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

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Emptywheel Twitterverse
bmaz @Will_Bunch But, still, leaking this on a Friday 5pm dump is pretty bogus.
2mreplyretweetfavorite
bmaz @Will_Bunch Yep, thanks, just found it. I never expected anything out of DOJ-CRD because their jurisdiction is thin, and very tough sledding
3mreplyretweetfavorite
bmaz Frankly, people, including the clueless Ben Crump, who put their faith in DOJ civil rte prosecution were always nuts http://t.co/32b2IB6ZGi
4mreplyretweetfavorite
bmaz @Will_Bunch Nevermind, found it.
6mreplyretweetfavorite
bmaz @Will_Bunch Crap, do you have a link? Jeebus.
7mreplyretweetfavorite
emptywheel Building young men into football players is just like building upscale office desks.
7mreplyretweetfavorite
bmaz Shades of Les Nesman and WKRP: "Blackhawk helicopter drops candy in Phoenix neighborhood last night" http://t.co/8dr19FzYzM via @azcentral
10mreplyretweetfavorite
emptywheel @nickmanes1 Ah. We're a duplex. So 2-for-1 once you get up the steps.
11mreplyretweetfavorite
bmaz @ralonzo A military Blackhawk?? I'm going to go with terrifying!
12mreplyretweetfavorite
emptywheel @kevinjonheller Nightshade. Lots of people are allergic to other nightshades, right?
13mreplyretweetfavorite
emptywheel @nickmanes1 You must have gotten tons of Treaters in the old joint. All wearing professionally made costumes?
13mreplyretweetfavorite
emptywheel @kevinjonheller Lucky for me I have a quasi open air greenhouse--even strawberry plants aren't dead yet. Picked eggplant & some peppers too
14mreplyretweetfavorite
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