A Twinkling of Hope for Homeowners?

Foreclosure protest

Foreclosed Families Descend on Capitol to Make Wall Street Pay

And Rev. Dr. Eugene Barnes, the president of the NPA’s board, calls predatory lending “reverse redlining.” Redlining was used by banks and realtors a generation ago to prevent blacks and Latinos from moving into white neighborhoods. Before the financial crisis, predatory lending led to banks targeting people of color, often regardless of income, and giving them subprime mortgages that would eventually have unsustainable monthly payments.

“In 2004, we started seeing predatory lending,” Barnes says, adding that this movement and anger came from the grassroots. “We were hearing this on the ground. Today, we have been able to identify the criminals, but we haven’t seen any criminal prosecution.”

This was published 8 March 2011.  We still haven’t seen any prosecution of the responsible parties.  But the last day of 2012, the Office of the Comptroller of the Currency, leaked information about a possible deal on the penalties 14 banks would have to pay.

Banking regulators are close to a $10 billion settlement with 14 banks that would end the government’s efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.

Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.

Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.

The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis that sent the housing market into the deepest slump since the Great Depression. As of early 2012, four million Americans had been foreclosed upon since the beginning of 2007, and a huge amount of abandoned homes swamped many states, including California, Florida and Arizona.

Settlement Expected on Past Abuses in Home Loans

The article went on to say:

The biggest action against the banks for foreclosure-related abuses has been the $26 billion settlement between the five largest mortgage servicers and the state attorneys general, Justice Department and the Department of Housing and Urban Development after allegations arose in 2010 that bank employees were churning daily through hundreds of documents used in foreclosure proceedings without properly reviewing them for accuracy.

The same banks in that settlement — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — are included in the current negotiations.

Under the terms of the settlement being negotiated, $6 billion would come from banks to be used for relief for homeowners, including reducing their principal, helping them refinance and donating abandoned homes, the people said.

The proposed settlement would also halt a separate sweeping review of more than four million loan files that the comptroller’s office and the Federal Reserve required the banks undertake as part of a consent order in April 2011.

But as commenters at the bottom of the post pointed out, the leak date was also the last date for homeowners to file to be part of the settlement.  But this is supposed to just cover the parts where homeowners already in trouble were charged outrageous fees and forced to purchase even more expensive insurance.

And what of the fraud that took place with the robo-signing and fraudulent notary practices?  Well, it seems there may be light there as well.  It turns out that the owner of the firm DocX has entered into a guilty plea with the DOJ.

According to plea documents filed today, employees of DocX, at the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices. Unbeknownst to the clients, Brown directed the authorized signers to allow other DocX employees, who were not authorized signers, to sign the mortgage-related documents and have them notarized as if actually executed by the authorized DocX employee.

Also according to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit. Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices. To further increase profits, DocX also hired temporary workers to sign as authorized signers. These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients. Some of these temporary workers were able to sign thousands of mortgage-related instruments a day. Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country. Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions. Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

Brown also admitted that she and others also took various steps to conceal their actions from clients, LPS corporate headquarters, law enforcement authorities and others. These actions included testing new employees to ensure they could mimic signatures, lying to LPS internal audit personnel during reviews of the operation in 2009, making false exculpatory statements after being confronted by LPS corporate officials about the acts and lying to the FBI during its investigation. LPS closed DocX in early 2010.

DOJ Press Release on DocX Founder Lorraine Brown Guilty Plea For Fraud

Now the question is, what kind of deal did she arrange?  Will we see justice?  Will the defrauded homeowners see restitution?  Will various County Recorder’s Offices over the country see any kind of help cleaning up the messes from 6 years of property titles?  Is anyone’s property title clean now?

But for the time being, there may be help for some homeowners in trouble.  And that is more than we had last week.

The money pit

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