November 24, 2012

National Mortgage Settlement: An Admission By The Banks?

By Dan McGookey

In April, 2012, the federal government, along with 49 state attorney generals, worked out an agreement with the nation’s five largest servicers, (J.P. Morgan Chase, Bank of America, Wells Fargo, Citi and Ally (GMAC)), resulting from the robo signer scandal which came to light in late 2010. 

Robo signing, of course, is the practice of employing unauthorized persons to execute documents such as Assignments of Mortgage and affidavits, en masse, in order to expedite foreclosure cases. Consistent with the Wall Street Bank’s arrogant belief that they are above the law, they gave no regard whatsoever to the legality, much less the morality, of the process of robo signing, so long as it increased their bottom-line profits.

However, as the old saying goes, “What goes around, comes around”, so that the banks may finally get their just desserts as a result of this, only the latest in a long line of indiscretions. In what could, and hopefully will be, the final fallout from the scandal, making the $25 billion settlement (purportedly only $5 billion in reality), look puny, the letters notifying victimized homeowners of their right to submit claims for damages against the settlement fund may prove to be their undoing in that they come scintillatingly close to an admission of illegal conduct by the participating servicers. Should a court hold that is the case, it could be the shot heard “round the financial world” in that hundreds of billions, if not trillions of dollars of damages could be sought by homeowners wrongfully dispossessed of their homes. As with the Independent Foreclosure Review process we discussed in last week’s Consumer Mortgage News, the National Mortgage Settlement provides opportunities for homeowners far beyond the amount they might recover through the program itself. It potentially provides homeowners a right to recover the real amount of his or her loss resulting from a wrongful foreclosure, not simply a nominal amount worked out within the confines of the very cozy relationship between the government and the banks which it has deemed to be “too big to fail”. Therefore, the best advice to homeowners is to submit a claim under the the National Mortgage Settlement if invited to do so, and keep your eyes open to much more exciting opportunities possibly to come.