Foreclosure (Un)Settlement

Let’s take a look at the $26 Billion Dollar Foreclosure (Un)Settlement and whether it is a good thing or a bad thing. We will uncover what we have learned to date, and give you the good, the bad, and the ugly. Here is some of what we have learned:UNSETTLING SETTLEMENTThe settlement reached between the Wall Street Mega-banks and the Justice Department is something that is still being analyzed. Cynthia Kouril, former Special Assistant U.S. Attorney, has said, "The court system will be permanently corrupted by forged and perjurious documents...This settlement is an incredible breach of the social contract between the government and the governed."I agree with Cynthia because as of today, there is no "Term Sheet" which will illuminate the terms of the agreement. The skeletal terms are that five (5) banks have signed on thus far: Bank of America, J.P. Morgan Chase & Co., Citi, Wells Fargo, and Ally. They have agreed, in prinicple, to a $26 billion dollar settlement; must help renegotiate better terms with homeowners that have underwater payments; and reductions in principle can be reduced up to $20,000 for homes underwater by $50,000. Also, 750,000 to 1 million homeowners are to be paid anywhere from $1,800 to $2,000. This sum is not meant to compensate homeowners who may have lost their home in foreclosure, but is meant to penalize the banks---not replace the home.Well, here is what is unsettling about this situation. First, there are 11 million homes underwater. Only 750,000 to 1 million folks will get aid...less than 10% will get aid, if any.Second, home value have approximately $700 billion in negative equity. There will only be $17 billion in principle reduction...less than 2.5% of those with negative equity will get aid...if any.Third, only homes underwater by $50,000 will qualify for aid. However, the average amount of aid will only be up to $20,000...if any.Fourth, from 2007 to 2012 over 4 million families were foreclosed upon. However, only 750,000 to 1 million families will get aid...if any.Fifth, lots of homeowners will get no help.And, finally, $20 billion of the settlement does not come from the banks themselves. It will come from investors! Guess who the investors are? You guess it! Freddie, Fannie, and your pension fund investors! Guess whose money is invested in pension funds, Fannie and Freddie? You're a smart cookie...yours! Folks, this is just another taxpayer bailout to the Wall Street Mega-banks and they have only recycled your own money to the banks...again.We have been hoodwinked, had, and took! The only good news about this UNSETTLEMENT is that:1. The fraud case in New York is preserved and will continue.2. Homeowners in California may continue to sue under the False Claims Act.3. There will be a continuing federal investigation and meeting on civil and criminal violations.4. Securitization investigations will continue.5. Insurance Fraud Claims will continue.6. INDIVIDUAL HOMEOWNERS CAN CONTINUE TO SUE…IF THEY WAKE UP!The other thing that is unsettling about this whole thing is that not one CEO or CFO has been charged with fraud because of this crisis...yet. I was hoping that the president would announce that they have charged someone from the Wall Street Mega-banks with fraud under the U.S. Sarbanes-Oxley Act that had become law in the U.S. on July 30, 2002 in response to the Enron and Worldcom scandals. Under Section 906 of the Act every periodic reporting containing financial statements filed by reporting companies must be accompanied by written statements by the company's CEO and CFO certifying that:1. the report fully complies with the requirements of ss13(a) or 15(d) of the Securities Exchange Act 1934;2. information contained in such periodic report fairly presents, in all material respects, the financial condition and results of operations of the reporting company;3. they have reviewed the report;4. the report does not contain any untrue statements of material facts or omissions of material facts.Well, we know that the Wall Street Mega-banks have committed an astonishing fraud when they packaged and sold the so-called REMIC's or Real Estate Mortgage Investment Conduits, to investors around the world. It has been widely reported in major media reports in the Wall Street Journal, USA Today, Financial Times, and Rolling Stone Magazine, that when the banks were putting these REMIC pools together, they were telling their investors that they were putting their money into tidy collections of real, performing home loans. But in reality, the loans in the trusts were not. Most times, the banks did not have all the loans they said they had. But the banks sold the securities based on the pools of mortgages as AAA-rated gold anyway. By doing so, the banks were committing securities fraud (because many of the mortgages did not match the information in the prospectuses given to investors) and tax fraud (because of the way the mortgages were collected and serviced often violated the strict procedures governing such investments).I just hope the Attorney General and his federal task force will uncover these violations and bring those bank CEO's and CFO's to justice who signed off on this investments. Sarb-Ox covers these types of violations and, it would be nice to see some heads roll for it. My guess is that the CEO's and CFO's will wiggle out of any charges, civil or criminal, because the statute of limitations will have run, and they will hide behind "plausible deniability" because the ratings companies like Standard & Poors, Fitch, and Moody's, had rated the securities AAA. And, the AG does not have the man power to do a thorough investigation because there are only 10 FBI agents assigned to the Fraud Task Force to investigate this scandal, versus 1,000 FBI agents that were assigned to the Savings and Loan crisis. NOT A GOOD LOOK!Be sure to tune in to the Foreclosure Mediation Internet Radio Webinar, at 6:00PM, the 1st and 3rd Saturday of each month at www.blogtalkradio.com/adrnow for news and updates on this crisis and what you can do to soften the blow from this Unsettling Settlement. (Like come together and sue the Wall Street Mega-banks for submitting false and perjured documents to the foreclosure court in efforts to mislead and undermine the court in rendering foreclosure judgments)Quote for the Day: Every virtuous act has some dark secret in its heart, and every risk we take contains a mystery that can't be solved. From the book, Shantaram, by Gregory David Roberts