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 RT @kgosztola: Hackers, next time you face charges of exceeding use of computer, tell judge it was misunderstanding https://t.co/f1mEtwOv8a
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emptywheel As you get outraged abt CIA spying illegally on the Senate, remember they've repeatedly done such things to Gitmo lawyers.
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emptywheel RT @RonWyden: .@CIA broke into Senate computer files. Then tried to have Senate staff prosecuted. Absolutely unacceptable in a democracy.
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emptywheel RT @nakashimae: Msft: We will appeal promptly and cont to advocate that people’s email deserves strong privacy protection in the U.S. & aro…
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emptywheel @froomkin I was already working on a post on how silly David Cole's claim COngress can control the IC was. Does that count?
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emptywheel RT @nakashimae: Judge in SDNY just ruled: Microsoft must comply with U.S. search warrant to turn over emails held in Ireland
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emptywheel Kudos to @MarkUdall for calling Brennan out, bc CIA was already prolly going to go after him over torture to try to flip the Senate.
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emptywheel Does Andy Card have corollary to his "you don't introduce new product in August" that goes, "But CIA does get absolved for multiple crimes"?
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emptywheel @matthewstoller I'm pretty sure he didn't kill Kennedy. So no.
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emptywheel Ho ho ho! Bah ha ha! John Brennan put Evan Bayh in charge of internal accountability. Bwa ha ha ha ha. http://t.co/7yRltvHt1U
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bmaz RT @michaelroston: The CIA is sorry for snooping on Senate staffers tasked with investigating the CIA http://t.co/OoQYn2WxpH
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