War on the Home Front » money

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement – Yves Smith

Mandelman — Thu, 09 Feb 2012 17:09:07 +0000

Yves Smith asked that this be cross-posted and I am happy to do it.

I’m certainly not going to write about it. I haven’t even read her piece yet and I’m not sure I’m going to. But, by all means, feel free. Click link below to read the rest on Yves’ site. I can’t do what she does and respond to this stuff with thoughtful and indignant outrage.

Here’s the deal… I wrote a year ago when the whole AG/banker political circus started that I was not going to follow it, not going to write about it, and certainly not care about it. It was a colossal waste of time by childlike participants who set out to embarrass themselves and succeeded. Now everyone is upset that it didn’t turn out to be more. Why? It’s to be ignored… unless anyone feels like wagering on any of its promises, in which case, I’m your huckleberry and we should talk.

Remember how the whole thing started… AGs: We want $30 billion. Banks: No, $5 billion. AGs: okay $20 billion. Banks: No, $10 billion. AGs: $20 billion. Banks: $10 billion. 20… 10… 20… 10… 20… 10…

Like watching two 9 year olds. No math involved. Just a stupid tug of war over nothing. Might as well have set the $20 BILLION ON FIRE! That’s not a joke, I mean it… set it on fire for all the impact it will have… assuming it ever gets spent, and I’ll bet a whole bunch that unless the money is going to banks, it’s not getting spent.

Remember HAMP was to be $75 billion… then reduced to $50 billion… then reduced to $37 billion. And we spent $2.4 billion and essentially all of that went to servicers. Oh, but I’m sure the money is going to be handled very efficiently. Just watching the jockeying is enough to turn my stomach. Children… badly behaved children. And Obama you have the leadership skills of a gerbil, the instincts towards transparency of a criminal. How dare you trumpet this as a success… treat the American people like their idiots… you should be ashamed.

Sorry, it’s Yves time…

Mandelman out.

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, withDave Dayen’s overview at Firedoglake the best thus far.

The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

Quotes of the day

Allahpundit — Thu, 09 Feb 2012 04:00:09 +0000

The conservative choice.

“After the returns came in, I asked Santorum spokesman Hogan Gidley what he thought about Rich Beeson’s message. Sure, Santorum did well on Tuesday, but doesn’t Romney have the money and infrastructure to outdistance Santorum, and everyone else, in the long run? “‘What an inspiring message,’ Gidley said sarcastically. ‘That is really inspiring. I can’t [...]

War on the Home Front » money

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement – Yves Smith

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

Quotes of the day

Abigail Field | Securitization Fail, Or, The Depth of Schneiderman’s Betrayal If Signs the Servicer Settlement, Or, Why DE AG Beau Biden Rocks

RNC video: Happy anniversary to the three-year, one-term promise, Mr. President!

Report: Trump to endorse Gingrich tomorrow in Nevada

The Ed Morrissey Show: Scott Rasmussen, Katie Pavlich

Obama money advantage disappearing

Confirmed by the CBO: Federal workers receive more compensation than private workers

Lee Camp | How To Destroy The Environment, Steal Money, & Look Good Doing It (VIDEO)

Club for Growth rips Newt for criticizing Romney’s investment income

Romney to Florida: Say, shouldn’t Gingrich give back the Freddie Mac money already?

Quotes of the day

Citizens United Anniversary | Citizens United v. FEC – What it Means for Democracy

Great news: Congressional gift shops also run deficits

Abigail Field | Our Morally Bankrupt Government, Justice Part II: Defending the Rule of Law

Pelosi: Nothing brings more money to the Treasury than education

Ellen Brown | Occupy the Neighborhood: How Counties Can Use Land Banks and Eminent Domain

Warren Buffett puts other people’s money where his mouth is

Quotes of the day

Quotes of the day

Climate change castaways?

It begins: Romney is a “Massachusetts moderate at best,” says Gingrich

Occupy Wall Street: How Cash Has Corrupted Congress

Former Sorenson campaign manager: Told me “several times” that Paul campaign offered money for switch

Feelgood video of the day: Store clerk knocks armed robber out cold

Romney to Gingrich: I’d rather not debate you one on one

Sarah Palin: “It’s not too late for folks to jump in”

Occupy D.C. presents Boehner with a golden calf because he idolizes money or something

Witness: Corzine knew that customer funds flew

19 Payments Later, Bank of America Refuses to Honor Loan Mod after Husband Dies (VIDEO)