The criminals in Washington never sleep, so we're on their asses like Nyquil.
---
By Dr. Pitchfork
With attempts to ignore the fraud in origination, securitization, and foreclosure having failed, key players have been hard at work with Plan B: sweep it under the rug. The three-pronged effort to save the banks from their own misdeeds includes:
1) An attempt by Congress to overide Obama's veto of HR 3808;
2) The possibility of a wrist-slap "settlement" with the state attorneys general;
3) The revocation by the Fed of the "recission" penalty for predatory lending.
In a countermove, Phil Angelides, head of the Financial Crisis Inquiry Commission, has called for his own Foreclosure-Gate investigation. Lots of links below.
##
HR 3808 ‘The Interstate Recognition of Notarizations Act of 2010’
This bill, aka "The Great MERS Whitewash Bill," was introduced in 2009, ostensibly to make it easier and more efficient for courts to recognize out-of-state documents.
However, it was recently passed by Congress in the dead of night in order to retroactively legalize hundreds of billions of dollars in mortgage fraud -- from origination to securitization to foreclosure. Robo-signers, fabricated documents, lost title -- it's all good under this bill (or so the banks hope). Fortunately, Obama had the good wisdom to veto this rotten bill. But now it's back.
The House plans to vote on this bill again TOMORROW (Nov. 17) in order to overide Obama's veto.
- 4closure Fraud -- Confirms that Congress WILL VOTE TOMORROW (Nov. 17)
- John Carney -- His "sources" tell him NO MERS bailout on the way (from early this afternoon)
- Market Ticker -- Great discussion of details in comments, plus some good sample emails for your Congressman (Call or Write, NOW!)
- Neil Garfield -- This is the original post that broke the story on the attempt to overide Obama's veto of HR 3808
- Full Text of the Bill (small bill, HUGE loophole)
- Great youtube video -- explains the whole deal in a minute and a half
##
State Attorneys General: "Settlement" With the Banks On the Way?
As Diana Olick and others report, a settlement between the big banks and the state AG's is in the works. Most likely, this will amount to little more than a slap on the wrist. It would also involve a (relatively small) slush fund, under AG control, that could be used to compensate victims of...fraud? Yeah, don't expect the f-word to get tossed around too much here. And don't expect anyone to be going to jail for their crimes. I suspect that whatever settlement is reached, the banks will be more or less indemnified from any future legal action. (That's not a bug, it's a feature.)
- Diana Olick (CNBC) -- Great article, covers all the basics and key players
- Washington Post -- Same info, but confirms that some kind of settlement on the way
- WSJ -- Iowa AG says NO DEAL....yet (but it's coming)
- WFTV Orlando -- Detailed article, notes that a JPM official testifying before Congress today was interrupted by shouts of "HE IS LYING!" (probably a Daily Bail reader)
##
The Fed Will Revoke the "Recission" Penalty for Predatory Lending
Big hat tip to Zach Carter on this one. He breaks it down nicely:
There is only one serious federal remedy for predatory lending, and the Fed is now knowingly trying to gut that remedy in order to help banks avoid losses from their own fraud. The remedy is called rescission, and it works like this:
If a bank failed to make key consumer protection disclosures about a mortgage, the borrower can demand that all of the interest and closing costs on the loan be refunded. Equally important, the bank must also stop all foreclosure proceedings and give up its right to foreclose. Once the bank gives up its right to foreclose, the full amount of the mortgage, minus interest and closing costs, becomes due. This isn't a free lunch for the borrower, especially when the value of her home has declined dramatically, but it's better than nothing, and it does impose real costs on banks.
As usual, the Bernanke Fed is doing everything it can to spare the banks from the consequences of their own actions:
Under the Fed's proposal, if you're the victim of illegal predatory lending, the bank will still get to foreclose on you unless you pony up hundreds of thousands of dollars all at once. And you'll have to pony up what the bank says you owe, which may be very different from what you actually owe. That eliminates the usefulness of rescission, making the new rule a bailout for predators.
But here's where the Fed's gutting of the recission penalty intersects with the deeper, underlying problems with Foreclosure-Gate:
The largest banks don't have enough capital to weather a bad housing market. And any process that sheds light on the documentation procedures at mortgage servicers will expose the big banks to investor lawsuits. But investors can't sue without those documents. Rescission judgments create a paper trail for illegal loans. In addition to creating immediate losses for banks, rescission documents that banks sold illegal loans, giving investors who bought mortgage-backed securities ammunition for well-founded lawsuits. Those lawsuits, in turn, could sink some of the biggest names on Wall Street, something the Fed has been trying to prevent at all costs since 2008.
If a bank failed to make key consumer protection disclosures about a mortgage, the borrower can demand that all of the interest and closing costs on the loan be refunded. Equally important, the bank must also stop all foreclosure proceedings and give up its right to foreclose. Once the bank gives up its right to foreclose, the full amount of the mortgage, minus interest and closing costs, becomes due. This isn't a free lunch for the borrower, especially when the value of her home has declined dramatically, but it's better than nothing, and it does impose real costs on banks.