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Obama Sells Out Homeowners Again: Mortgage Settlement a Sad Joke
Joe Nocera, the columnist currently challenging Tom Friedman for the title of Hackiest Militant Centrist Hack--it's a tough job that just about everyone on The New York Times op-ed page has to do--loves the robo-signing settlement announced last week between the Obama Administration, 49 states and the five biggest mortgage banks. "Two cheers!" shouts Nocera.
Too busy to follow the news? Read Nocera. If he likes something, it's probably stupid, evil, or both.
(Photo: CNN)
As penance for their sins--securitizing fraudulent mortgages, using forged deeds to foreclose on millions of Americans and oh, yeah, borking the entire world economy--Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo have agreed to fork over $5 billion in cash. Under the terms of the new agreement they're supposed to reduce the principal of loans to homeowners who are "underwater" on their mortgages--i.e. they owe more than their house is worth--by $17 billion.
Some homeowners will qualify for $3 billion in interest refinancing, something the banks have resisted since the ongoing depression began in late 2008.
What about those who got kicked out of their homes illegally? They split a pool of $1.5 billion.
Sounds impressive. It's not. Mark Zuckerberg is worth $45 billion.
"That probably nets out to less than $2,000 a person," notes The Times. "There's no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file."
Readers will recall that I paid more than that for a speeding ticket. 68 in a 55.
This is the latest sellout by a corrupt system that would rather line the pockets of felonious bankers than put them where they belong: prison.
Remember TARP, the initial bailout? Democrats and Republicans, George W. Bush and Barack Obama agreed to dole out $700 billion in public--plus $7.7 trillion funneled secretly through the Fed--to the big banks so they could "increase their lending in order to loosen credit markets," in the words of Senator Olympia Snowe, a Maine Republican.
Never happened.
Three years after TARP "tight home loan credit is affecting everything from home sales to household finances," USA Today reported. "Many borrowers are struggling to qualify for loans to buy homes…Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits. Even then, they may not qualify for the lowest interest rates."
Financial experts aren't surprised. TARP was a no-strings-attached deal devoid of any requirement that banks increase lending. You can hardly blame the bankers for taking advantage. They used the cash--money that might have been used to help distressed homeowners--to grow income on their overnight "float" and issue record raises to their CEOs.
Next came Obama's "Home Affordable Modification Program" farce. Another toothless "voluntary" program, HAMP asked banks to do the same things they've just agreed to under the robo-signing settlement: allow homeowners who are struggling to refinance and possibly reduce their principals to reflect the collapse of housing prices in most markets.
Voluntary = worthless.
CNN reported on January 24th: "The HAMP program, which was designed to lower troubled borrowers' mortgage rates to no more than 31% of their monthly income, ran into problems almost immediately. Many lenders lost documents, and many borrowers didn’t qualify. Three years later, it has helped a scant 910,000 homeowners--a far cry from the promised 4 million."
Or the 15 million who needed help.
As usual, state-controlled media is too kind. Banks didn't "lose" documents. They threw them away.
One hopes they recycled.
I wrote about my experience with HAMP: Chase Home Mortgage repeatedly asked for, received, confirmed receiving, then requested the same documents. They elevated the runaround to an art. My favorite part was how Chase wouldn't respond to queries for a month, then request the bank statement for that month. They did this over and over. The final result: losing half my income "did not represent income loss."
It's simple math: in 67 percent of cases, banks make more money through foreclosure than working to keep families in their homes.
This time is different, claims the White House. "No more lost paperwork, no more excuses, no more runaround," HUD secretary Shaun Donovan said February 9th. The new standards will "force the banks to clean up their acts."
Don't bet on it. The Administration promises "a robust enforcement mechanism"--i.e. an independent monitor. Such an agency, which would supervise the handling of million of distressed homeowners, won't be able to handle the workload according to mortgage experts. Anyway, it's not like there isn't already a law. Law Professor Alan White of Valparaiso University notes: "Much of this [agreement] is restating obligations loan servicers already have."
Finally, there's the issue of fairness. "Underwater" is a scary, headline-grabbing word. But it doesn't tell the whole story.
Tens of millions of homeowners have seen the value of their homes plummet since the housing crash. (The average home price fell from $270,000 in 2006 to $165,000 in 2011.) Those who are underwater tended not to have had much equity in their homes in the first place, having put down low downpayments. Why single them out for special assistance? Shouldn't people who owned their homes free and clear and those who had significant equity at the beginning of crisis get as much help as those who lost less in the first place? What about renters? Why should people who were well-off enough to afford to buy a home get a payoff ahead of poor renters?
The biggest fairness issue of all, of course, is one of simple justice. If you steal someone's house, you should go to jail. If your crimes are company policy, that company should be nationalized or forced out of business.
Your victim should get his or her house back, plus interest and penalties.
You shouldn't pay less than a speeding ticket for stealing a house.
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31 Comments so far
Show All"Borking"...is a reference to that Supreme Court judge wannabe. "Boinking" is the word your probably looking for, based on the italian root word Boink ME?~~Boink YOU!
gigggggggggggggglesssssss
whocares;)
The title is wrong.
This is neither sad nor funny.
This is the best the corporate owned tools could do because it is most important (to them) that the banks be pleased.
So why would anyone vote for any of these Wall Street tools?
"So why would anyone vote for any of these Wall Street tools?"
fantastic question! Could those who are planning on voting for either a democrat or a republican please give us your reasons?
One only needs to look at the world, day after day, and to see the hundreds of reasons why ONE WOULD NOT VOTE for one of "these Wall Street tools?"
You already know the answer. "Because third parties don't have any chance of winning, and I just can't....I can't....even....imagine...gasp...voting for a candidate that can't win!!!" or the classic from the Dumbocrat-loyalists: "because they are better than Republicans...well, somehow...."
The sheep get the government they deserve. You vote for rape - D or R - then SHUT UP when you get raped.
We'll continue to be sold out by Obomber. Vote Green.
This article appeared on counterpunch.org yesterday.
http://www.counterpunch.org/2012/02/24/obama-is-coming-to-my-town/
sums up nicely the point i tried to make. the author, ron jacobs does a nice job of laying out the failings of the current joker in charge.
excerpted from mr. jacobs article"
There are some of us in town that plan to protest when Mr. Obama hits town. We aren’t birthers and we aren’t Tea Partiers. Some of us even voted for Mr. Obama. All of us are pissed off. Having a Democrat in the White House has not made much of a difference, even for those that thought it would. Obama has not fulfilled hardly any of the promises he made to his progressive supporters. There are multiple reasons to protest.
Because the reason for his visit is to raise cash for a politics that leaves most people out.
Because Guantanamo Bay prison is not closed.
Because 91,000 US troops and even more US mercenaries are still killing and dying in Afghanistan.
Because the US is still spending $3 billion a year in Iraq.
Because Bradley Manniing is in jail for exposing the truth about the wars in Iraq and Afghanistan while the liars who started the wars walk free.
Because thousands of Iraq and Afghan War vets are without work.
Because thousands of those vets suffer from PTSD and other combat-related illnesses.
Because millions of people are homeless, including thousands of veterans, women and children.
Because millions of houses sit empty after banks foreclosed on them and kicked out the residents.
Because the banks that engaged in illegal foreclosure actions are not being prosecuted.
Because Washington continues to support Israel’s expansionist policies in the Middle East and against the Palestinian people.
Because Washington seems more willing to go to war against Iran instead of agreeing to unconditional negotiations.
Because sanctions are an act of war that harms civilians.
Because the Defense budget (not including VA) is over a trillion dollars
Because Washington has military bases in 450 countries.
Because the Pentagon wants to send Special Forces death squads anywhere at any time to kill whomever they want.
Because Empire is unsustainable, unwanted and wrong.
Because Barack Obama refuses to stand up to the right wing women haters in the Congress.
Because the homophobic Defense of Marriage Act is still on the books.
Because Barack Obama bailed out the banks instead of the workers.
Because Barack Obama pays lip service to workers’ right to unionize while his policies do nothing to help workers to unionize.
Because student debt should be forgiven.
Because the post office is being destroyed and sold off.
Because schools and libraries are being closed.
Because 44 million Americans don’t have health care and many of those won’t be able to afford that offered via Obama’s “health care” plan.
Because immigrant families are being shattered by ICE.
Because the underemployment rate stands at around 16%, with more than half of that number being people with no job at all. The unemployment rate for black Americans is even higher. This is also the case for youth.
Because the DEA continues to arrest medicinal marijuana providers.
Because CEOs average paycheck increased 24% since 2008 despite a failing economy.
Because business as usual is the business of exploitation.
Because Obama represents business as usual.
Because Obama talks some of the talk of the 99%, but his actions benefit the one percent 99% of the time.
Too Big To Jail.
Privilege, in U.S. society, is a commodity that can be bought.
Another good piece by Rall.
In the meantime, according to Tim Geithner, a true man of the people, Obama wants to lower the tax rate for his good pals the corporations. It doesn't matter, really, since they don't pay it anyway.
“Amnesty: The state’s magnanimity to those offenders whom it would be too expensive to punish.”
Ambrose Bierce
The Devil’s Dictionary
Come on now - do we really need a healthy housing market?
Do we really need a consumer economy based on decent jobs and consumer spending?
According to the Obama admin, the rethugs and our corporate leaders the answer is NO.
Not sure what they want to replace the real economy with but I'm thinking they are decoupling We the People from the economy.....
The more I learn about our business and governmental leadership the more I think David Icke might be onto something.
This helps demonstrate how flawed a system is that sees the home as an investment and savings vehicle and storehouse of wealth rather then a shelter and place to live.
That so called "wealth" was all illusion and paradoxically the only way to recreate that "wealth" is to recreate the bubble and the illusion that it represents true wealth.
Canadian newspapers are filled with advertisements fronted by beaming real estate agents describing how one can get rich buying and selling Real Estate in the USA due to the economic crisis and the collapse of housing prices. The system called "Capitalism" turns everyone into an investor that can grow rich off the misery of others and off these boom and bust cycles.
All of this of course has its roots in the concept of "property law" and the belief that an entity can claim to OWN a piece of land and are not seen as being valued unless they own property. Those without it not only end up sleeping in streets but are also marginalized politically seemingly having little in the way of political power. They are WORTH less and as worthless individuals do not have a voice.
In order to obtain that property the system has designed a way by which one can indebt themselves to a bank again a win win for the banker and ruling class as that person then becomes one that is forced by that debt to not rock the boat.
At the same time those that have LOST their homes and are freed of that debt CAN be a threat to the established system has they have little to lose. They are much like the proles in 1984 who Winston sees as the only hope to overthrow the system.
In order to keep THAT group in its place the Government removes program spending intended to aid people in times of need. They ensure these masses all compete for a handful of jobs. They ensure that laws designed so that any of these that break laws are further marginalized with Criminal records so as to make it even more difficult to get a job.
Property law and the removal of the concept of the Commons , and along side it this thing Called Capitalism where a small group of people control all the property and wealth forcing the masses to labor on their behalf leads to fascism and enslavement.
Defining fascism as government control of private ownership and defining socialism as government control through government ownership, I would say we are fascist oriented. I think anyone who has attempted to do anything other than draw a paycheck and subsidized benefits can rue the growth of this all-controlling fascism.
But whether working for another or self-employed, we are already partially enslaved due to income and payroll taxes forcing us to work for the fascist state. This enslavement can only increase as debt and unfunded liabilities come due.
Finally, it must be said that property law and the concept of the commons can work hand in hand in a capitalist system. Property law allows a person to take possession of a portion of the commons upon initial purchase and then the payment of periodic rent. This rent can support a government that is small enough to be transparent and to allow each of us the freedom to advance beyond adolescence. Since each ideally owns a share in the value of the commons, each is entitled to an equal earth dividend funded through rents payed by those utilizing the commons. This addresses your justifiable concern of a small group of people controlling all property. The earth belongs to all and is the feedstock for all wealth.
The problems with the concept of "Private Property" go far beyond one small group claiming to own all.
I would use as example Vancouver British Columbia.
Since property is private and based upon the whims of a marketplace, the price of Real Estate and a home is all but out of reach for most people. An average home price single family detached in Vancouver is over 850000$$.
The only people that can afford such homes are the already wealthy or those that have two high income working parents borrowed to the hilt. Given the nature of Capitalism not all people can make the samee wages yet the City relies on low income workers to function such as their janitors, store clerks , Gas Station attendants and the like.
Local small businesses can not attract workers because they can not or will not pay a wage that allows the worker to reside inside the city. The worker then has to do a two hour commute from an area with affordable housing this putting stress on infrastructure. This means more traffic, more bridges, more pollution and more stress on the environment.
So why does a home in one location have a value of 850k and a home in another of the be valued at 200k? It is the artificial mechanism of the so called "free market" coupled with the concept of Private property. Again an artificial man created system created by laws and policies that are implemented.
Yet at the same time within the city limits homes can be provided to people at a fraction of the cost, this on Indian reserves where the land held in Common and while the person who resides in the house has his or her privacy and all the legal rights to the same as an owner, that land belongs to the tribe "In Common" and can only be used for housing and not be eaten up for Golf Courses or Shopping malls because they provide a higher "return on investment". (At the same time there are reservations that do this very thing leaving many of their members homeless while they lease out their land to investors to build malls and casinoes upon)
Housng should be just that. A Place of shelter for families. A Home. It should not be subject to whims of the marketplace anymore then health care should be. We should all have access to healthcare no matter our income and we should all have access to housing regardless of income.
To imply healthcare and housing problems to be exclusively housed in the marketplace is a stretch of the imagination. Just a wee bit to blame is government central planning that is driving us out of home and responsible healthcare.
An underappreciated tool of central planning has been the Federal Reserve’s ability to increase the amount of money for political purposes such as appeasement of both the few with their much wealth and the many with their many votes. Secretly, the Fed still stimulates a market already stimulated to death with inflated fiat money. This is the free money that has built houses of straw to be blown down by the big bad wolf in the marketplace.
But the health of the wolf and each of us is at risk due to government policy subsidizing the pollution of our natural home: the land, water, and air of earth. An earth tax would restore accountability to those rent seekers making out like bandits while stealing the value of our commons. Simultaneously, ending taxes on payroll, income, profit and sales would restore the health of the economy. But it is the earth tax, enhancing the health of the earth, that would also be a funding source of healthcare through an earth dividend distributed to all.
Then there is our spending as much as the rest of the world combined in order to destroy the health of the rest of the world while patting ourselves on the back while doing so. Indeed, Clinton’s Secretary of State Madeleine Albright thought the sacrifice of half a million Arab children was worth it. But the health of underfed children outside the gates of Fortress America is as important as the health of overfed old people in America. Ron Paul would begin to restore the health of the world by sounding the retreat to our occupation forces throughout the world.
>>Ron Paul would begin to restore the health of the world by sounding the retreat to our occupation forces throughout the world.
Ron Paul would turn EVERYTHING over to the whims of the marketplace. He has no use for the commons and he has no use for any government interference in the rights of an "owner" to do whatever he wished to his or her property.
He follows the theories of Mises who felt EVERYTHING should be privatized from forests to water and operate under market principles.
Ron Paul thinks that if someone causes harms to anothers PROPERTY (not self) then that other person should seek restitution through the courts. A ludicrous notion which would result in even mnore pollution of our environment.
Ron Paul would not heal the world. He sees the natural world as little more then a resource to exploit for the sake of profit.
Ron Paul would begin to restore the health of the world by withdrawing military forces of occupation. This may not be appreciated by those of us not under the heel of military boots, since we received only a snapshot of what that might be with 9/11. And I am not suggesting that Paul be awarded the Nobel Peace Prize. How could I ever place him in the same category as President Barack Obama who received the 2009 Nobel Peace Prize?
You would never know what a con job this is if you are watching his primetime apologists on the democratic television channel MSNBC. There every host after Dylan Ratigan do nothing but cheer him on as if he was a progressive president. FOX and MSNBC are two sides of the same corrupt coin toss and I honestly don't know which side is dumner.
Huckuva job, Schneidy!
One way or another everything bad always ends up being mostly or entirely officially blamed on the victim in the US. In this case, the homeless and quasi homeless will get $2,000 to become housed and productive members of society again. Obviously, in most localities that is substantially less than 10% of the amount needed to accomplish that (and far less than 100% of the amount needed).
So then when the victims of the mortgage crimes inevitably fail to emerge from homelessness, imprisonment, unemployment ext. with their $2,000 it will be 100% their fault according to the failed US system. The victims will end up with bad credit ratings, criminal records, and other black marks.
But of course, in reality and actually it will be 0% the victims' fault and 100% the fault of the actual criminals who are helping to run the failed system.
Although Obama for one evidently thinks so, token amounts of money don't change the real facts.
Rall sez: "You shouldn't pay less than a speeding ticket for stealing a house."
***
Depends what the meaning of "you" is. Wall Street is not subject to rule of law. Ergo, nothing it does can ever be considered a crime (ie, theft). Ergo, there are no victims.
It is at moment like this that a simile from Greek mythology be drawn. The Bankster-driven mortgage fraud is this era's Augean Stables, and this paltry 'settlement' is akin to a hand shovel. Thus the production of dung will continue unabated.
The need for huge amounts of cash seem to keep our elected officials begging for the proper way to please the capitalists that control Washington DC.
Why do our elected officials need huge amounts of cash? Well to tell the truth I am not so clear about that. The word is that they need it to finance another run at public service. That to me could be a problem.
The way these last few presidents have bent this nation over for the pleasure of the banksters is an indication that there are problems with 'our' republic. The punishment for crimes in the US seem to diminish as the wealth of the transgressor increases. This need not be dealt with flight or fancy in the future as it seemingly is today.
The future may include retribution of a far more meaningful nature. With people continuing to suffer at the hands of a ruling class that holds their plight as insignificant. The possible resulting turmoil may include vigilantism in a frightful attempt to right a perceived wrong.
This of course can all be prevented. Justice has been a theme used effectively throughout the history of this nation. Putting justice ahead of profits or even ahead of self promotion might be a way in which the citizenry will conclude that at least an attempt has been made on their behalf to bring them justice.
“It's simple math: in 67 percent of cases, banks make more money through foreclosure than working to keep families in their homes.”
“The average home price fell from $270,000 in 2006 to $165,000 in 2011.)”
Please explain to me how a bank makes money by loaning someone $270,000 to buy a house, foreclosing, and selling it $165,000.
“Those who can get loans need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits.”
Surprise, Surprise. Surprise! A big part of the problem arose because the banks made loans to people who could not afford them and didn’t require sufficient down payments. Do we want to start the cycle all over again?
Because of lax lending practices home ownership in the United States rose 8% from 64% in 1995 to 69% in 2005 after remaining constant for more than a decade. The housing crisis won’t be over until this rate getsback down to 64%.
Just because a house is temporarily underwater is not a justification to reduce the principle. I suspect that in 30 years, at the end of the mortgage it will be worth close to what it cost to purchase it. On the other hand anybody that qualified for the original loan should automatically qualify for a new loan at the current interest rates. The rules for qualifying should not change.
The banks have already made as much as they could out of 270,000 - they're just trying to squeeze as much as they can out of that 165,000 value and leaving the mortgage payer in a house with a renegotiated mortgage doesn't serve that goal.
It is definitely Ally Financial, Bank of America, Citibank, JPMorgan Chase and Wells Fargo doing their best to create another tighter and neater ownership of a horizontally integrated monopoly with the fervent help of the congress, the president and the supreme court who will leap to the protection of this goddamn bankster and mortgagor haven. Imagine most of the home foreclosed becoming rental property and then you should get the picture. Like the not great free capitalist system that dictates smaller and unregulated it better, any thing else is socialism(ooooh what a nasty word). Good article Ted.
How the government enables Wall Street parasites to cash in on the crisis:
Saturday's New York Times reported that Greg Lippmann, a former Deutsche Bank trader who made millions of dollars personally and $1.5 billion for Deutsche Bank by betting against mortgage-backed securities, at the same time his bank was selling them to clients, is back in business buying and selling these toxic assets.
...Thus, three-and-a half years after the financial crash that triggered the worst economic crisis since the Great Depression, the same speculators whose swindling caused the banking meltdown have not only been bailed out by the government, they have been put in a position to make a new financial killing by the government’s policy of cheap credit and its refusal to carry out serious bank reform or pursue criminal prosecutions.
...And as the Financial Times reported last week, the bulk of the cost of the settlement will be covered by taxpayer funds. At the insistence of the Obama administration, the banks will be allowed to make use of an existing federal program, the Home Affordable Modification Program (HAMP), which provides public funds to banks that agree to reduce the principal on troubled home loans. Nearly two-thirds of the value of any write-downs the five banks make will be recompensed with funds from this program.
In effect, the value of mortgage-backed securities will be underwritten by government subsidies, opening up a wide vista for profiteering by Lippmann and his cohorts.
The case of Lippmann exemplifies how the policies of the Bush and Obama administrations have enabled the financial elite to cash in on the crisis amid the social ruins left by its criminal activities. While millions of people have lost their homes, either through fraudulent foreclosures or as a result of predatory mortgage practices, the financial parasites continue to rake in millions...
http://www.wsws.org/articles/2012/feb2012/pers-f22.shtml
TOO PESSIMISTIC (both the article and the responses).
I suggest concentrating on those who are paying excessive interest. They were the original victims in most cases. They should get loans at current loan rates.
Those who were foreclosed on, in many cases, just were not able to pay the mortgage. There could a tribunal system to determine if there was fraud in the original loan, or in the servicing, or in the foreclosure. In many cases, no fraud will be found, just unfortunate circumstances. If fraud is found, damages can be determined and paid from the fund.
Those who are "underwater" could be offered a reduced principal loan on a shared equity basis (if the house is sold for more than the new loan amount, the entity that provided the new loan gets a large percentage of the profit). This would be fair because the write down essentially reduces the purchase price for the borrower. In some cases, the reduction in the value of the home may be temporary or not as large an amount as may be talked about and the borrower may want to see it through.
The devil is in the details.
The media news reports of the latest plan, showed a lot of smiling politicians and smiling banksters. giving us a lacy outline , and feel good snippets of how this would help those homeowners who are, 'underwater'.
They spoke of billions of Dollars being made available to help the lenders refinance troubled mortgages. These same banks received billions in the previous bailout funds to use as they saw fit, unquestioned, with no oversight. These same banks continue to make mortgage modifications and refinance virtually impossible. These same banksters have hired foreclosure mills to bring proceedings in courts across the country, submitting fraudulent documents to force homeowners out of house and home.
To add insult to injury, the deal provides $2000.00 to those home owners who have been victimized by this felonious criminal cabal.
To be sure- The black or grey limousines, with trunks full of cash, will be running red lights speeding out of Washington.
That is why were these politicians and banksters were smiling!
"Heads," I win; "tails," you lose!
The Gummint's "War on Banks" is using the same strategy as their "War on Drugs", only in reverse.