My Sunday Washington Post Business Section column is out. This morning, we look at the yet another bank giveaway, the awful robosigning foreclosure settlement.
The print version had the headline The robosigning deal is a useless embarrassment, while the online version is titled Foreclosure settlement a failure of law, a triumph for bank attorneys.
As I noted oh so many times before, once we bailed out failing banks, there is a strong incentive to protect rather than police them. This deal is a perfect example.
Here’s an excerpt from the column:
“Before the settlement, we learned that nearly every aspect of the robosigned documents was false. None of the details were ever reviewed. The signatures attesting to the review of the documents were fabricated — made by someone other than the person whose name was on the document. Neither person — the supposed signatory to the document nor the hired forger — ever validated the facts of each case. All of the safeguards put in place to make sure foreclosures were done correctly and legally were bypassed. Even the notary stamps were bogus — they were not real, and not signed by a notary to validate that the signer and the signature matched.
How did this happen? Instead of a careful review, people were hired to rubber-stamp hundreds of foreclosure documents an hour. Former burger flippers were paid $8 to $10 an hour to violate the law, file false affidavits and commit perjury. Some of the information was correct, but much of it was wrong — and none of it was verified for court purposes.
And now we have this grand settlement.
What will the impact be?
Economically, it will have no effect. The dollar amount is small relative to the U.S. economy. Indeed, the total impact of the settlement is less than one ten-thousandth of annual gross domestic product.
Then there’s the “math.” The number touted is $26 billion, but that’s wildly misleading. At most, it’s $6 billion, paid out by a consortium of banks. The other $20 billion is for capital write-downs for delinquent homeowners that were going to happen anyway. These were homes that the banks anticipated taking a $50 billion-to-$100 billion hit on. Only now, they get a tax benefit for it.”
The dead tree version of the paper has a nice layout:
click for ginormous version of print edition
Foreclosure settlement a failure of law, a triumph for bank attorneys
Washington Post, February 26 2012