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.

Tweet about this on Twitter0Share on Reddit0Share on Facebook0Google+0Email to someone

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

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
Emptywheel Twitterverse
emptywheel @elbowspeak Probably ALSO an endemic Scotch-Irish problem. @ExumAM
9mreplyretweetfavorite
emptywheel @DanaHoule I did do my 5 stages of denial, btw. http://t.co/J3HAiONyhr But ref to Stone as CoS got cut.
10mreplyretweetfavorite
emptywheel Anyway, come to GR & drink our beer. This block is by no means prettiest block in or just outside of downtown. http://t.co/5yUC9CdlsT
22mreplyretweetfavorite
emptywheel Here, I'll ignore signature of Grand Rapids--the Calder--to avoid showing you ugly plaza! http://t.co/5yUC9CdlsT http://t.co/H94KoA3caA
25mreplyretweetfavorite
emptywheel To make GR downtown look really well preserved, redefine it to exclude govt monstrosities! http://t.co/5yUC9CdlsT And where is Heritage?
29mreplyretweetfavorite
emptywheel @ExumAM You saw the new study showing (unsurprisingly) rugby has a concussion problem?
38mreplyretweetfavorite
bmaz A scene from a US political press confab on how to keep slurping Trump while totally applying "Clinton Rules" to HRC http://t.co/RlGORfluPW
1hreplyretweetfavorite
JimWhiteGNV @MasaccioEW Phase 1 complete! I am a lopper legend. #ChainsawTime http://t.co/AFYUP2Au4s
1hreplyretweetfavorite
emptywheel Make IAD into real agency way the fuck away from NSA, but THAT in charge of cybersecurity for real, and appoint a future contractor for NSA
1hreplyretweetfavorite
emptywheel If Admiral Mike Rogers can't do both CyberComm and DIRNSA maybe those roles (and IAD) should be broken up. http://t.co/TY6FuvVz5z
1hreplyretweetfavorite
October 2011
S M T W T F S
« Sep   Nov »
 1
2345678
9101112131415
16171819202122
23242526272829
3031