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.