Another pass at a banking whitewash:
A multistate settlement with five large U.S. banks over foreclosure practices would include as much as $17 billion in mortgage debt forgiveness and loan modifications and take three years to complete, according to a letter describing the deal. The draft letter to stakeholders from state attorneys general outlines an agreement among large mortgage servicers, states and the Department of Justice, which are continuing talks to finalize the proposal.
Servicers, including Bank of America Corp., JPMorgan Chase & Co. (JPM), and Wells Fargo & Co., would also have to provide as much as $3 billion in refinancings, enabling borrowers to secure new loans “at today’s historically low rates,” according to the letter. Another $1.5 billion would be distributed to about 750,000 borrowers who have lost their homes to foreclosure, according to the letter.
States that sign on to the agreement would get “immediate payments” to fund consumer protection and foreclosure prevention efforts.
All 50 states announced almost 16 months ago they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from a group of state attorneys general offices and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with the nation’s largest mortgage servicers.
The agreement holds banks accountable for “wrongdoing on robo-signing and mortgage servicing.” It allows state and federal prosecutors to continue to pursue securities cases and other claims. Individuals would not be barred from filing their own lawsuits, and the settlement includes “absolutely no criminal immunity for any individual who violated the law.”
In other words, a slap on the wrist, a few new loans, and the attorneys general will magically make all the title fraud go away. This costs the banks nothing, as most of the “mortgage debt forgiveness” consists of bad loans the banks were going to have to write off anyhow. The net result is rather like telling a bank robber that he has to repay a few dollars each time he holds up a bank… except the behavior of the banks is far more criminal than that of the average bank robber.
The real point of the loan modifications and the new loans is to generate new paperwork and ensure that the banks have proper title to the properties to replace the titles they destroyed in utilizing the MERS system to avoid local taxes. If you figure an average county transfer fee of around $750, that means the local taxes successfully evaded by the banks were around $562,500,000 for the foreclosed properties alone.