Obama Administration’s Price Tag for Bank Lying, Predation, and (Probably) Securitization Fail: $8 Billion

Back when the foreclosure fraud settlement was purportedly only going to cover robo-signing abuses, the price tag was going to be $17 billion.

Now that the Obama Administration is desperately trying to craft a settlement deal to include origination problems, the price tag has grown to $25 billion.

Under the proposed terms of the settlement — which could total $25 billion — banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.

The deal could provide some relief to the battered U.S. housing market and clear up some uncertainty about banks’ legal exposure that has been a drag on their shares.

Banks have been holding out on a multi-billion-dollar settlement because they wanted broader legal immunity than state attorneys general were prepared to offer.

Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.

In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.

That means for all the additional things the banks would get immunity for–at the very least, the liars loans and the predatory lending, all the things they’re getting hammered for in reps and warrants suits, though the language might well immunize securitization failures–banks would pay just an additional $8 billion.

That, in spite of the fact that FHFA filed lawsuits against the banks that might be worth $40 billion, with $11.5 billion from Bank of America alone.

So basically Obama wants to fund HAMP 2.0 by letting banks out of at least 80% of what they stand to lose in court.

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Emptywheel Twitterverse
bmaz A horrendous practice ratified by Connecticut Supreme Court https://t.co/Yht9rvdUQF
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JimWhiteGNV Groundhog Day. Train. Fade away. Train again. Rinse. Repeat. https://t.co/xrqmhJKFa0
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bmaz @PhilPerspective @R_Ephemeral @walterwkatz To paint the picture to explain the other conduct.
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emptywheel @regretblues Interesting. thanks.
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emptywheel RT @FSIStanford: Taubman: Presumably the Senate Intelligence Committee was aware of everything Snowden exposed. No, says Feinstein. #Securi
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emptywheel RT @FSIStanford: Feinstein: We don't know who or how, but Leon Panetta had asked his staff to "assess" what our Intelligence Committee was …
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emptywheel @adambonin Yeah. I bet @ddayen could invent some competition that would distinguish Spelling wasp from fruit fly.
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emptywheel @adambonin I'd say a POTUS debate but they'd look good by comparison, I guess.
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emptywheel @adambonin Why not make them face off in skills neither is good at, like all good reality shows?
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JimWhiteGNV Aaand there are now a ton of SD Police on motorcycles. Moving on to previously planned destination...
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JimWhiteGNV Previous tweet: this is a demonstration against Border Patrol violence.
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emptywheel How can something as cutthroat as the Spelling Bee end in a tie? It's not right.
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