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 Twitterverse
emptywheel I bet Keith Alexander is wondering why he doesn't get away w/the tricks Dick Cheney used to get away with, like dual hatting his spies.
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bmaz The Obama Admin is unprecedented at prosecuting leaks. So, where is the outcry+prosecution of FBI and DOJ/CRD over #MikeBrown Rule 6 leaks?
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emptywheel RT @nakashimae: FBI's Joe Demarest: ‘No indication’ #JPMorgan hacked as payback for western sanctions on Russia http://t.co/pbHRzSUILa via …
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JimWhiteGNV Steel Curtain? Nah. More like Asphalt Speed Bumps.
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emptywheel @ldpws Thanks.
57mreplyretweetfavorite
JimWhiteGNV They are booing the rapist at the giant ketchup bottle.
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emptywheel @MelissaRyan I'm just ignoring them until next week then mass deleting them. Why doesn't Gmail have a mute button? I guess a filter, maybe?
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JimWhiteGNV Alabama House Speaker Mike Hubbard indicted on 23 felony corruption charges by Lee County Grand Jury http://t.co/qFznlxm0jL via @aldotcom
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emptywheel @Aennie1 Haven't tracked it. I'd have to put some thought to it. Sorry.
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emptywheel But don't worry bc that obstruction only underlies the whole PRISM system. What could go wrong?
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JimWhiteGNV Oh, look. Even after he left, Rick Scott's old company is still full of fraudsters: http://t.co/DtQbjpctxn
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