“Relief” Of National Mortgage Settlement a Farce
The American public has been made to believe that banks would be made to pay for at least part their misdeeds related to mortgage servicing and trading prior to and in the wake of the national housing bubble burst. That’s what the whole series of national mortgage settlements were all about. You may recall headlines over the course of the last year or so, announcing multi-billion dollar deals that large banks had agreed to pay for ripping off the American public.
$17 billion here. $25 billion there. It sounded like a lot, though the truth is it wasn’t nearly enough for what we’d all lost. Still, the hope was that it would help, and maybe at least it would deter these companies from engaging in such poor behavior again.
Now, we learn the impact to these large financial institutions for paying these large “fines”? Likely miniscule. In fact, more than likely, if you’re investing in a retirement account or rely on a public pension, you’re the one who is paying. That’s according to a recent report from Forbes.com.
Here’s an example: Bank of America recently promised to pay $17 billion to settle with the U.S. Justice Department, which had been pursuing criminal charges against the firm for churning out trillions of dollars in risky mortgages that it then bundled into securities and resold to investors without revealing the risk. Some of those investors were money managers in charge of retirement accounts, who were responsible for employing a diversified strategy for their customers.
So when Bank of America made its settlement deal, promising to pay off 41 percent of that $17 billion fine by providing customer relief, that included lowering mortgage payments for certain borrowers. The problem is, the bank doesn’t actually own a lot of those mortgages it intends to write down. Investors do. Those paying into these retirement accounts. So that means when the bank writes down the lower principle balances, the monthly return for those who were investing in their retirement is diminished.
Our Miami foreclosure defense lawyers understand what that means is the banks aren’t losing out on much of anything. So who’s really being punished?
Banks could choose to reimburse investors or write down only those mortgages it holds. However, no entity is requiring it to do so.
There is one advocacy group pushing for change. The Association of Mortgage Investors (AMI) had been slated to request Congress require bank reimbursement of retirees for those write downs. The group said they weren’t against offering relief to borrowers who were struggling, but insisted banks should ultimately be the ones responsible to pay for it, particularly when they had settled with the government to do so. However, the Congressional hearing was later postponed because there wasn’t enough time.
If you’re battling foreclosure in Miami or the surrounding areas contact Bruce Jacobs & Associates for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.