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 @woerma_wenhua I read it a LONG time ago, but seeing the movie again reminds me how much more textured the book was.
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bmaz "Benevolent Protector Daddies" like Hayden, Alexander and Rogers are EXACTLY the modern day Gen James Matoon Scott's we should worry about.
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bmaz @woerma_wenhua Have you read the book? I did when I was young, and its better than even Frankenheimer's film. I highly suggest it, even now
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bmaz Damn if John Frankenheimer movies don't hold up incredibly well, despite their period settings. John was a master, and a great guy.
13mreplyretweetfavorite
bmaz @TimothyS And exactly who else put the issue squarely in front of the public?
22mreplyretweetfavorite
bmaz Today's Jiggs Casey is Edward Snowden. But surveillance statists would rather mock than think about those implications.
23mreplyretweetfavorite
bmaz In the surveillance state/military/industrial complex of today, the heroic whistleblower would look like Edward Snowden, not a Marine.
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bmaz The joke of history is that the craven and unconstitutional scope of the NSA makes Frankenheimer/Knebel's ECONCOM look like a piker.
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bmaz I would love to see @TheOliverStone remake Seven Days In May. Lawdy, that would be awesome.
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bmaz RT @jfeckstein: @bmaz Ripe for a reboot. HBO miniseries.
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bmaz @jfeckstein I screwed up that retweet! But, hell yes!
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bmaz Ripe for a reboot. HBO miniseries. RT @jfeckstein Thanks to Edward Snowden, we finally know about ECONCOM. #SevenDayInMay #ButNow // YES!!
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