By Sherry Hernandez, Author and Member of Occupy San Pedro
Originally published in the Feb. 23, 2012 edition of Random Lengths News
Legend has it the Europeans purchased Manhattan for $24 worth of beads and mirrors almost 400 years ago. On Feb. 9, the U.S. Attorney Generals sold out the American people for $26 billion dollars to the banks that have defrauded our American dream.
The terms of the settlement has not yet been officially released. The terms need to be signed off by a judge and the results might not be in effect for more than a year. What this means to the home buyers is that the banks will escalate their foreclosures while they still can. Most of us will not see any relief for quite some time and others have already lost their homes and future revenue. The banks that brought on this massive fraud are getting by with a slap on the wrist. The $26 billion dollars is a paltry sum for causing the American people more than $700 billion in underwater debt.
The estimated $10 to $20 billion in the deal for principal reduction would reduce only about 2 percent of the $700 billion in equity destroyed during the financial crisis. And the banks themselves will only pay $5 billion out of their own pocket. By far the lion’s share of the cost will be borne by investors and taxpayers, who had no part in the robo-signing scandal.
Once again, the banks will be in charge of fulfilling the settlement themselves.
What does that mean to a family of six or more who has already lost their home? They will get a check for anywhere from $1,500 to $2,000, sometime down the road, maybe a year to five years from now… maybe. Meanwhile, their credit has been ruined and they must find a place to rent that will take a family with four or more children. I hear that there are more places available now that the banks own most of the property, but for the most part 4- or 5-bedroom rentals are a rare find. And, with the credit of aforementioned family being destroyed, it is not likely that they can rush out a purchase a more affordable home. They will still have the option of bringing on a civil suit against the lending institute, if they have any funds left with which to pay a lawyer.
In a Feb. 15 article in The New York Times, Gretchen Morgenstern, reports about an audit in San Francisco that has found broad irregularities in foreclosures.#
In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.
The report went onto say that 340 of the 400 mortgages investigated had irregularities.
Although massive wrongdoing has been documented by various agencies throughout our government, the officials paid to protect the public interests still have yet to charge the executives who have thrust our country into this financial crisis.
In an article posted by the Washington Blog posted on Dec. 14 2011, it was reported that fraud done by the big banks, more than anything done by the little guy caused the financial crisis.
The FBI estimates that 80 percent of all mortgage fraud involves collaboration or collusion by industry insiders.
William K. Black, professor of economics and law, brings us current to where we are today: History demonstrates that if the control frauds get away with their frauds they will strike again.
For those readers who doubt this is true, in an article released as recently as Feb. 20, just days after the announcement of a settlement: Two AllianceBernstein LP mortgage specialists say they have hit on the next great investment for institutional investors: securities based on a pool of residential Freddie Mac and Fannie Mae mortgages that could blossom into a $250 billion to $500 billion institutional market. Investors could fund the mortgage investment from their real estate or fixed-income allocations. They said in the paper that the safest mortgages would be included in the securities that would be fully guaranteed by the government.
By allowing the banks to use their political power to gimmick the accounting rules to permit them to hide their massive losses on liar’s loans, we have made it far harder to take effective administrative, civil and criminal sanctions against the elite frauds that caused the Great Recession. Hiding the losses cripples economic recovery and public integrity, and leaves a broad based opening to repeat the fraud.
The FBI has written that any discussion of the crisis that ignores the role of mortgage fraud is “irresponsible.” But instead of prosecuting fraud, the government just continues to cover it up.#
The problem with this upcoming settlement is that it lets the banks off too easily for their fraud. No criminal charges are being brought against the executives that initiated this crisis and the taxpayer is still carrying the burden.
Some still say this settlement is better than nothing … for those of you who still think so … I hear that you can buy our country for a few beads and some mirrors.