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 @FrankPasquale: “what do we learn from [a] data-says-the-darndest-things story?” http://t.co/551aCmlwSQ & do we ever get to audit it? If…
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JimWhiteGNV RT @TehranBureau: Kalame: photographer Arya Jafari arrested in Isfahan, Iran for taking pictures of those protesting acid attacks http://t.…
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JimWhiteGNV Free the bowling alley! It did nothing wrong. And poses no risk...
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emptywheel @brettmaxkaufman Actually there is a study showing this now, look at (IIRC) Nazi sports associations. @dandrezner
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bmaz RT @JoshMankiewicz: My father Frank Mankiewicz has passed away after a wonderful life. He was the best dad I could ever have wished for. ht…
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bmaz @BernardKingIII Only thing it ever got me was in contempt. Which was thankfully dropped by judge when guilty verdict returned.
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bmaz @KanysLupin @MonaHol @normative @trevortimm @onekade @FareedZakaria Yeah, starry eyed people like to talk nullification, but doesn't happen
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bmaz @BernardKingIII I mean, seriously, only law professors would come up with that theoretical drivel. And Zakaria still screwed it up.
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bmaz @MonaHol @KanysLupin @normative @trevortimm @onekade @FareedZakaria If so, you should be prosecuted for perjury.
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bmaz @McBlondeLand @nycsouthpaw Was also a real thing in southern Arizona back in late 80's - 90's Biosphere: http://t.co/YrTSfTqpVI
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bmaz @MonaHol @normative @trevortimm @onekade @FareedZakaria Rule 24 leaves discretion on void dire method to court. Some do it some let attys
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