CALIFORNIA FORECLOSURE STATUS

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Los Angeles Sues U.S. Bank, Calls It a 'Slumlord'

 

By Jonathan Stempel

The city of Los Angeles has sued U.S. Bank, accusing a unit of the fifth-largest U.S. commercial bank of becoming one of its biggest slumlords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.

Monday's civil lawsuit by the office of Los Angeles City Attorney Carmen Trutanich alleges that U.S. Bank has taken title to more than 1,500 foreclosed residential properties in the city in its role as trustee for various mortgage-backed securities trusts.

Los Angeles said that at least since July 2008, U.S. Bank has "disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties and substandard occupied housing units."

It said the bank has ignored repeated demands that it comply with the law, causing hundreds of homes to become uninhabitable or "public nuisances," and resulting in illegal evictions of hundreds of tenants from the second most-populous U.S. city.

Los Angeles said that it is seeking a civil fine of $2,500 a day for each violation by what it called "one of the largest slumlords in the city." It estimated the bank's potential liability to be in the "hundreds of millions of dollars."

Thomas Joyce, a spokesman for Minneapolis-based U.S. Bank, said it is the mortgage servicers, not the trustee, who have the responsibility to maintain foreclosed properties, and that "we intend to bring them into" the lawsuit.

Joyce also said the city only recently agreed to detail which homes needed better upkeep, and that the bank will "stand ready" to address property-specific and general foreclosure concerns as it has done in other cities.

Other Cities' Lawsuits

Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.

Wells Fargo & Co, the nation's largest mortgage lender, in May settled a lawsuit by Memphis, Tenn., and on July 12 it settled a similar case involving Baltimore.

The Baltimore accord was reached in connection with the San Francisco-based bank's $175 million settlement with the federal government over allegations that it overcharged black and Hispanic borrowers on mortgages, contributing to higher foreclosures.

Wells Fargo was one of five big servicers to join February's $25 billion U.S. settlement over foreclosure abuses.

The National Fair Housing Alliance filed discrimination complaints with the federal government in April against both U.S. Bank and Wells Fargo, accusing them of doing a better job maintaining foreclosed homes in white neighborhoods than in minority neighborhoods.

According to the 2010 census, Los Angeles had 1.41 million housing units, of which about 95,000 were vacant. The city's population was about 3.79 million.

Shares of U.S. Bancorp were down 9 cents at $32.69 in morning trading on the New York Stock Exchange.

The case is People v. U.S. Bank NA et al, Superior Court of California, Los Angeles County, No. BC488436.

Copyright 2012 Thomson Reuters. Click for restrictions.

Related articles

• LA's Biggest Slumlord

MATT TABBI, AN OLDIE BUT A GOODIE, WHERE DO WE STAND NOW?

A Victory for the Public on Foreclosures?

by Matt Tabbi, Rolling Stone

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post), the deal will not include:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

I'm interested to see what the market reaction will be if this deal goes through. On the one hand the banks will all obtain some certaintly and relief from robosigning claims. But on the other hand, all the banks are still on the hook in other areas, nost notably putbacks of bad loans.

Score one for Schneiderman/Harris. Coupled with the news that the subpoenas have already started dropping on the securitization front, I'm almost optimistic.

p.s. let me clarify something, for readers who might mistake my meaning here. Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

Robosigning had a profound and immediate impact on large numbers of actual human beings, and I don't want people to think I'm dismissing it as unimportant. I probably also shouldn't celebrate news like this until I see how the actual deal looks, what wording is used to narrow the deal's purview, how homeowners and other victims will be compensated, what will be done to prevent it in the future, and so on.

But my point was that, while a gross crime and one of the more obvious (and easily provable) parts of the criminal scheme common during the mortgage bubble years, robosigning is really an ancillary part of an even more enormous fraud that went on, and is still going on, in securitization/origination. Many homeowners were victimized by robosigning, but your more common victim of bank fraud during this time was an investor in MBS -- maybe even another WallStreet entity like a hedge fund or a bond insurer, maybe a foreign trade union, maybe a state worker whose pension fund lost 40% of its value because it was sold bad bonds by a too-big-to-fail bank. And the hook that snared those victims was securitization.

When I first heard about the foreclosure settlement, I thought it might contain a broad waiver for everything, including the tax evasion issues, the fair lending issues, securitization, and all the other things on that list above. If they did that, that would be TARPx10. My only point about this deal is that it appears to have been effectively negotiated down from a bloocurdling outrage to whatever it is now, which is probably something far less than that: it may still be a serious underpay, but it's not the unreal, criminal giveaway it was originally meant to be.

And it still leaves plenty of room for criminal investigation and reform. The people who organized and supervised the robosigning could and should still be targets of criminal prosecution, deal or no deal: this won't change that.

All I'm saying is, good for Schneiderman/Harris for holding out and preventing this settlement from being another AIG -- a secret backroom bailout in which everybody at the table got the government to solve their balance sheet problems in 24-48 hours of frenzied, disorganized discussion. This is still a bailout, but at the very least, someone represented the public this time around.

We still have to see what it looks like in the end, but I'm encouraged.
I talked more on this with the excellent Bill Press on Countdown last night:

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From Around the Web

COMMENTS

Sort by: Most Recent Oldest First

• 
  Matthew Weidner |1 hour, 59 minutes ago

  Flag CommentReply

  oh god no. they've finally gotten to taibbi...now he's a government troll. that's the only explanation that makes sense for this cheer-leading piece. remember, all the announcements speak of maybe a hundred attorneys and investigators...Enron had thousands. remember, Holder already said most of the conduct was not criminal in his speech. remember schneiderman has no real authority. remember they've already been investigating for years and no arrests. until we see real indictments this is all just theater.
• 
  Kurt Duffy |7 hours, 13 minutes ago

  Flag CommentReply

  
  While interest rates have never been more attractive, the number of people taking advantage of the historically low rates and refinancing their mortgages has dropped substantially, most of them dont even aware of the rates, i recommend 123 Refinance for refinance
• 
  Lee AuCoin |10 hours, 20 minutes ago

  Flag CommentReply

  So there will be a deal limiting liability on the crimes (perjury, fraud, conspiracy) while the larger, more complicated & difficult to prove crimes will begin and continue.... at least until the election. Why am I suspicious?
• 
  Don Fahnestock |19 hours, 35 minutes ago

  Flag CommentReply

  Two steps back, instead of four, for the possibility to maybe perhaps, after hell freezes over, take one step forward. The financial industry's strategy to wear folks down to the point where the most ardent critics will call just about anything, "A Victory for the Public....."
• 
  Richard Davet |Yesterday, 8:18 AM EDT

  Flag CommentReply

  the deal will not include:
  
  Criminal liability.
  Tax liability
  Fair lending, fair housing, or any other civil rights claim.
  Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  
  Since 1996 bac has sold 94% of their mortgages to fnma. If 94% are left out of settlement...................what is being settled?
• 
  Richard Davet |Yesterday, 8:14 AM EDT

  Flag CommentReply

  the deal will not include:
  
  Criminal liability.
  Tax liability
  Fair lending, fair housing, or any other civil rights claim.
  Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  
  As far back as 1996, bac sold 94% of all their mortgages to fnma. If 94% are left out of settlement...................................what is being settled???????????
  
  
  
  
• [Deleted] |Yesterday, 7:14 AM EDT

  Flag CommentReply

  If it's true that this issue is focused ONLY on robo-signing - then I agree, this number doesn't suck. I only hope that the States use the funds to reimburse those who were injured by these abuses and do not earmark the funds for completely unrelated wishlists. The funds truly belong to those injured - and leaving the Ad Valorem Tax issue open for the States to recover funds should completely exclude the States from using funds from this settlement for State services.
• 
  Thomas Joseph |Yesterday, 6:34 AM EDT

  Flag CommentReply

  A judge once told me " the court house is like the Ritz Carlton, the doors are open to everyone as long as you have $600 for a room". It probably is a good settlement but the cost of litigating even the simplest claim is outrageous. Justice is out of reach for the 99%.
• 
  Dana Outlaw |Yesterday, 12:57 AM EDT

  Flag CommentReply

  
  Refinancing to a shorter mortgage term may allow you to build your home equity and pay off your mortgage faster. You can easily find your rates from websites like 123 Refinance in secs
• 
  [Deleted] |January 28, 6:14 PM ET

  Flag CommentReply

  The criteria for a good settlement is explained by Abigail Field on her website today.
• 
  Mitch Seaman |January 28, 6:13 PM ET

  Flag CommentReply

  Formatting's weird, can't read the first word of each line. If you could fix that would be rad.
• 
  [Deleted] |January 28, 6:12 PM ET

  Flag CommentReply

  This is not a good fraud settlement unless it meets the simple criteria for a good settlement as explained by Abigail Field here abigailcfield.com/?p=859
• 
  Carter Russell |January 28, 6:06 PM ET

  Flag CommentReply

  Robosigning has always seemed to me a case of lazy or sloppy bookkeeping, not a nefarious ripoff scheme. That said, Al Capone went down on tax evasion not his syndicate criminal activity, so it's good a dent has been made with the robosigning issue (where there was an undeniable smoking gun, if I can call the lack of something a smoking gun). And it's great that all the other abuses can still be investigated.
  
  Good job with the interview. I agree with your assessment of Press as excellent. When it comes to Obama, however, I hope you heed the words (more or less) of George W. Bush. "Fool me once, shame on you, fool me twice, shame on me. Won't get fooled again!" (I'm sure you don't intend the piece as an election piece, but coming in an election year, it will inevitably be interpreted that way.)
• 
  Abigail Caplovitz Field |January 28, 5:53 PM ET

  Flag CommentReply

  So much more than the liability waiver is important. Here's an idea of what a strong deal would look like: 1) Enforcement. Now, there’s been rumors about an independent court appointed monitor to do enforcement. That sounds fine as far as it goes, but here’s what real enforceability means:
  
  a) The monitor must have the ability to access and review servicer databases and other records at will. Servicers can’t be allowed to manage the info flow to the monitor.
  
  b) If the monitor finds problems, s/he must be able to impose immediate penalties of a variety of strengths without going through a process that enables the servicers to appeal and object and delay. Think of the monitor as a probation officer.
  
  c) The monitor should have a process for homeowners to file complaints, and a certain threshold of substantiated complaints should trigger enforcement action.
  
  d) The monitor must be truly independent with the skills, experience, staffing and other resources to do the job right.
  
  e) The monitor’s job and powers must continue into perpetuity unless the agreement is superceded by statute or regulation. This is important because homeowners are not servicers’ customers. The economic interests of the servicer do not align with homeowners, and after a deal’s expiration there’s zero reason to expect compliance to continue.
  
  2) Servicing Standards. When the “deal” was first leaked early last year I took it apart for DailyFinance here. What was abundantly clear from the proposal was that it mostly required servicers to obey the law, including the duties of good faith and fair dealing. That is, the document mostly exposed how much of the problem is a failure to enforce existing law. The biggest addition was the idea that servicers can’t foreclose on someone they’re considering for a modification. Of course, that is also a blatantly deceptive (and therefore illegal) practice, and that’s why Massachusetts AG Martha Coakley included it in her suit against five bailed-out banks (at paragraph 142).
  
  Beyond the very vanilla stuff in that original, “obey the law” term sheet, the settlement must force the banks to let the independent monitor’s team audit their account records. Evidence keeps surfacing that their records of who owes how much, to whom, are simply wrong far too much of the time. Consider these recent stories by Reuters and iWatch News or this one I wrote about a year ago. Or consider that servicers have been playing games with amounts borrowers owe in bankruptcy court so frequently that the court did a two year, seven step process to change the rules and force the banks to deal in good faith. (I write about the rule changes and background here, starting under “Measuring Up: The U.S. Trustees Program”.)
  
  Bottom line: mortgage servicers will never be able to do a good job unless their databases are totally overhauled, and they’ll never do that overhaul without an independent audit. And no, I don’t mean “independent” in the OCC sense; I mean actually independent, by the settlement monitor.
  
  What the current servicing standards are on the table isn’t clear, since we’ve not seen anything in nearly a year. It’s impossible to evaluate the terms on the table without seeing them, but unless the terms are better than that initial leak, they’re nowhere near good enough.
  
  3) Principal Reductions
  
  One of the oddest features of the settlement as discussed to date is the idea that the banks will be given total discretion to allocate most of the billions of dollars involved among borrowers. Several bad consequences flow from that.
  
  First, no state can know how much it’s getting (except the rightly-rejected CA bribe). How can an AG, in good conscience, take a deal without knowing what it’s worth to his or her state? Second, structuring the deal this way enables the banks to focus on managing their balance sheets rather than providing relief to homeowners. That is, decisions about who to help and how much will have nothing to do with who needs help or how much help they need. Third, as part of that balance sheet management, the banks will be able to shift losses from themselves to pension funds. How is that just?
  
  I call this feature of the settlement odd, because it’s completely unnecessary. Consider what happened after BP turned the Gulf of Mexico into a toxic waste dump: we made them stick $20 billion in a kitty, put Ken Feinberg in charge, and he cut checks to victims. Why isn’t that the model in this case?
  
  Instead of letting the banks manipulate the numbers to their advantage, we should require them to cough up the full amount in actual cash, and let a fully staffed and independent special master pay down the mortgages. The special master for each state should be appointed by that state’s AG, and the banks should not have a right to object to the person chosen. More; the rule should be that the payments are applied, 100%, to principal and interest. Any outstanding fees that the servicer has applied to the account only get repaid if the servicer submits a fully documented bill to the special master.
  
  Having a state-AG named person run a fund aimed at helping that state’s victims insures the decisions about who to help how much can be made by someone who really has homeowners’ interests at heart. Second, by forcing the banks to cough up cash, the approach is punitive, which it’s supposed to be.
  
  4) Regardless of how the DE’s MERS lawsuit is resolved and liability for its past actions addressed, the settlement should include an agreement to stop using MERS on all loans made after the date of the settlement. We need to limit the damage.
  
  5) The settlement has to deal with the fact that most mortgages’ documents are FUBAR. ‘Robosigning’ isn’t simply about signing documents in a funny way; it’s about creating documents the banks don’t have because they didn’t do their job right at the outset. Why are they creating the documents? So they can win foreclosure cases. That’s obstruction of justice. When you don’t have the evidence you need, you’re not supposed to just make sh-t up. But the servicers are, systematically. And it’s not like they’re doing things they have the right to do, just late. For a variety of reasons these documents are just fraudulent. They’re creating documents in the name of companies that have long since gone out of business, for example.
  
  Bottom line: You can’t solve “robosigning” simply by slowing the process down long enough for people to review newly-minted documents before submitting them. Similarly, if the database the reviewer is checking the numbers against is wrong, the review doesn’t help either. How to resolve the FUBAR documents situation? I don’t know. All I know is that the topic has to be dealt with head on.
  
  6) The liability waiver should be narrow. Perhaps that’s a done deal; certainly there’s considerable reporting to that effect. All I can say is 1) the text isn’t released, and 2) if the origination fraud waiver was so narrow, why were the banks willing to give CA a $15 billion bribe to sign on? What is it about California’s released liability that inspired such a big bribe?
  
  But let’s say, ok, the waiver’s narrow. If 1 through 5 above aren’t also part of the deal, then it’s a joke; the help for homeowners is too little in terms of dollars and too ephemeral in terms of servicing improvements. So the banks aren’t getting much liability released, but homeowners also aren’t getting much help.
• 
  Jessica LaRock |January 28, 5:51 PM ET

  Flag CommentReply

  Matt, the robosigning is not a "small" issue. It has contributed to clouding the titles of tens of millions of properties all over the country, potentially 60 million or more if you include all the MERS mortgages. The result is that homeowners will not be able to sell their homes, nor get a satisfaction/release on their mortgage if they should pay it off. Not without filing a quiet title suit, anyway. $25B is nowhere near enough to clear up this problem.
• 
  Garrett Rue |January 28, 4:26 PM ET

  Flag CommentReply

  I too want to be optimistic. I do. But it's really hard to shake the idea that this is all being run by bunch of four star clowns who are gonna end up giving the whole circus away.
• 
  John Regan |January 28, 4:18 PM ET

  Flag CommentReply

  I'm afraid this is not good news at all. The banks should not be let off the hook for robo signing, and should not be permitted to continue the practice. Please see my post at strikelawyer.wordpress.com
• 
  James Etling |January 28, 3:03 PM ET

  Flag CommentReply

  Nice to know some people in government are into that "justice" thing.
  
  In yor earlier post, you had pondered that Schneiderman already had the authority to take on the banks prior to this new post and responsibility. But as US Attorney for NY, would he have the rhe reach to address matters abroad? These banks are all MNCs, and have their greedy little fingerprints all over the globe - including assets offshore waiting for a tax holiday or in the Swiss accounts of the officers.
  
  I want to be optomistic and believe that when Obama said Jamie Dimon was smart, he was setting himself up to later point out that he wasn't smart enough to evade federal prosecutors. - that's the audacity of my hope, at least.

Related articles

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• The Robosigning Deal is a Useless Embarrassment
• Corruption of Title Chains Is Pandemic
• Foreclosure settlement a failure of law, a triumph for bank attorneys
• Schneiderman to Face Direct Action Pressure at Tonight's Netroots Nation Keynote
• $26 Billion Settlement Meager Compared to Damages
• U.S. Foreclosures Up For The 2nd Straight Month In a Row
• Robosigning is Focus of New York Fraud Legislation
• States Grab Robosigning Settlement - to Pay Own Bills
• A.G. Schneiderman Introduces Legislation To Protect New Yorkers From Foreclosure Fraud

BRIAN HAZEL, SOUTH & ASSOCIATES. HERE IS WHY YOU SUCK.

BRIAN HAZEL, SOUTH & ASSOCIATES. HERE IS WHY YOU SUCK.

Brian Hazel, you aren't nice, you are aren't swell (except your head might be), and you aren't doing a good job. You are STEALING homes. That is ALL you know how to do. Obviously.

by Kelly L. Hansen

Brian, your firm, South & Associates (S & A) is a law firm that specializes as a foreclosure mill in my home State of Kansas. You've WON AWARDS for stealing homes. You have offices nationwide. S & A produces questionable assignments, alters documents, willingly notarizes and commits forgeries willy-nilly. I think many of your associates just like to sign their names to prove they can. And I think the ones that don't want to commit acts of forgery for fear their law licenses may be revoked, are often forced to, by you, to keep their jobs.

Your Associates often sign on behalf of Mortgage Electronic Registration Systems, Inc. (MERS) as a Secretary or Vice President of MERS as a nominee (as per MERS mortgage contracts) of one of your Bank or Mortgage clients. Did you know this is an illegal act? Did you know that any homeowner losing their home due to an illegal act by S & A could sue you and get their home back? (Of course you do. This is for the benefit of my readers.)

They could simply go to their county recorder -- check to see if a correct chain of title exists. When MERS is involved a correct chain of title is questionable, at best. The homeowner should file a Motion for Loss of Subject Matter Jurisdiction Over the Case (based upon fraud upon the Court.) Robo-signing, forgery, failure to perfect a lien, false witness on assignment,

Buddy up with Darren and Becky Volk to help you out just a little bit more and see where it will get you. Because I LOOK FORWARD to the challenge of searching high and low to see what else I can come up with, what other little dirty secrets I can find out about both you and Apple Assets in this State's, and in other State's Court records, to take you both down. Believe me, I'm not the only one looking. Because I am M-O-T-I-V-A-T-E--D to see dirty little swine corporations such as yours be made unmentionable, horrific words on the lips of every homeowner I meet. Ask Darren Volk just why. And if he won't tell you, Becky will. And if she won't, they know, I WILL.

They stole my home. Steve Six started to shut them down, but didn't finish the job he started. Apple Assets should not be in business. They are bad people. You are no better.

The Volks have children, and that is the only reason I don't come down on them any harder than I currently do. If they are smart, they will stay away. I know some of the people at your firm are good people, because even among swine, are good people. However, Brian, do not provoke me, or make me angrier, by making more stupid comments like the comments made on my MERS blog yesterday.

You are not funny. This is not funny. Stealing homes is not funny. Go to Church. Say some prayers. Today has been a shitty day. Perhaps I could have handled this better, but I am pissed. Sue me. You asshole.

MATT TABBI'S THOUGHTS ON THE FORECLOSURE SETTLEMENT'S PROGRESS

A Victory for the Public on Foreclosures? 

by Matt Tabbi, Rolling Stone

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post), the deal will not include:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

I'm interested to see what the market reaction will be if this deal goes through. On the one hand the banks will all obtain some certaintly and relief from robosigning claims. But on the other hand, all the banks are still on the hook in other areas, nost notably putbacks of bad loans.

Score one for Schneiderman/Harris. Coupled with the news that the subpoenas have already started dropping on the securitization front, I'm almost optimistic.

p.s. let me clarify something, for readers who might mistake my meaning here. Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

Robosigning had a profound and immediate impact on large numbers of actual human beings, and I don't want people to think I'm dismissing it as unimportant. I probably also shouldn't celebrate news like this until I see how the actual deal looks, what wording is used to narrow the deal's purview, how homeowners and other victims will be compensated, what will be done to prevent it in the future, and so on.

But my point was that, while a gross crime and one of the more obvious (and easily provable) parts of the criminal scheme common during the mortgage bubble years, robosigning is really an ancillary part of an even more enormous fraud that went on, and is still going on, in securitization/origination. Many homeowners were victimized by robosigning, but your more common victim of bank fraud during this time was an investor in MBS -- maybe even another WallStreet entity like a hedge fund or a bond insurer, maybe a foreign trade union, maybe a state worker whose pension fund lost 40% of its value because it was sold bad bonds by a too-big-to-fail bank. And the hook that snared those victims was securitization.

When I first heard about the foreclosure settlement, I thought it might contain a broad waiver for everything, including the tax evasion issues, the fair lending issues, securitization, and all the other things on that list above. If they did that, that would be TARPx10. My only point about this deal is that it appears to have been effectively negotiated down from a bloocurdling outrage to whatever it is now, which is probably something far less than that: it may still be a serious underpay, but it's not the unreal, criminal giveaway it was originally meant to be.

And it still leaves plenty of room for criminal investigation and reform. The people who organized and supervised the robosigning could and should still be targets of criminal prosecution, deal or no deal: this won't change that.

All I'm saying is, good for Schneiderman/Harris for holding out and preventing this settlement from being another AIG -- a secret backroom bailout in which everybody at the table got the government to solve their balance sheet problems in 24-48 hours of frenzied, disorganized discussion. This is still a bailout, but at the very least, someone represented the public this time around.

We still have to see what it looks like in the end, but I'm encouraged.
I talked more on this with the excellent Bill Press on Countdown last night:

Prev Is Obama's 'Economic Populism' for Real?

Taibblog Main

• 
  MUSIC Listen: Preview Van Halen's New 'Blood and Fire'
• 
  MOVIES & TV Peter Travers Rages Against Oscars Snubs
• 
  POLITICS Obama's Blueprint for a Fairer Economy
• 
  VIDEOS RS Live: Craig Finn Plays Acoustic

More From Rolling Stone

You might like:

• We're So Fucked - Rolling Stone
• Matt Taibbi on Extremist Altar Boy Rick Santorum - Rolling Stone
• Liam Neeson Faces Off Against Wolves in 'The Grey' - Rolling Stone
• Newt Gingrich Ordered to Stop Using 'How You Like Me Now?' - Rolling Stone - Music News
• Grateful Dead Exhibit Coming to Rock and Roll Hall of Fame - Rolling Stone - Music News

From Around the Web

 

COMMENTS

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• 
  Matthew Weidner |1 hour, 59 minutes ago

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  oh god no. they've finally gotten to taibbi...now he's a government troll. that's the only explanation that makes sense for this cheer-leading piece. remember, all the announcements speak of maybe a hundred attorneys and investigators...Enron had thousands. remember, Holder already said most of the conduct was not criminal in his speech. remember schneiderman has no real authority. remember they've already been investigating for years and no arrests. until we see real indictments this is all just theater.
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  Kurt Duffy |7 hours, 13 minutes ago

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  While interest rates have never been more attractive, the number of people taking advantage of the historically low rates and refinancing their mortgages has dropped substantially, most of them dont even aware of the rates, i recommend 123 Refinance for refinance
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  Lee AuCoin |10 hours, 20 minutes ago

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  So there will be a deal limiting liability on the crimes (perjury, fraud, conspiracy) while the larger, more complicated & difficult to prove crimes will begin and continue.... at least until the election. Why am I suspicious?
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  Don Fahnestock |19 hours, 35 minutes ago

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  Two steps back, instead of four, for the possibility to maybe perhaps, after hell freezes over, take one step forward. The financial industry's strategy to wear folks down to the point where the most ardent critics will call just about anything, "A Victory for the Public....."
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  Richard Davet |Yesterday, 8:18 AM EDT

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  the deal will not include:
  
  Criminal liability.
  Tax liability
  Fair lending, fair housing, or any other civil rights claim.
  Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  
  Since 1996 bac has sold 94% of their mortgages to fnma. If 94% are left out of settlement...................what is being settled?
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  Richard Davet |Yesterday, 8:14 AM EDT

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  the deal will not include:
  
  Criminal liability.
  Tax liability
  Fair lending, fair housing, or any other civil rights claim.
  Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
  
  As far back as 1996, bac sold 94% of all their mortgages to fnma. If 94% are left out of settlement...................................what is being settled???????????
  
  
  
  
• [Deleted] |Yesterday, 7:14 AM EDT

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  If it's true that this issue is focused ONLY on robo-signing - then I agree, this number doesn't suck. I only hope that the States use the funds to reimburse those who were injured by these abuses and do not earmark the funds for completely unrelated wishlists. The funds truly belong to those injured - and leaving the Ad Valorem Tax issue open for the States to recover funds should completely exclude the States from using funds from this settlement for State services.
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  Thomas Joseph |Yesterday, 6:34 AM EDT

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  A judge once told me " the court house is like the Ritz Carlton, the doors are open to everyone as long as you have $600 for a room". It probably is a good settlement but the cost of litigating even the simplest claim is outrageous. Justice is out of reach for the 99%.
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  Dana Outlaw |Yesterday, 12:57 AM EDT

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  Refinancing to a shorter mortgage term may allow you to build your home equity and pay off your mortgage faster. You can easily find your rates from websites like 123 Refinance in secs
• 
  [Deleted] |January 28, 6:14 PM ET

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  The criteria for a good settlement is explained by Abigail Field on her website today.
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  Mitch Seaman |January 28, 6:13 PM ET

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  Formatting's weird, can't read the first word of each line. If you could fix that would be rad.
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  [Deleted] |January 28, 6:12 PM ET

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  This is not a good fraud settlement unless it meets the simple criteria for a good settlement as explained by Abigail Field here abigailcfield.com/?p=859
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  Carter Russell |January 28, 6:06 PM ET

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  Robosigning has always seemed to me a case of lazy or sloppy bookkeeping, not a nefarious ripoff scheme. That said, Al Capone went down on tax evasion not his syndicate criminal activity, so it's good a dent has been made with the robosigning issue (where there was an undeniable smoking gun, if I can call the lack of something a smoking gun). And it's great that all the other abuses can still be investigated.
  
  Good job with the interview. I agree with your assessment of Press as excellent. When it comes to Obama, however, I hope you heed the words (more or less) of George W. Bush. "Fool me once, shame on you, fool me twice, shame on me. Won't get fooled again!" (I'm sure you don't intend the piece as an election piece, but coming in an election year, it will inevitably be interpreted that way.)
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  Abigail Caplovitz Field |January 28, 5:53 PM ET

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  So much more than the liability waiver is important. Here's an idea of what a strong deal would look like: 1) Enforcement. Now, there’s been rumors about an independent court appointed monitor to do enforcement. That sounds fine as far as it goes, but here’s what real enforceability means:
  
  a) The monitor must have the ability to access and review servicer databases and other records at will. Servicers can’t be allowed to manage the info flow to the monitor.
  
  b) If the monitor finds problems, s/he must be able to impose immediate penalties of a variety of strengths without going through a process that enables the servicers to appeal and object and delay. Think of the monitor as a probation officer.
  
  c) The monitor should have a process for homeowners to file complaints, and a certain threshold of substantiated complaints should trigger enforcement action.
  
  d) The monitor must be truly independent with the skills, experience, staffing and other resources to do the job right.
  
  e) The monitor’s job and powers must continue into perpetuity unless the agreement is superceded by statute or regulation. This is important because homeowners are not servicers’ customers. The economic interests of the servicer do not align with homeowners, and after a deal’s expiration there’s zero reason to expect compliance to continue.
  
  2) Servicing Standards. When the “deal” was first leaked early last year I took it apart for DailyFinance here. What was abundantly clear from the proposal was that it mostly required servicers to obey the law, including the duties of good faith and fair dealing. That is, the document mostly exposed how much of the problem is a failure to enforce existing law. The biggest addition was the idea that servicers can’t foreclose on someone they’re considering for a modification. Of course, that is also a blatantly deceptive (and therefore illegal) practice, and that’s why Massachusetts AG Martha Coakley included it in her suit against five bailed-out banks (at paragraph 142).
  
  Beyond the very vanilla stuff in that original, “obey the law” term sheet, the settlement must force the banks to let the independent monitor’s team audit their account records. Evidence keeps surfacing that their records of who owes how much, to whom, are simply wrong far too much of the time. Consider these recent stories by Reuters and iWatch News or this one I wrote about a year ago. Or consider that servicers have been playing games with amounts borrowers owe in bankruptcy court so frequently that the court did a two year, seven step process to change the rules and force the banks to deal in good faith. (I write about the rule changes and background here, starting under “Measuring Up: The U.S. Trustees Program”.)
  
  Bottom line: mortgage servicers will never be able to do a good job unless their databases are totally overhauled, and they’ll never do that overhaul without an independent audit. And no, I don’t mean “independent” in the OCC sense; I mean actually independent, by the settlement monitor.
  
  What the current servicing standards are on the table isn’t clear, since we’ve not seen anything in nearly a year. It’s impossible to evaluate the terms on the table without seeing them, but unless the terms are better than that initial leak, they’re nowhere near good enough.
  
  3) Principal Reductions
  
  One of the oddest features of the settlement as discussed to date is the idea that the banks will be given total discretion to allocate most of the billions of dollars involved among borrowers. Several bad consequences flow from that.
  
  First, no state can know how much it’s getting (except the rightly-rejected CA bribe). How can an AG, in good conscience, take a deal without knowing what it’s worth to his or her state? Second, structuring the deal this way enables the banks to focus on managing their balance sheets rather than providing relief to homeowners. That is, decisions about who to help and how much will have nothing to do with who needs help or how much help they need. Third, as part of that balance sheet management, the banks will be able to shift losses from themselves to pension funds. How is that just?
  
  I call this feature of the settlement odd, because it’s completely unnecessary. Consider what happened after BP turned the Gulf of Mexico into a toxic waste dump: we made them stick $20 billion in a kitty, put Ken Feinberg in charge, and he cut checks to victims. Why isn’t that the model in this case?
  
  Instead of letting the banks manipulate the numbers to their advantage, we should require them to cough up the full amount in actual cash, and let a fully staffed and independent special master pay down the mortgages. The special master for each state should be appointed by that state’s AG, and the banks should not have a right to object to the person chosen. More; the rule should be that the payments are applied, 100%, to principal and interest. Any outstanding fees that the servicer has applied to the account only get repaid if the servicer submits a fully documented bill to the special master.
  
  Having a state-AG named person run a fund aimed at helping that state’s victims insures the decisions about who to help how much can be made by someone who really has homeowners’ interests at heart. Second, by forcing the banks to cough up cash, the approach is punitive, which it’s supposed to be.
  
  4) Regardless of how the DE’s MERS lawsuit is resolved and liability for its past actions addressed, the settlement should include an agreement to stop using MERS on all loans made after the date of the settlement. We need to limit the damage.
  
  5) The settlement has to deal with the fact that most mortgages’ documents are FUBAR. ‘Robosigning’ isn’t simply about signing documents in a funny way; it’s about creating documents the banks don’t have because they didn’t do their job right at the outset. Why are they creating the documents? So they can win foreclosure cases. That’s obstruction of justice. When you don’t have the evidence you need, you’re not supposed to just make sh-t up. But the servicers are, systematically. And it’s not like they’re doing things they have the right to do, just late. For a variety of reasons these documents are just fraudulent. They’re creating documents in the name of companies that have long since gone out of business, for example.
  
  Bottom line: You can’t solve “robosigning” simply by slowing the process down long enough for people to review newly-minted documents before submitting them. Similarly, if the database the reviewer is checking the numbers against is wrong, the review doesn’t help either. How to resolve the FUBAR documents situation? I don’t know. All I know is that the topic has to be dealt with head on.
  
  6) The liability waiver should be narrow. Perhaps that’s a done deal; certainly there’s considerable reporting to that effect. All I can say is 1) the text isn’t released, and 2) if the origination fraud waiver was so narrow, why were the banks willing to give CA a $15 billion bribe to sign on? What is it about California’s released liability that inspired such a big bribe?
  
  But let’s say, ok, the waiver’s narrow. If 1 through 5 above aren’t also part of the deal, then it’s a joke; the help for homeowners is too little in terms of dollars and too ephemeral in terms of servicing improvements. So the banks aren’t getting much liability released, but homeowners also aren’t getting much help.
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  Jessica LaRock |January 28, 5:51 PM ET

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  Matt, the robosigning is not a "small" issue. It has contributed to clouding the titles of tens of millions of properties all over the country, potentially 60 million or more if you include all the MERS mortgages. The result is that homeowners will not be able to sell their homes, nor get a satisfaction/release on their mortgage if they should pay it off. Not without filing a quiet title suit, anyway. $25B is nowhere near enough to clear up this problem.
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  Garrett Rue |January 28, 4:26 PM ET

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  I too want to be optimistic. I do. But it's really hard to shake the idea that this is all being run by bunch of four star clowns who are gonna end up giving the whole circus away.
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  John Regan |January 28, 4:18 PM ET

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  I'm afraid this is not good news at all. The banks should not be let off the hook for robo signing, and should not be permitted to continue the practice. Please see my post at strikelawyer.wordpress.com
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  James Etling |January 28, 3:03 PM ET

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  Nice to know some people in government are into that "justice" thing.
  
  In yor earlier post, you had pondered that Schneiderman already had the authority to take on the banks prior to this new post and responsibility. But as US Attorney for NY, would he have the rhe reach to address matters abroad? These banks are all MNCs, and have their greedy little fingerprints all over the globe - including assets offshore waiting for a tax holiday or in the Swiss accounts of the officers.
  
  I want to be optomistic and believe that when Obama said Jamie Dimon was smart, he was setting himself up to later point out that he wasn't smart enough to evade federal prosecutors. - that's the audacity of my hope, at least.