A recent editorial in the Los Angeles Times, "California Should Make that Mortgage Deal," admonishes California Attorney General Kamala Harris for her insistence on ensuring that the big banks that caused the foreclosure crisis in our state pay their fair share to our homeowners. The editors urge Attorney General Harris to take the deal that's currently on the table, even though she knows -- and California's homeowners know -- that the deal isn't good enough.
In order to fully appreciate what is being asked of Ms. Harris, it's important to put the size of California's foreclosure crisis in perspective. About one million foreclosures have hit our state since 2008. Moreover, 30 percent of current California homeowners owe more on their homes than they're worth, a rate that's higher than the national negative equity rate of 25 percent. With about 2 million underwater mortgages in our state, and assuming that each homeowner is $93,000 underwater -- an average calculated by CoreLogic -- then to address all the negative equity in California, the settlement would have to provide $214 billion to our state alone. How big is the settlement currently on the table? $30 billion. And that's for the entire country. This isn't a settlement; it's a bailout for the banks.
It's another bailout because in exchange for getting off cheap with California's homeowners, the banks would be released from liability on the origination and servicing of trillions of dollars of mortgages. The release would come before any of the attorneys general, including our own, have been able to properly investigate allegations of foreclosure fraud. What anecdotal evidence we do have that says the wrongdoing potentially runs deep, with Delaware Attorney General Beau Biden, who has also abandoned the multi-state settlement, saying that a cursory examination of foreclosures in his state indicates that in one out of every four times a bank went to foreclose on a homeowner, they were foreclosing on behalf of an entity that did not own the underlying mortgage. By settling now, and for so little, the attorneys general could be leaving potentially hundreds of billions of dollars on the table. No wonder the banks want a deal so badly.
Moreover, the attorneys general need to learn from past mistakes and fight for not only a fair settlement, but strong enforcement mechanisms. By most accounts, the terms of past settlements have been flouted by the banks. For example, in the case of the $8.4 billion Countrywide settlement with California and eleven other states in 2008, the lender, now owned by Bank of America, has failed to provide the loan modifications and reforms to their systems that were promised. The current settlement, which will reportedly use a "credit system" where banks agree to reduce a predetermined amount of principal owed on mortgages, may likely face the same enforcement pitfalls as previous efforts.
So before we can cut any deal, we first need to be assured that the wrongdoing that necessitated these settlements in the first place has stopped. To date, we have no reason to believe that it has. And then what we need is a robust and thorough investigation into what happened and who has been impacted -- from mortgage servicing fraud, to title and securitization issues, to the banks' use of MERS to avoid paying deed recordation fees to local governments.
Without the leverage that comes from knowing the full scope of wrongdoing, we will never be able to negotiate a settlement large enough to compensate for all the fraud in our mortgage securitization and servicing systems, and help prevent the 6 million foreclosures over the next 6 years that some housing analysts predict.
Attorney General Harris knows that the banks want a sweetheart deal like this. The banks hope that we'll see all the zeros and think that they've actually given us something. But many of us, including California's attorney general, are not buying it. Instead of pressuring Attorney General Harris to go with the flow, the rest of the attorneys general should follow her lead.
Follow Rep. Maxine Waters on Twitter: www.twitter.com/Maxinewaters
I know I speak for many Republicans is saying how happy I am the requirement for a 3 digit IQ for all House members failed.And,may I compliment you in your courage during the debate?
COrwin. Being Cruel. But,only to be Kind
ANGELO MOZILO, CHAIRMAN AND CHIEF executive officer of Countrywide Financial Corporation, Calabasas, California, was honored with the National Housing Conference (NHC) 2004 Housing Person of the Year Award in recognition of his long-standing commitment to reducing the barriers to homeownership for lower income and minority individuals and families.
Source: http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/190037-1.html#ixzz1e4e61gcT
Mozilo was doing what Waters and her democrat pals wanted him do and now they turn on him.
How left wing.
Cuomo made predatory lending legal.
It wasn't the banks that determine underwriting guidelines, it is Fannie and Freddie. Why do you think we are bailing them out to the tune of 100's of billions of dollars? The reason why banks started to bet against them, is because they were too heavily leveraged with the housing market. They didn't "make fortunes" they lost billions. Why do you think we had to bail them out? They didn't make money on their bets against the market, the lost less because of these bets.
Wall Street shares their blame in not disclosing what was in the derivatives they were selling, and they also share blame for not carrying enough capital requirements to back their bets (AIG, etc.). But the damage had already been done by our government before the securities ever got to Wall Street.
That is one reason why I think all our politicians in Washington, and both political parties, are at fault. That's why we all need to work together to get the message across to our politicians that the path they're on is not sustainable, and changes need to be made.
Clearly they haven't gotten the message (my interpretation of the lack of progress seen with the so called "super committee). I hope we can get the changes enacted to put us in a sustainable financial position.
After that, yes the banks (with "protection" and low interest from the feds) went on a "gourging at the trough", but again were aided by a co-conspirator (Congress), who had authorized Fannie & Freddie, then proceeded to milk it for their individual gains.
The history of capitalism shows that the big money profiteers will do whatever
it takes to make the mega-bucks -- that's the nature of predatory capitalism.
The motto has always been ''let the buyer beware.''
But of course, it's not a level playing field --
and our incompetent / inefficient government can't seem to do much about that.
No I'm not saying banks didn't do more than their fair share in creating this mess. And where were the realtors advising their buyers to get a real estate attorney to review the documents? I NEVER bought a house without one.
Why would anyone dispute this? We are suffering the deepest financial retraction since the Great Depression, are we not? The economy ebbs and flows, but this time it's a historic disaster. When savings and loan companies massively failed under Ronald Reagan, the crash was aggressively investigated - and that involved pocket change compared to the damage that permeates the US and world economies today. Don't we at least need to know exactly what went wrong? (And we're way behind schedule.)
Why is immunity for banks even considered? If they are blameless, why negotiate for immunity? I don't have legal immunity? Do you?
If they did something wrong, not just as an error of judgement, but as a matter of violations of the law, where is the "accountability" that politicians so often blather about? The offer to look the other way is either crazy, or deeply corrupt.
Immoral, yes, not not illegal. And thank democrats for it.
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