Friday Round-Up — Settlement Docs Weeks Away, Donovan Hopes Fannie and Freddie Come Around; Citi-Bank Settles Suit; Bank Approves Loan Modification, Then Forecloses
Yesterday we expressed concern because we have yet to see the formal documents behind last week’s landmark $25 billion settlement, and it seems few people actually have.
HousingWire reports, through an unnamed source, that federal prosecutors plan to file them in court by the end of the month.
But of course herein lies the problem: We’ve heard how much money each individual state is getting, Florida alone is set to receive about $8.4 billion alone, but until the documents are filed, but until all I’s are dotted and all T’s crossed, those numbers are always subject to change!
While Rich Andreano, a banking lawyer quoted in the article says he doesn’t expect any drastic changes to the numbers, we still need to see them for ourselves!
And will we really see these documents filed this month? How many deadlines associated with the settlement have come and gone without a hint of activity?
Will we see any additional surprises, like additional immunity for the banks? Let’s hope not.
The problem with this headline is glaring. Donovan HOPES Fannie and Freddie will write down mortgages. Not he demands, not he insists, he hopes. Well I hope for world peace, doesn’t mean it will happen now does it?
Donovan told the Huffington Post that he thinks the people behind the two GSE’s will finally come on board the principal reduction train once they see the effects from last week’s settlement on the housing market. Donovan called their reluctance to engage in principal reduction, “quasi-religious”, which is the problem in a nutshell.
Borrowers, especially the ones with mortgages with Fannie Mae and Freddie Mac, have waited far too long for relief, and we can’t just sit around and wait for them to see the light. Shaun, if you can not force their hand, then take our advice and eliminate Fannie and Freddie outright.
If we had a nickel for every outrageous act we’ve seen done by a bank than we’d all be on a beach in Tahiti, and you’d be reading some other blog right now!
Yesterday Citi-Bank paid $158 million to settle a lawsuit over bad mortgage loans they passed on to the Federal Housing Administration to insure.
Despite the standards in place by the FHA, and the objections of one of their own employees, Citi-Bank admits they asked the government to insure loans that had a high rate of default, and that they now admit were not eligible for approval.
The bank pressured employees to pass these mortgages on, offering them incentives based on the amount they approved, and telling them they had “marching orders” to pass these loans by “brute force”.
So taxpayers ended up saddled with debt they didn’t deserve. Real Nice.
Speaking of bad acts committed by the banks, this one made our blood boil. The Huffington Post reported on a Minnesota woman whose house was foreclosed on one month after she was approved for a loan modification.
Carrie Haskamp did everything right, and was assured by her bank not to worry about the foreclosure notices she was getting even after the modification was approved. Still she became a victim of what’s known as dual-tracking, essentially one arm of the bank working on the foreclosure, while another arm works on the loan modification.
Another classic example of the left hand not knowing (or wanting to know) what the right hand was doing. And while last week’s settlement in intended to curb this practice, it’s unclear if it ultimately will.
Have a great weekend and we’ll see you soon in the trenches!