Many were thrilled to hear that all 50 state attorneys general and federal authorities were negotiating with the large U.S. banks to punish them for their robo-signing misdeeds, fabricated documents and stepping on some homeowners’ rights.
This came after every U.S. state filed lawsuits against the banks, claiming these actions were a violation of homeowner rights and were illegal. But, according to The New York Times, it appears the settlement will do little to punish the corporate banks that ran fast and loose, causing the Great Recession that affected nearly everyone in the country.
According to a recent article, the newspaper reports that sources have said the settlement will cost about $25 billion, which seems big on the surface. But under the agreement, banks would only pay about $3.5 to $5 billion, paid by about a dozen financial institutions.
The majority of the difference would be in the form of credits to banks that consent to lower the amount owed on mortgages owned or serviced for private investors. It’s unclear, the newspaper reports, how many credits, but negotiators would come up with a formula. It is amazing that banks, who made record profits, would be let off the hook by the government despite their actions.
While Miami foreclosure defense lawyers didn’t hold out great hope that these settlements would make a large impact, many others did. One would expect that the 50 attorneys general would have done more to help the many homeowners struggling with foreclosure in Miami and elsewhere in South Florida.
While $5 billion is a lot of money, spread over several companies it won’t exactly sting. In comparison to the damage done to our economy, the world’s economy and the many homeowners who lost their jobs and homes, it’s merely a slap on the wrist.
It is hoped that bank officials will care enough about the penalty to stop the practice in the future. But there is also concern that there are documented incidents in recent months that robo-signing still exists, even as banks held off on filing mortgage foreclosures for a number of months.
The article also states that government-backed Fannie Mae and Freddie Mac loans will be excluded from the settlement. Only loans on the banks’ books are involved. Banks are expected to dole out $1,500 to homeowners whose homes were lost to foreclosure. For those cases where there was no fraud alleged, it’s free money for nothing. For those who were rolled over in the process, it means nothing.
The rest would be split between the federal government, state bank regulators and other support systems. Sensing this is a sham of a deal, officials from Delaware, New York, Massachusetts and Nevada have dropped out of the talks, coming to the conclusion, rightly it appears, that this isn’t going to do anything to help their constituents.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.
More Blog Entries:
Miami Foreclosure Watch: 11 Million Properties in U.S. Have Negative Equity: September 30, 2011
Banks Don’t Learn Their Lessons — Still Using Robo-Signed Documents in Miami Foreclosures: September 13, 2011
A Deal That Wouldn’t Sting, by Gretchen Morgenson, The New York Times