Cole: Obama's Next Bailout

The Washington Times ^ | 1-27-12 | Rebel A. Cole

[rebel_yell2]

On Jan. 23, U.S. Department of Housing and Urban Development Secretary Shaun L.S. Donovan met in Chicago with several Democratic state attorneys general (AGs) in an attempt to strong-arm them into signing up for an administration-backed agreement to settle the “robo-signing” scandal. Wall Street would pay what sounds like a large fine ($25 billion), and in exchange, the state AGs would relieve the bankers of all legal liabilities related to the fraudulent mortgage-lending practices that led directly to the 2008 financial meltdown and a 30 percent drop in U.S. home prices.

The fraudulent practices of the mortgage servicers have injected an untold number of forged documents into the legal system, jeopardizing the clean titles to millions of homes around the country. The costs of cleaning up this legal mess will most likely be in the hundreds of billions of dollars, yet this settlement would let Wall Street settle up with the state AGs for just $25 billion. Worse yet, most of this money would come from the pockets of investors who now own the mortgages, not from the perpetrators of fraud, and the rest would come out of the pockets of bank shareholders rather than from the miscreants who perpetrated the fraud.

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[struggle]

$20 Billion from BP
$25 Billion from banks

Obama sure is good at getting campaign money.

[SunkenCiv]

Thanks rebel_yell2.

[whitedog57]

Great job! I agree, there will be an FHA bailout. Watch them try to postpone until after the elections though.

[rebel_yell2]

The FHA bailout is yet another issue, but one that is inextricably tied to the robo-signing settlement because HUD Secy. Donovan is using a $60 BILLION FHA payout to the big banks on delinquent FHA-insured mortgages as a carrot in the settlement talks.

Thus far, the banks, which had to repurchase the mortgages from GNMA pools, are holding them on their books at par value, claiming that the FHA will pay in full.

However, the FHA already has sued several banks under the False Claims Act for presenting such mortgages for payment when the mortgages failed FHA underwriting standards. The law provides for treble damages, which explains why the volume of delinquent FHA mortgages on the banks’ books continues to grow. At BofA alone, the amount has doubled from $12 billion in 2010 to more than $25 billion today, yet nary a single mortgage has been presented to the FHA for payment.

IF Donovan strong-arms the FHA into paying, then FHA is going to need at least a $50 billion taxpayer-funded bailout.

[upchuck]

Worse yet, most of this money would come from the pockets of investors who now own the mortgages, not from the perpetrators of fraud, and the rest would come out of the pockets of bank shareholders rather than from the miscreants who perpetrated the fraud.

Scream this from the house tops.

This taxpayer abuse will never, ever stop until the guilty parties spend some hard time in prison. Until then, their customers, stockholders and we the taxpayers are paying for their illegal activities. Feel like you're getting ripped off big time? You should.

[Anti-Christ is Hillary]

If the banks go along with this they deserve everything that they are going to get.