Banks, Government Reach Foreclosure Abuse Settlement

WSJ: Banks Settle With Federal Government Over Alleged Foreclosure Abuses. On February 10, The Wall Street Journal reported:

The $25 billion settlement with banks over alleged foreclosure abuses will provide financial relief to an estimated one million at-risk borrowers, raising new hopes for an economy still hurting from the mortgage bust.

The pact, announced Thursday between five large U.S. banks and government officials, will offer reductions in loan principal and other assistance to qualifying homeowners. The largest portion of the aid, valued at $17 billion, goes to borrowers at risk of foreclosure.

While the deal won't be a cure-all for the housing market or to the majority of borrowers at risk of foreclosure, the settlement also includes a provision that will let some homeowners who are current on payments refinance mortgages even though they owe more than their homes are worth.

In addition, the deal will provide cash payments to other borrowers who went through foreclosure during the past four years. These people will be eligible to receive around $1,500 to $2,000.

Banks will have three years to meet their obligations. [The Wall Street Journal, 2/10/12]

Right-Wing Media Respond By Attacking Struggling Homeowners As “Deadbeat[s]” ...

Fox & Friends Calls Settlement A “Deadbeat Bailout.” During the February 10 edition of Fox News' Fox & Friends, co-host Steve Doocy teased a segment on the foreclosure settlement by saying:

DOOCY: Welcome, ladies and gentlemen, to the “fairness era.” The president of the United States announcing his new plan that takes your hard-earned money and gives it to people who don't pay their bills. Is that fair?

During the segment, on-screen text stated, “Deadbeat Bailout.” [Fox News, Fox & Friends, 2/10/12]

Fox's Bolling: Most Of The Settlement Will “Help Kind Of Deadbeat Homeowners.” During the February 10 edition of Fox News' America's Newsroom, Fox News host Eric Bolling claimed that most of the settlement will “help kind of deadbeat homeowners.” From the broadcast:

BILL HEMMER (co-host): Are we headed for more foreclosures? New details on that $25 billion settlement that the government reached with major banks to help homeowners. It could take years before many of the homeowners see any of that cash. But in the short term, is there another wave coming now that will force people out? Let's bring in Fox Business Network's Eric Bolling, also co-host of The Five on the Fox News Channel. Eric, how are you doing? Good morning to you.

BOLLING: Good morning, William. Good morning. Good morning.

HEMMER: More foreclosures, now why would that be?

BOLLING: Well, here, let's look at it this way. There is $25 billion that the government has told the banks, Ally Banks, Citi Bank, some of the big mortgage holders in the country, that they need to fork over because of some practices of foreclosures that they may or may not have been involved in. They decided to settle and say, “yes, here is your $25 billion.” Very interestingly, though, of the $25 billion bill, $1.5 billion is going to people who were victims of those robo-signings and other forms of quick foreclosures.

The rest is going to be to help kind of deadbeat homeowners -- homeowners who have either paid their bills and are underwater or who haven't paid their bills. So, going forward there is somewhere between 1 and 2 million homeowners, home -- people holding loans who are having trouble, who are going to get a check somewhere around 1 to $2,000.

So what it is, it's another $25 billion taken from the private sector and put it towards, you know, people who are in need of help, another redistribution of, you know, of private sector money. [Fox News, America's Newsroom, 2/10/12]

Fox's Gasparino: “A Deadbeat Bailout.” In a February 10 New York Post column titled, “A Deadbeat Bailout,” Fox's Charles Gasparino wrote:

It's hard to imagine a less-deserving group of victims: people who gambled during the housing bubble by purchasing homes with borrowed money that they knew or should have known they couldn't afford, but who are now able to stay in the homes they should have never bought because of what amounts to paperwork errors on the part of the nation's big banks.

[...]

These home-owners didn't really own their homes; many, in fact, barely plunked down a downpayment for a mortgage.

By borrowing far more heavily than what they could afford, they were also gambling that housing would keep rising in value, defying basic rules of economics.

Now they're being rewarded for their mistakes.

[...]

Why are these deadbeats getting bailouts? Aside from election-year politics, at issue is the foreclosure practice known as “robo signing” -- a procedure in which low-level bank employees, without direct authorization, approve perfectly legal foreclosures on a bank's behalf.

The foreclosures themselves were legal; the only apparent illegality is that the banks streamlined the foreclosure process, with clerks signing the bank officer's name on legal documents. [New York Post, 2/9/12]

... And By Whitewashing Alleged Foreclosure Abuse By Banks As “Shoddy Paperwork”

Fox's Kilmeade Calls Alleged Foreclosure Abuse “Shoddy Paperwork.” Later, during the February 10 Fox & Friends, Doocy and co-hosts Gretchen Carlson and Brian Kilmeade discussed the foreclosure settlement. They claimed that the foreclosure issues were not prevalent and that the settlement “is a complete scam in an election year.” From the broadcast:

CARLSON: Let's talk about a big thing that happened yesterday, because it was $25 billion with a “B.” This was the administration's new sort of outlook on foreclosures. Remember, they've tried a lot of different programs to get the housing market --

KILMEADE: All failed.

CARLSON: Yeah, and most of them have not done well. So, this is being deemed by people who do not agree with it as the “fairness era” because basically the banks -- five big banks are going to give $25 billion back to people who were foreclosed on. They're going to make it easier for them to refinance on their homes, and in some cases, if you've already lost your home, you will be eligible for only $2,000.

KILMEADE: And guess why this is out? Why are they really doing this? This is no BP disaster where they got the BP officials in and said look --

DOOCY: Right.

KILMEADE: -- you just destroyed the Gulf. Pay up some money. What their leverage was -- was the shoddy paperwork that --

DOOCY: Robo-signing.

KILMEADE: Yeah, with the robo-signing that allowed people to say, well, the banks are being corrupt when, in reality, government officials have privately said that 95 percent of those who are going to be bailed out from foreclosures, there was really no corruption at all.

DOOCY: Exactly right. So there are two great editorials you can read today: Charles Gasparino writes in the New York Post and also in The Wall Street Journal, they talk about how this is a complete scam in an election year. One line from The Journal says, “Washington is taking money from bank shareholders and investors in mortgage-backed securities who will see the value of their holdings fail and giving it to people who aren't paying their bills. Welcome to the 'fairness era,' ” The Wall Street Journal writes.

CARLSON: And the argument is it could be a re-election gimmick because it's delaying the real pain, according to these op-eds, that the housing market, they believe, really needs to go all the way down to the lowest possible prices before it can pick up steam again and that this move will just delay that possibly until after November 2012.

KILMEADE: And the banks are going to be shelling out to bailout these homeowners at the very least temporarily, it will be about, what, affect about 2 million.

DOOCY: Yeah, it's not that much. The administration needs to look like they're doing something in an election year. Interestingly enough, though, because over the last year, the administration has been negotiating with 50 attorneys generals across the country and the various states and the banks have gone slow on foreclosing on homes. Now that they've got a deal, look for the number of home foreclosures in this country to actually go way up real fast. [Fox News, Fox & Friends, 2/10/12]

WSJ: “Bankers Coughed Up Shareholder Money To Settle A Pseudo-Foreclosure Scandal”; Banks Had “Sloppy Paperwork Practices.” In a February 10 editorial about the settlement, The Wall Street Journal claimed, “The bankers coughed up shareholder money to settle a pseudo-foreclosure scandal,” and that "[t]he banks did have sloppy paperwork practices." From the editorial:

Obama Administration officials and various state Attorneys General looked gleeful yesterday announcing a $25 billion settlement with five big tobacco--er, banks--and why not? The bankers coughed up shareholder money to settle a pseudo-foreclosure scandal, while the White House moved closer to its political goal of guaranteeing every home mortgage.

Rarely have so many politicians cashed in so blatantly on so little wrong-doing.

[...]

The banks did have sloppy paperwork practices, but they were also dealing with a historic wave of foreclosures created in large part by government-backed Fannie Mae and Freddie Mac. To date there's no evidence that borrowers current on their mortgage payments were improperly ejected from their homes.

[...]

Washington is taking money from bank shareholders and investors in mortgage-backed securities, who will see the value of their holdings fall, and giving it to people who aren't paying their bills. Welcome to the “fairness” era.

[...]

They are being rewarded for not paying their bills. [The Wall Street Journal, 2/10/12]

But This Whitewashes The “Pervasive” Misconduct That Led Regulators To Order Banks To Overhaul Procedures

The Washington Post: “Problems ... Are So Widespread That Some Judges Approving The Foreclosures Ignore Them.” In a September 23 2010 article titled, “Amid mountain of paperwork, shortcuts and forgeries mar foreclosure process,” The Washington Post reported:

The nation's overburdened foreclosure system is riddled with faked documents, forged signatures and lenders who take shortcuts reviewing borrower's files, according to court documents and interviews with attorneys, housing advocates and company officials.

The problems, which are so widespread that some judges approving the foreclosures ignore them, are coming to light after Ally Financial, the country's fourth-biggest mortgage lender, halted home evictions in 23 states this week.

During the housing boom, millions of homeowners got easy access to mortgages while providing virtually no proof of their income or background. Now, as millions of Americans are being pushed out of the homes they can no longer afford, the foreclosure process is producing far more paperwork than anyone can read and making it vulnerable to fraud.

Ally Financial is now double-checking to make sure all documents are in order after lawsuits uncovered that a single employee of the company's GMAC mortgage unit, a 41-year-old named Jeffrey Stephan, signed off on 10,000 foreclosure papers a month without checking whether the information justified an eviction.

Many of the homeowners in fact might have been in default. Some might have been unfairly targeted. But the flawed process is creating an opening for borrowers to contest some of the more than 2 million foreclosures that have taken place since the real estate crisis began. [The Washington Post, 9/23/10]

Los Angeles Times: “Citing Pervasive Misconduct In Foreclosures, Federal Regulators Have Ordered The Nation's Biggest Banks To Overhaul Their Procedures.” In an April 2011 column, the Los Angeles Times reported:

Citing “pervasive” misconduct in foreclosures, federal regulators have ordered the nation's biggest banks to overhaul their procedures and compensate borrowers injured financially by wrongdoing or negligence.

[...]

[R]egulators said the changes agreed to by banks and other major home-loan servicers would address frequent complaints about understaffed and undertrained foreclosure operations as well as shortcuts taken at the expense of consumers. Among the changes, the banks now must:

* Designate a single person for distressed borrowers to contact so they aren't bounced around from one call center employee to another.

* Put the foreclosure process on hold if a mortgage has been approved for a trial modification.

* Establish “robust” controls and oversight for the actions of law firms and others hired to help with foreclosures.

* Hire outside auditors approved by the regulators to review foreclosure proceedings in 2009 and 2010 and identify improper foreclosures, violations of state and federal law, and errors, misrepresentations or negligence that caused financial harm to borrowers.

* Compensate borrowers found to have been harmed financially by bank wrongdoing or negligence, including setting up a process for aggrieved borrowers to make claims for remediation. [Los Angeles Times, 4/11/11, accessed via Nexis]

Federal Reserve Board Noted “Pattern Of Misconduct And Negligence Related To Deficient Practices In Residential Mortgage Loan Servicing And Foreclosure Processing.” From an April 13, 2011, Federal Reserve Board press release:

The Federal Reserve Board on Wednesday announced formal enforcement actions requiring 10 banking organizations to address a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing. These deficiencies represent significant and pervasive compliance failures and unsafe and unsound practices at these institutions.

The Board is taking these actions to ensure that firms under its jurisdiction promptly initiate steps to establish mortgage loan servicing and foreclosure processes that treat customers fairly, are fully compliant with all applicable law, and are safe and sound.

The 10 banking organizations are: Bank of America Corporation; Citigroup Inc.; Ally Financial Inc.; HSBC North America Holdings, Inc.; JPMorgan Chase & Co.; MetLife, Inc.; The PNC Financial Services Group, Inc.; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Company. Collectively, these organizations represent 65 percent of the servicing industry, or nearly $6.8 trillion in mortgage balances. All 10 actions require the parent holding companies to improve holding company oversight of residential mortgage loan servicing and foreclosure processing conducted by bank and nonbank subsidiaries. [Federal Reserve Board, 4/13/11]

This Is Another Right-Wing Media Attack On Efforts To Help Struggling Americans

Fox's Carlson Claimed She Has Spoken To “Tons” Of Economists While Downplaying Employment Impact Of Payroll Tax Holiday. During a September 2011 interview with White House press secretary Jay Carney, Fox & Friends co-host Gretchen Carlson downplayed the employment impact of a payroll tax holiday, claiming that "[w]e've already had that," and “I see dismal [job] numbers.” [Fox News, Fox & Friends, 9/8/11, via Media Matters]

For more on the economic benefits of the payroll tax cut, click here.

Fox's Bolling: Obama's Plan To Help Americans With Student Loan Debt Is An Attempt To “Buy The Young Vote.” During the October 25, 2011, edition of The Five, Bolling attacked President Obama's plan to help Americans consolidate and lower their payments on student loans after college before it was even announced. Bolling claimed the administration was attempting to “buy the young vote” and asserted that it “should be illegal.” [Fox News, The Five, 10/25/11, via Media Matters]

For more right-wing attacks on student loan relief, click here.

Right-Wing Media Have Repeatedly Attacked Food Stamps. In August 2011, right-wing media mocked Secretary of Agriculture Tom Vilsack for stating that food stamps are “economic stimulus.” [Media Matters, 8/17/11]

For more right-wing attacks on food stamps and the truth regarding their stimulative effect, click here.