cause of action for putbacks of securities, not for a homeowner to void his mortgage/note.  The contract with the mortgagor expressly allows assignment without capability of dispute on the part of the mortgagor...  sorry, but this is not fraud.

PS, the contracts are merely voidable, at best, and likely, may be waived or otherwise ratified...

Fri, 02/10/2012 - 11:56 | 2145958 Silver Dreamer
Silver Dreamer's picture

Why does this surprise anyone?  The banks are our true government.

Fri, 02/10/2012 - 14:50 | 2146909 PatBateman
PatBateman's picture

People who have stayed current on their mortgage through this whole thing should sue subprime borrowers or whoever lied about income on a mortgage application and got foreclosed on. They're the reason why the crisis came to be, not the banks. Our society has this problem of blaming the crack dealers instead of the paint a loose metaphor. If there wasn't demand for high LTV housing, there would have be less supply. Homeowners should of had more control. If I only make $60K a year, I shouldn't buy a $300K house, even if a bank says I can. A hard fact is not every American should of owned a home. The American dream needs to be revised to "live within your means".

Fri, 02/10/2012 - 15:04 | 2146975 MachoMan
MachoMan's picture

Good luck getting blood from a turnip...

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