$25B Settlement on Foreclosure Abuses

Today, federal officials announced a $25 billion settlement with the five largest mortgage lenders over foreclosure abuses. The deal requires the banks to reduce some loans, send out small checks to foreclosed folks, and refinance mortgages for underwater borrowers. Its being billed as the largest settlement involving a single industry since big tobacco in the late '90s. Under the agreement, which was reportedly negotiated for 16 months, B of A, Chase, Wells Fargo, Citigroup, and Ally will reduce loans for nearly a million households. They will also send checks for two grand to about 750,000 Americans who were improperly foreclosed upon. All but one state agreed to the deal-- Oklahoma, whose AG opposed the deal. Lenders that violate the deal could face $1 million penalties per violation and up to $5 million for repeat violators. Interestingly, homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges. The settlement only applies to privately held mortgages issued from 2008 through 2011. Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. See news item from Fox here-- http://fxn.ws/yN8oVo and website for the public here-- http://www.nationalmortgagesettlement.com/

Starting tomorrow in Seminole: 300 Foreclosures in 3 days

Tuesday, Seminole County's Chief Circuit Judge says he'll hear three days of foreclosures at 30 seconds a case, though last year Judge Dickey processed about 125 foreclosure cases an hour, many of which were dismissed or continued. For a time last year, the State of Florida paid retired senior judges to hear foreclosure cases to clear dockets. Since the program's demise, dockets are clogged again, especially with the Supreme Court of Florida also dropping its mandate last month for foreclosure mediation after reports that it was ineffective. Unfortunately, according to the Office of the State Court Administrator, almost seventy percent of cases mediated from March 2010 to March 2011 did not result in any agreement between the borrower and the lender. However, a U.S. Justice Department report recently concluded that mediation can resolve more cases-- if the programs are structured effectively. Without a government driven program for banks and homeowners to mediate foreclosures, it's now up to individual judicial circuits to decide about foreclosure mediations. Some circuits, such as Volusia, have no plans to ensure that banks offer mediation. Others, such as Seminole and likely Orange, will continue mandatory mediation. See article: http://thesent.nl/zQcPz6

Jurist tough on settling parties in mortgage crisis litigation

Last month, the Securities and Exchange Commission had to defend their proposed settlements to U.S. District Judge Jed S. Rakoff, who according to the Wall St. Journal is "No Mr. Nice Guy." The SEC apparently considers factors including losses suffered by investors as a result of the alleged wrongdoing in weighing how much the company benefited from the behavior and whether they will be hurt by a penalty. Judge Rakoff was skeptical why Citigroup's penalty is less than one-fifth the penalty paid by Goldman Sachs Group Inc. in its $550 million settlement with the SEC last year over a different mortgage-bond deal. Likewise, Judge Rakoff forced Bank of America and the SEC to come back with a 50-page statement and a higher penalty. He reluctantly approved the revised deal, quoting "the great American philosopher Yogi Berra" in a ruling. The judge says he saw in private practice how delays and gamesmanship made the American legal system too slow and expensive for the average person. See related stories at: http://on.wsj.com/sBSoL0 and http://on.wsj.com/u7f9FE