Courtesy: New York Giants

The clock may have run out on this year’s Super Bowl (Way to go Giants!!) but there’s still a few minutes left in this year’s REAL grudge match, the Banks vs. the Attorney Generals.

It’s 4th and Inches, the score is tied, and it would be nice to avoid overtime.

Today we could learn whether the much-discussed robo-signing settlement with Wells Fargo, Bank of America, JP Morgan Chase, Ally Financial and CitiGroup will come to pass, and in what form.

With California AG Kamala Harris returning to the negotiating table, the deal looks closer than ever to being sealed. Harris, who represents the state with the largest amount of foreclosed homes, has rightfully been hesitant to sign off because her state has the most to gain, or lose, from this deal.

We were initially very hesitant to see this deal go through ourselves, but the time has come for it to put to bed.

Why?

Because we feel the deal in its current form does a lot. Does it help every single homeowner who’s underwater? Of course not. There is no deal that will.

But here is who it does help. The homeowners who have fought to keep their homes from day one, who were at the forefront of these legal challenges against the banks. Much of what we have learned about robo-signing and the lack of standing banks had to bring foreclosure, would not have come to light without these crusaders, and its time they got a reprieve.

In theory it also helps the responsible homeowners, the ones who paid their mortgages on-time and whose homes went underwater through no fault of their own. They too need to be rewarded.

The reported 25 billion dollars (perhaps more if all 50 states sign on) that the banks are putting up will finally offer these homeowners some principal reduction, and the chance to refinance, two things we have long sought to see.

For those who just walked away, who left their homes to fall into disrepair, it’s our opinion that they should not be a priority.

The longer this deal lingers without any hope of conclusion, the longer we face the chance of a social contagion where everyone decides to stop paying their mortgage.  That will not help the market, and more importantly it won’t help the homeowners who’ve truly been wronged by the banks.

There are some bloggers and commentators who are still urging the AGs to not sign this deal. Is is a slap on the wrist? Yes, but that’s all it can be. We must not forget that rob-signing is the tip of the iceberg.

Whatever state claims that might be washed away by this agreement will seem like small potatoes once Schneiderman and his team wrap their investigation.

In fact they’ll seem more like little potato crumbs. Trust us what lies ahead is far worse.

If this settlement is the homeowner’s Super Bowl, then what lies on the horizon is the Supercalifragilisticexpialidocious Bowl.

There is nothing more important to us than making sure the banks face punishment for their dirty dealings.  It is very important that people continue to challenge the banks by trying to flesh out whether they  truly have standing to bring foreclosure. There’s no reason why this should end with this settlement. When it’s said and done, we believe the banks will be punished.

So far Schneiderman has not not wavered in his efforts to go after the banks. His efforts in the last few weeks have them running scared for the first time. We’re confidant he’ll do whatever it takes to get the banks. He has been one of the holdouts against this deal, but he is starting to turn around on it.

If he can be comfortable with it, then so can we.

The South Florida Law Blog loves a good burger!

We’re finally starting to catch our breath, with the substantial amount of news we’ve seen come down the pipeline in the housing market this week.

President Obama’s State of the Union, and the apparent collapse of the federal government’s settlement with the banks have been our focus this week, and rightfully so.  But there’s been lots of other stories that have crossed our desk this week, some big, some small, but all important.

Republicans Offer Unpopular Solutions for Housing Fix

Most of our attention has been on the President this week, but we’ve also been keeping our eyes of the Republicans as well. With the Florida GOP Primary just days away, the candidates have been descending on Florida as expected. Foreclosure, which has been long absent from the GOP discussion, has become a more focal issue this week.

Unfortunately, it feels like much of the talking points have focused on the candidates blaming each other for causing the housing crisis, and less on what they plan to do to fix it.

This excellent piece in The Street details all the remaining Republicans comments on foreclosure. They all have suggested a hands-off approach, and appear to be under the misguided notion that the market will correct itself on its own. Gingrich and Paul have made one-note villains out of the Dodd-Frank Act and The Federal Reserve, respectively.

Romney’s past comments about market correction have come back to haunt him as he tries to pass himself off as sympathetic to the homeowners’ plight. Frankly we don’t feel like any of the Republican candidates are looking out for the homeowners.

Chase, BofA may lose $131 million in HAMP payments

Anything that hurts the banks in the pocketbooks, we’re all for. We realize that $131 million is chump change to them, but it’s great to see the banks being held accountable for failing to live up to expectations. This story further proves how little the banks have done to correct their own mistakes.

The Special Inspector General for the Troubled Asset Relief Program (TARP) is threatening to take away this money because both banks have failed to improve their performance in the in the Home Affordable Modification Program. In a report released this week, the SIG said both had failed to properly evaluate homeowners for the HAMP program.

While the report states that Bank of America has made some headway, it was particularly critical of JPMorgan Chase, saying “JPMorgan Chase’s continuing refusal to comply with program requirements is deeply troubling and there must be serious repercussions.”

Florida Attorney General bashes states that rejected nationwide foreclosure settlement

We can’t get through this recap without some mention of the robo-signing settlement, as Republican Pam Bondi continues to stand with it as it crumbles. Our Attorney General, whose been accused before of being soft on lenders, came out Thursday saying the deal needs to be passed now so Floridians can start getting foreclosure relief. Bondi has been one of the settlement’s biggest backers.

“The settlement under discussion contains all the elements California purports to be looking for; transparency, substantial relief for distressed homeowners, and strict enforcement,” Bondi said.We of course, strongly and respectfully disagree, particularly when it comes to her belief the settlement offers strict enforcement, which is why Obama’s plan to form a new investigative unit is so necessary.

From foreclosure king to burger king: Stern buys into Five Guys

From the sublime to the ridiculous  – Foreclosure attorney David Stern, the lawyer at the center of one of the largest foreclosure mills in Florida, is now making money in the fast food business.Stern has now invested in a company that owns several Five Guys Burger and Fries  franchises.

Stern’s law firm closed last March, and Stern is now being sued by the company that paid him $60 million and now claims his business was unlawful, so he has to make money somehow right? Of course the fact that he has money to invest in such a large chain probably doesn’t make homeowners too happy.If you’re hungry we’d be cautious about stepping into one of his restaurants, Stern might steal the fries right off your plate!

Like the characters in "The Blair Witch Project", the banks are running scared!

Well what a wild week it has been.  When we came to work on Monday we feared President Obama would put the housing crisis to bed without ever holding the banks’ feet to the fire.

The settlement with the banks, which we have blogged about ad nauseam this week, seemed as sure as a chip-shot field goal.

But thanks to President Obama’s suddenly get-tough approach, as evidenced by his State of the Union speech, we’ve seen the banks’ kick go wide-right and now all bets are off.

Can There Be Real Change In Mortgage Industry?

Now we are not completely sold that things will play out exactly as homeowners would like, this is of course the federal government we’re talking about, but for the first time we have a true sense of optimism. The President may finally be seeing things our way, and we want to throw our full support behind him.

There is no doubt cages have been rattled in the mortgage industry, and nerves have been frayed. If Obama’s plan to re-write the foreclosure rules didn’t have some kind of teeth, then we doubt we’d be seeing the type of reverberation thorough the media and the top echelons of government that we’ve detected in the last few days.

Banks Are Fearful of Settlement Collapse

The settlement could be falling apart at the seems, at least JPMorgan Chase CEO Jamie Dimon thinks so.  He told CNBC this morning that Obama’s announcement to investigate the packaging and servicing of mortgage loans could stop the settlement cold.

“It has a pretty good chance of derailing it,” Dimon said in a televised interview from Switzerland, adding later, “I think it would be better for America if the settlement took place.”

Guess Dimon hasn’t been reading the South Florida Law Blog. You and I know it would be better for the BANKS if a settlement took place now, and we suspect Dimon knows that too.

From the moment the details of the settlement became public, there was push back from some of the Attorneys General, the legal community, and the media.

The New York Times mirrored our thoughts, in this Op-Ed piece published in Thursday’s paper they also wondered if this was finally the investigation that would end with criminal prosecution and dare we say, jail time.

New York AG Promises to Leave No Stone Unturned

The importance of the appointment of New York AG Eric Schneiderman, which we mentioned yesterday, can not be understated. His new unit, which will answer to the existing Financial Fraud Enforcement Task Force, will be composed of members of the Department of Justice, the SEC and the IRS. It will also be working with the existing hierarchies of those organizations.  So his reach will be far and wide, and we believe this investigation has the potential to do some real good.

Schneiderman, along with California AG Kamala Harris, have been some of the most outspoken critics of the settlement, and he is promising a thorough investigation of ‘every aspect of the conduct that created the bubble and crash’.

To us, those words ring true. Obama is embracing real change with his appointment, and we can’t wait to see what happens next.

President Barack Obama delivers remarks on the economy at Shaker Heights High School,Shaker Heights, Ohio, Jan. 4, 2012. (Official White House Photo by Chuck Kennedy)

We really haven’t seen President Obama insert himself directly into the housing crisis, but there are rumblings that he may do just that during Tuesday’s State of The Union address.

The fact is that is what homeowners have been clamoring for. A new USA TODAY/Gallup Poll found 58% of Americans want the government to do more to help people keep homes.

According to HousingWire, Ohio senator Sherrod Brown told reporters today that there was evidence that Obama would address the robo-signing case which involves several major banks.  A North Carolina congressman even said there were rumours that Obama would announce a settlement, something HUD secretary Shaun Donovan suggested last week was ‘very close’, as we mentioned in our Week In Review on Friday.

For the record, Obama’s press secretary refused to confirm any details, saying only that the President was “focused on the issue of housing”.

Between Dononvan’s comments and the recent white paper sent out by the Federal Reserve, it seems that more and more top government officials are finally realizing how important the housing market is to our economic recovery, not to mention their own political survival.

This is not news to us here at the South Florida Law Blog.

We called it a band-aid, and at least for some South Florida homeowners, it’s proving to be just that.  The Palm Beach Post profiled several homeowners who were among the first to receive benefits from the program. Sheryl Stuart, a Jupiter homeowner whose business went under, applied for help through the mortgage relief program, and is about to see her payments end next month.  Hardest Hit only entitles qualified homeowners up to six months of mortgage assistance.

Stuart told the Palm Beach Post that even though she’s found a new job, her salary won’t be able to cover her mortgage payment once she stops receiving aid from Hardest Hit. She’s frustrated that she’s about to be right back where she started when she applied for aid in the first place.

“In this economy, to think you can turn your life around in six months is totally ludicrous,” Stuart said in the article,  ”The working class is quickly slipping into a black hole.”

The truth is this program, however well-intentioned it might have been, is just not enough. What Hardest Hit is essentially doing is giving homeowners a nice seafood dinner, when they really need to learn how to fish.

It scratches the surface but for people like Stuart it might just delay the inevitable. Unless you’re giving homeowners a solid two years of payment relief, you’re not giving these people time to go back to school, improve their financial standing, and really turn their lives around.

Hardest Hit is throwing good money after bad, and really, what’s the point of spending all this money if it won’t provide permanent relief?

Not to mention that many homeowners have been rejected by the program, nearly 10,000 according to the Post, for reasons including being over 180 days past due on their mortgage.  So if many aren’t getting the help they need, and those who are getting the relief aren’t feeling a lasting impact, what’s the point?

Spokeswoman Cecka Green told the Post the state is going through uncharted waters with Hardest Hit, and it looks to us like the state wasn’t truly prepared to handle the demand.

“We never really anticipated where we would be at this point since we had not ever before administered a program like this,” Green said.

Helping people make their payments isn’t the answer. We were elated when the Federal Reserve started talking about principal reduction, that’s a much better solution that ultimately has a chance of keeping people in their homes.

If we allowed homeowners facing foreclosure to lease back their properties, that too would have a higher success rate, in our opinion. If we’ve learned nothing else, it’s that banks make the worst neighbors.

Florida’s Hardest Hit was doomed from the get-go, so it’s time to focus on systematic long-term solutions.