February 27, 2012: There have to be clowns. Without them, we might cry a river during election years. Pinching your nose while voting brings tears to the eyes of many. So send in the clowns. Or at least– a really sharp comedy.
Some clarification as to what counts as comic. The Mitt/Newt/Rick Show and MSM’s Fist Pump 4 Obama are stale. They keep working the same lines and pratfalls. Not all old shows are dullsville. The Government Real Estate Game is hoary as hell but keeps reinventing itself. The latest twist:
Mortgage Settlement Madness!
Honk-a-dollar. As in, the 25 billion of ‘em coughed up by five mega lenders via the national mortgage servicer settlement. Also called the national foreclosure settlement. The lenders who hit homeowners with funky foreclosures and hence had to cough are Citigroup, Wells Fargo, Bank of America, JPMorgan Chase, and Ally Financial Inc. Ally is the loan artist formerly known as GMAC. Why the name change? Cause “everybody needs an Ally”*.
Fun factoids about GMAC aka Ally: In 2008, the US Treasury invested $5 billion in GMAC (a sub of General Motors) from the Troubled Asset Relief Program (TARP). In 2009, they added 7.5 billion, giving the government a majority stake in GMAC. In 2010, GMAC “rebranded” itself as Ally Financial Inc. By January, 2012, TARP had 12 billion invested in GMAC/Ally.
Is Ally’s slice of the mortgage settlement being served by TARP?
If so, please notify Peter he’s being robbed to pay Paul.
The Obama administration in the form of U.S. Attorney General Eric Holder pushed the mortgage servicer settlement; 49 state attorney generals added their heft. A few balked at first. Not enough money for my state said some. Others were bugged that the settlement scotched legal actions supposedly in the hopper. (The ultimate deal doesn’t nix actions re other bads the AGs may have discovered when investigating foreclosure abuses. Future prosecutions could still take place in the future.) New York State Attorney General Eric Schneiderman was the scariest holdout. He was in the belly of the Wall Street beast. He was gonna get them bastids!
Compassion for struggling homeowners– and quid pro quo– eventually won over the AGs. The settlement will help homeowners avoid foreclosure via various programs (insert pratfall sound effect here) and in some cases, mortgage modifications. About 750,000 victims of foreclosure fouls will receive $2000 each. No mule though.
Not all homeowners will qualify for assistance. Selections must be made. Homeowners best get busy kissing butt on their local politicized housing scene; non profit housing helpers will be guiding the mortgage settlement dispensation.
By the time the settlement makes it to local levels, there will be less to dispense. Hands at higher levels are already helping themselves.
The Federal Housing Administration (FHA) immediately skimmed $1 billion from the payout kicked in by Bank of America (BofA). Apparently BofA boffed the FHA with a boatload of bad loans. Poor FHA. Their taxpayer-backed loan portfolio is always giving them trouble. As for BofA, they must have really been macking around. Their part of the settlement is the heftiest.
State pols are also swarming the mortgage settlement, with governors and state reps claiming that since the busted housing bubble busted their budgets they deserve a piece of the pie.
Missouri Governor Jay Nixon (Democrat) wants to use almost all of his state’s $41 million cut as a budget plug. The state legislature leaders (Republican) say Yay Jay. In Pennsylvania, Dems are pushing the Republican attorney general to channel settlement funds into poverty programs. Maryland’s attorney general will give 10% of the state’s settlement cut to Governor Martin O’Malley (Democrat) and state reps “to spend as they choose”**.
Just when you think Mortgage Settlement Madness! couldn’t get any funnier, Wisconsin Governor Scott Walker (Republican) flaps onto the stage with a plan to use $26 million of the foreclosure rescue fund to plug his budget hole. This from the Friend-Of-All-Homeowners.
It also seems funny (as in “weird”) that state attorney generals will be dispensing money to public officials from a national settlement made by major financial institutions under threat of legal action by the very same attorney generals. The AGs’ leeway to control the cash was a crucial part of the mortgage settlement deal. Overall, the settlement is an attorney general power enhancer.
An oft asked question is why the financial crash of 2008 and the massive taxpayer bailouts that ensued didn’t lead to any prosecutions of major players. One of the answers– and there are many, none of which go down easy– may be that our state attorney generals increasingly treat financial crime in high places as a power tool and revenue source rather than something to be prosecuted.
Meanwhile, out in the lesser criminal fields, the mortgage servicer settlement is sparking new grifts. According to a press release*** by North Carolina Attorney General Roy Cooper, scammers in that state are already working the “landmark settlement”. (North Carolina’s banking commissioner incidentally, will be overseeing the mortgage servicer settlement.) Calling homeowners and promising I can get you a piece of the settlement but first I’ll need your bank account number…
The Government Real Estate Game has done it again. Mortgage Settlement Madness! promises to be a comedy keeper.
Carola Von Hoffmannstahl-Solomonoff
*ally/Ally Financial, FAQs, Why is GMAC rebranding to Ally Financial, Inc.? 2010
**Some money from mortgage settlement to be diverted, David A. Lib, Associated Press, 02/22/12
***Watch out for sham mortgage settlement calls, AG warns, North Carolina Department of Justice, 02/22/12
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