Bank Of America’s Massive $16.65 Billion Settlement (That Foreclosure Defense Lawyers Clearly Don’t Get, or Want to Get)

Recently, Bank of America entered into the largest settlement ever with the federal government, in the sum of $16.65 billion.  The $16.65 billion settlement includes a $9.65 billion cash penalty and $7 billion in relief to homeowners.  The $9.65 billion cash penalty will be paid to settle federal and state civil claims. $300 million will go to California, $45 million for Delaware, $200 million to Illinois, $23 million to Kentucky, $75 million to Maryland and $300 million to New York.  Florida was not party to the settlement. 

Yet the Tampa Bay Times poses the question: “But it’s unclear who specifically will qualify or if the money ultimately will help those hurt most by the reckless conduct of Bank of America and the companies it bought, Countrywide Financial Corp. and Merrill Lynch.”  

Clearly, not the most intelligent piece of writing when their own article cites that Florida WAS NOT a party to the settlement, and further states that Florida was still receiving $1 billion that would be used for  “…reductions to the principle portion of their mortgage and other loan modifications aimed at reducing the number of homeowners who are underwater (owing more than what their house is worth) on their mortgages, according to the Department of Justice. Assistance also will come in the form of new loans for borrowers deemed “credit worthy,” donations to communities to demolish buildings in blighted areas and financing for affordable rental housing.”  I think the relief Florida homeowners are receiving is quite clear to the contrary.

The article further cites that “[a]lthough Thursday’s announcement and the 2012 National Mortgage Settlement tout large penalties, some experts say consumers don’t get much benefit.  “It’s all accounting tricks,” said Matt Weidner, a St. Petersburg consumer-protection attorney who handles foreclosures. “Rather than provide real relief to consumers, these settlements provide tax relief to the banks.””

I disagree as the settlement has NOTHING to do with homeowners what so ever.  

The Justice Department and the bank settled several of the department’s ongoing civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of RMBS, collateralized debt obligations (CDOs), and the bank’s practices concerning the underwriting and origination of mortgage loans. The settlement includes a statement of facts, in which the bank has acknowledged that it sold billions of dollars of RMBS without disclosing to investors key facts about the quality of the securitized loans. When the RMBS collapsed, investors, including federally insured financial institutions, suffered billions of dollars in losses. The bank has also conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

I fail to see the word homeowner or anything relating a reference to the borrowers on the loans.  If you look to the basis and language of this settlement to begin with right from the Department of Justice:

Of the record-breaking $16.65 billion resolution, almost $10 billion will be paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America will pay a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion will be paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion will be paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million will be paid to settle claims by the Securities and Exchange Commission. In addition, $300 million will be paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York.

In fact the words “homeowner” or “borrower” appear NOWHERE in the official written settlement agreement.  Check for yourself, nothing, as those words do not even appear once (nor the word Florida).

I think it is abundantly clear that this settlement is NOT intended to be a remedy to homeowners, but to the investors that were deceived by Bank of America, as well as to FNMA, Freddie Mac, the FHA, the SEC and other governmental agencies.  Nowhere in what the DOJ said does it mention fraud on homeowners.  In fact this has nothing to do with the homeowner as borrower(s), but the relationship between the bank and its investors and with the governmental agencies concerning the loans.

Where the foreclosure defense lawyers get off claiming that “oh well this does not seem to be relief for the consumer, blah blah” sounds more like an opportunistic sound bite in the media limelight to stir up angry homeowners rather than resembling any truth relating to the facts of the settlement. 

Please actually read the facts and the settlement itself in the above links and judge for yourself.





My Beef With Some Foreclosure Defense Lawyers in Florida Part 2

Earlier I wrote an article on My Beef With Some Foreclosure Defense Lawyers.  My beef continues.

Recently I read an blog entry from a high-profile defense lawyer, and this lawyer proceeded to take their client to a foreclosure trial.  Let’s forget for a second this client or client(s) had to take a full day off of work to attend court.  Let’s forget for a second that the client/clients had to pay this lawyer to go to trial extra- likely $2,500-5,000+ in extra fees just for trial.


Why take you client(s) to a trial that you have 2% or less chance of winning?


This is obviously not about just 1 particular lawyer, but a group of high profile lawyers in Florida who have decided to try to “stick it to the man/bank”; and rather unsuccessfully the majority of the time.  It truly begs the very real question of whether this group of lawyers became high profile in the first place on their clients’ backs (or houses in this case).  One only becomes newsworthy for doing something radical or unconventional in the public eye, not hammering day in and day out getting settlements for your clients to keep them in their homes.  Not accusing all others of being “pretender defenders” as if their method is so wrong.  


So it truly begs the question whether these group of lawyers are truly looking out for your interests, or if you are just the next grandstand in court or appellate court to get them recognition in the industry.  Definitely question the motive of your lawyer as a client, and ask questions.

Back to that blog entry.  This lawyer went to trial and was cross-examining a bank witness, and raised some (rightful and good) objections about a document not being in court that this witness was testifying about.  Surely it was at least a line of questioning with merit.  The judge overruled this and admitted the document into evidence sinking the homeowner’s case completely on the last issue he/she could have potentially won on.  


What happened after dozens of hours preparing for trial and the client paying for it, out $2,500-5,000+ in trial fees?  The homeowner was forced to take a loss and a 30-45 day sale date or agree with the bank before it won the trial to a much longer extended sale date; the same exact result that could have been gotten in 30 minutes of work without the client taking a day off work to be in court, and without paying the lawyer a large sum of money.

I just do not understand this move, and find it irresponsible in many ways.  Do you want to gain fame or fees or…..what?  I am not sure.  But these are the very same lawyers who call the others “pretender defenders” who do not fight for their client(s).  Yet we all end up at the same result in the vast majority of cases, just our way is cheaper and less stressful on the client.  I would much rather save my client thousands of dollars and time off work that they cannot afford to take already being in a financial hardship.


Again, I am not advocating to not use any particular lawyer. There are some out there who truly believe that they can prove the bank’s evil and are willing to do so at all cost.  More power to them as it is their home and money to lose.


But please at least ask yourself whose interest your counsel is looking out for?  Saving you money and getting you a good result, or charging unnecessary fees to get to the same result while risking your house in the meantime.