- Listen to the entire program<\/a><\/li><\/ul><\/p>\n
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Following yesterday\u2019s announcement that 49 state Attorneys General reached a $25 billion deal with 5 major mortgage lenders, a Forbes headline read, \u201cMortgage Deal: Little Impact for Big Banks.\u201d The assessment that banks got off easy in the foreclosure fraud settlement was a consensus among analysts. The settlement sought redress for people who were victims of robo-signing and other rushed methods of foreclosure. State officials and federal agencies that negotiated it, though, declared victory. The Secretary of the Housing and Urban Development agency said yesterday, \u201c[the settlement] isn\u2019t just about punishing the banks\u2026 It\u2019s also about requiring them to help the people they harmed.\u201d <\/p>\nHowever financial watchdogs concluded the deal would neither punish the banks nor be of much benefit to homeowners. Of the $25 billion being touted as a bank-payout, only $5 billion will come as cash from 5 financial institutions, a sum most analysts assume the banks already have in reserves. David Dayen at FireDogLake.com wrote,\u201d [i]t\u2019s a drop in the bucket compared to the negative equity in the county, which stands at around $700 billion.\u201d About $17 billion will come from shareholders, including average Americans whose retirement money is tied up in mortgage backed securities. <\/p>\n
The average pay-out to a homeowner, about $2000, is also being decried as pathetically small. Yves Smith at Naked Capitalism said the amount, \u201c[i]s a fraction of the cost of legal expenses when foreclosures are challenged.\u201d The lead negotiator, Iowa Attorney General Tom Miller, defended the deal as better than nothing, saying, \u201cThe homeowner that couldn\u2019t get one dollar and they\u2019re getting a check for $1500, they\u2019re not going to tell us we settled too cheap.\u201d <\/p>\n
Of the 4 million homes lost to foreclosure since the financial crash, a large number of which were fraudulent, only about 750,000 borrowers who lost their homes between September 2008 and December 2010 will receive any money. Individuals retain the ability to sue their mortgage lender under the settlement, but states and many federal agencies gave up their right to pursue further legal action. Even President Obama was measured in his remarks on the settlement yesterday, calling it a \u201cstart\u201d and saying he hoped it would provide a \u201csmall measure\u201d of relief to homeowners. <\/p>\n
GUEST: Richard J. Eskow, Consultant, writer, and Senior Fellow with the Campaign for America’s Future, David Dayen, Politics Writer for FireDogLake.com<\/em><\/p>\n
Read Richard J Eskow’s latest article about the foreclosure settlement here<\/a>. <\/p>\n