Settlements for Inept Mortgage Practices

Are they finished? Maybe not…it all depends on what the Government settlement exclusions and future Federal protection against legal action from claimants. And let me add the personal angle to this – alot of home owners got plowed under with all the ineptness – some behavior should have resulted in hangings or executions!

6-26-2014: Part of the credit the Big Banks got for modifying mortgages under the $25 Billion settlement were related to investor owned loans (i.e., loans they didn’t own, but still serviced). WSJ, 6-25-14, C3.

6-19-2014: SunTrust got fined about $1 Billion – >$400M toward fines and >$500 M in helping those borrowers over the next 3 years who are underwater on their mortgages. Source: WSJ, 6-18-14, C3.

3-28-2014: After $55-60 Billion in lawsuit settlements, Bank of America (BOA) still faces suits from AIG, Federal Home Loan Banks, and the US Justice Department. Source: WSJ, 3-28-2014, C8.

3-27-2014: Bank of America and the FHFA settled the lawsuits involving the acquisition of Countrywide and Merrill Lynch for a total of $9.5 Billion (bringing the total to $60 Billion) and a $15 Million settlement with the state of New York for failure to disclose losses at ML upon takeover. (Note: The FHFA has pursued 18 lawsuit fr $200B but so far have settled 12 of them for $19B.)
Source: WSJ, 3-27-2014, C1.

2-13-2014: FHFA settles $1.25 Billion suit with Moran Stanley stemming from a 2011 lawsuit that they didn’t adequately disclose risks of loans sold to Fannie Mae/Freddie Mac….the FHFA is still pursuing Bank of America for $6 Billion….and J.P. Morgan Chase settled with US Dept. of Justice to pay $614 Million for approving thousands of FHA/VA loans that didn’t qualify for their mortgage insurance. Source: WSJ, 2-5-14, C3.

12-18-2013: Freddie Mac and Bank of America settled dispute from defaulted mortgage crisis related loans total sum of $404 Million (bringing total settled with Fannie and Freddie to $14.8 Billion).

11-20-2013: totals up to now on the estimated $107 Billion banks may end up paying…
Bank of America: $44B
Wells Fargo: $9B
J.P. Morgan: $21B
Citigroup: $4B
Goldman Sachs: $1B
Morgan Stanley: $0.3B

Source: WSJ, 10-29-13, C2

11-19-2013: The final $4B of the $13B settlement with JP Morgan over mortgage crisis behavior was directed toward those homeowners who are to get loan write-down or restructured loans and some of the $2B toward future low or moderate income loans – didn’t those loans cause problems in the past as well? Source: WSJ, 11-19-13, A1.

11-14-2013: An $864 Million charge against Bank of America for actions caused by Countrywide..before B of A bought Countrywide. This is the first “civil” court case judgment related to mortgage crisis. Source: WSJ, 11-11-13, C3.

10-24-2013: Some of JP Morgan’s investors (those who also got $8.5 Billion settlement from Bank of America on similar lawsuit) are looking for a $6 Billion settlement (in addition to the US Government $13 Billion settlement, $4 Billion of which settled thru 2011 FHFA, Fannie, & Freddie lawsuit) ) to cover the losses from the MBS’s prior to the mid 2000’s real estate market bubble breaking. Source: WSJ, 10-23-2013, C1

10-22-2013: JP Morgan settles inept practices dealing with Washington Mutual & Bear Stearns acquisitions of mortgages for about $13 Billion (or $4B going to FHFA; $3B to investors for losses; $2B to US Gov’t in penalties for behavior; and $4B in relief to underwater homeowners) but fails to prevent any future criminal charges. Source: WSJ, 10-22-2013,C1.

Note: My big ass question is: What the hell is the US Government going to do with the $9 Billion in fines – throw a White House Christmas party and chill in the hood?

10-8-2013: JP Morgan faces a “potential” $11 Billion settlement with US Justice Department and other regulators regarding MBS’ between 2005-2007 from JP Morgan, Washington Mutual, and Bear Stearns. It faces another $6+ Billion settlement with FHFA over misleading Fannie Mae & Freddie Mac about quality of mortgages sold to them during mid 2000’s. Source: WSJ, 9-26-2013, A1.

8-28-2013: Both the DOJ & SEC filed civil charges against Bank of America for understating risks associated with a 2008, CDO that packaged 1,000 prime jumbo (those over a high dollar amount) loans & the frequency of default is excessive and not sufficiently explained by the real estate market crash/crisis. In related note, UBS settled to pay $49 Million for their involvement in an unrelated CDO from 2007. Source: WSJ, 8-7-2013, C2

5-3-2013: Even though about a month ago the story of the $9.3 billion settlement (resulting in about 4 million homeowners who got screwed with incorrect foreclosure procedures by banks will share $3.6 billion of it by receiving less than $1,000), I wonder how it’s going? Like a carnival barker – “hurry! hurry! step right up, lose your house and get $800!” Source: WSJ, April 10, 201, C1

3-22-2013: Per a 3-4-2013 WSJ article, apparently Wells Fargo and Bank of America experienced double digit error rates under review until all cried uncle and settlement wad agreed to…Congress needs to investigate why we let the big fish go, but maybe it as something to do with campaign financing?

3-22-2013: Based on a Wall Street Journal opinion piece in the 1-8-2013 WSJ, almost all of the 3.8 million borrowers under review were delinquent on mortgages, and although about 7% of those homeowners were abused which is terrible, 100% will receive compensation and many never lost their homes. So is the settlement money actually helping anyone else besides the lawyers?

Also mentioned was the $7 Billion Countrywide bitter pill that BOA had to swallow (i.e., take one for the team) in bad loans swept under the carpet like a gangster who ratted on his boys.

3-20-2013: Bank of America will pay $11.6 Billion to settle dispute about Fannie Mae putbacks (loans with poor underwriting or so bad that Fannie forces lenders to buy them back). Source: WSJ, 1-8-2013, Pg A1.

Note: With legal costs related to mortgages approaching $50 Billion at Bank of America alone, the real beneficiaries of the foreclosure mess have been attorneys!

2-23-2013: Obama’s performance by the numbers – about 550,000 homeowners helped thru 49 states thru $45 billion in settlements, thru $22.8 billion in debt forgiveness… Source:

2-20-2013: Details of the $25 billion settlement with 5 largest US banks over robo signing and alleged mortgage fraud were released which offers up to $2,000 to homeowners who lost their homes and may help up to 1 million former foreclosed homeowners. Almost all US states have signed onto the agreement and will receive funds to administer to affected homeowners within each state. Who will watch to see how it’s dished out?

2-19-2013: Bank foreclosure processes were found abusive and improper. 14 large US banks and the Federal Reserve & Office of the Comptroller of the Currency resolved the dispute totaling $8.5 billion – 3.75 Billion in cash; 4.4 million homeowners in some stage of foreclosure during 2009 ad 2010 will receive checks of at least $250. Source: WSJ 1-7-2013, Page C2

There is a detailed 27 page proposal (“code of conduct”) by states attorney generals and some federal agencies to settle apparent bad practices by mortgage servicers.  The specifics include specific loan modification time lines; the freeze foreclosure action once a loan modification application is received; limits on bank fees charged to delinquent borrowers; and improved tracking to get away from using the MERS (Mortgage Electronic Registration System) that causes problems of identity of who owns the loan.

Another effort by the Obama Administration is to hold large banks responsible to “write-down” up to $20 Billion (of the $744 Billion more than their homes are worth) of mortgage loan balances as a penalty for sloppy mortgage practices. There is a belief that a large single settlement may avoid several smaller suits from several federal agencies would tie up the banks in courts for years.

Note of interest:  Loans that went through foreclosure in January 2011 were delinquent for an average of 507 days.

Source:  WSJ, 3/5-6/2011, B1 and 2-25-2011

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