If ever you need as an illustration why bank bailouts are such a misguided idea, one need look no further than Fraudclosure and RoboSigning. The sunk cost of the bailouts have completely skewed government officials priorities. Hence, enforcement of laws and imposing criminal penalties has become verbotten, as it undercuts the prior monies.
Why do I suspect that the hand of former NY Fed president and current Treasury Secretary Timothy Geithner is behind this?
So far, only Attorneys General in six five states have questioned the rush to settlement before full investigations have been completed. In addition to California, the AGs in Delaware, Massachusetts, Nevada and New York are raising questions about any settlement prior to a full and thorough accounting of exactly how such massive illegality took place at the nations’ largest banking institutions and law firms. Florida’s prior AG was actively investigating fraudclosure, but the new AG, Pam Bondi, has apparently sold her soul to the notorious Lender Processing Service. She fired the Fraudclosure investigators, and I continue to search for evidence she is not corrupt public official, more or less in vain.
Regardless, the banks are hoping to head off further investigations by writing a check in amounts between $18-25 billion dollars.
“Bank representatives and government officials are working on a broad settlement of most state and federal foreclosure-practices investigations that could move forward without the participation of California, long considered a key to any deal, people familiar with the negotiations said.
The terms of the deal remain fluid. Banks have proposed a deal excluding California that would carry a value of $18.5 billion, though the final outcome remains uncertain, people familiar with the discussion said.
Negotiators are continuing to make a push to persuade California to join a settlement valued at $25 billion among federal officials, state attorneys general and the nation’s five largest mortgage servicers: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. The talks center on the banks’ use of “robo-signing,” in which employees approved legal documents without proper review, and other questionable foreclosure practices.
The dollar value would include the value of principal write-downs, interest-rate reductions and other benefits to homeowners as well as cash penalties.
But negotiators now are discussing how to structure an agreement if California remains on the sidelines. Until recently, it seemed unlikely that a settlement would be possible without the participation of California Attorney General Kamala D. Harris. She left the discussions in late September, calling the deal then on the table inadequate. The state accounted for 13.1% of all mortgages outstanding at the end of September and 10.8% of all loans in foreclosure, according to the Mortgage Bankers Association.”
California has two million+ underwater homes, according to CoreLogic.
Florida Attorney General Report on Fraudclosure (January 2011)
The Foreclosure Zoo (November 2010)
Foreclosure Talks Push Ahead Absent California
RUTH SIMON And NICK TIMIRAOS
WSJ, November 23, 2011