Our San Bernardino county foreclosure defense attorneys wrote recently about the decision by Attorney General Kamala Harris to pull out of robo-signing settlement talks. Harris was reportedly unhappy with the direction of the talks because it was too soft on the banks, offering what she reportedly thought was too much immunity for too little compensation for homeowners. Her move followed attorneys general in several other states, who had also thought the settlement must be more severe. The departure was analyzed thoroughly in a piece on RollingStone.com, authored by political commentator Matt Taibbi. Taibbi suggested that a too-soft settlement would be tantamount to a bailout of the banks, pointing out that limiting their liability saves them huge amounts of money in foreclosure and investor lawsuits.
Taibbi starts by dismissing the idea that the size of the settlement is the chief problem. Rather, he says, any settlement at all would be tantamount to another round of bailouts, because it wouldn't be able to cover the huge amount of liability the major mortgage lenders face. Taibbi writes that mortgage lenders conspired to create huge amounts of "junk" subprime loans, then bundle them into securities with overinflated AAA ratings. Those securities were purchased by both private and public investors, all of whom have now lost that money. To make matters worse, Taibbi cites the lenders' use of the MERS system, the private loan exchange company, to avoid registering loans with county offices and paying associated fees. Thus, they have also bypassed local taxes -- something that at least a few counties are suing over. Already, he notes several lawsuits from individuals or groups of investors in mortgage-backed securities, including a settlement for $8.5 billion between Bank of America and private investors. This is nearly half of the total proposed settlement applying to all banks, Taibbi wrote, but a tiny fraction of the liability faced by Bank of America on its Countrywide holdings alone. Thus, he thought Harris could likely get much more money for California by pursuing her own cases.
Taibbi does acknowledge that homeowners are also victims, but spends less energy on this issue than we would. As Irvine foreclosure defense lawyers, we work every week with homeowners who were misled or exploited by banks when their loans were issued, or who now are being given the runaround when they try to address financial problems. As he notes, MERS helps lenders avoid local taxes -- but it has also proven disastrous in the foreclosure crisis by making it difficult to track or prove ownership of any particular mortgage and note. Meanwhile, securitizing loans in the manner he described helped banks inflate the number of mortgages by making risk-free loans to people they knew would not be able to pay the loans back, then selling the loans to unsuspecting investors. Perhaps Taibbi is right that a true repayment for all this would bankrupt the banks, but it's hard to feel sympathy for lenders dealing with the consequences of their mistakes.
Howard Law, P.C., represents California borrowers who need legal help to stop an avoidable foreclosure or cancel a loan made under predatory circumstances. Our Los Angeles County foreclosure defense attorneys have practiced in this area of the law since the beginning of the housing crisis, so we understand very well what kinds of tricks lenders use to avoid giving a loan modification any real consideration Depending on your situation, we may be able to challenge a foreclosure started without any discussion of other options; an incorrect denial of a loan modification; or pursue a bankruptcy to help you catch up on payments. If a foreclosure is looming, we can ask the court to stop it until these legal issues have been considered. Call us today to tell us your situation and learn about how we can help.
If you're being threatened by a foreclosure you believe can be avoided, don't wait to call Howard Law for help. You can send us an email or call toll-free at 1-800-872-5925.