Thursday, October 06, 2011

Attorneys General Settlement: The Next Big Bank Bailout? | Matt Taibbi | Rolling Stone

Attorneys General Settlement: The Next Big Bank Bailout? | Matt Taibbi | Rolling Stone
In fact, any federal foreclosure settlement along the lines of what’s been proposed will amount to a last round of post-2008-crisis bailouts. I talked to one foreclosure activist over the weekend who put it this way: “[The AG settlement] will be a bigger bailout than TARP.”
I have been reading up on foreclosure abuse recently and spent yesterday morning talking with some attorneys who do a lot of work with people who have been victimized by these sleazy practices. There are so many scams going on that you can't keep track of them. Remember all those fly-by-night subprime mortgage companies that went out of business? They sent out zillions of colorful postcards offering all these great mortgages, with no down payment, teaser rates, negative amortization loans, selling subprime mortgages to people who would have qualified for conventional ones, and getting paid by the bank for doing it, and so forth? Well, guess what? Lots of them have a new gig and are sending out zillions of new postcards. They have re-emerged from the sewer as "mortgage rescue" companies. That's right. After sticking people with exploding mortgages that were bound to explode in their faces, now they offer their services as the folks who will save you from the consequences of those very same toxic deals. The first round of these scams involved the mortgage rescue artist finding an "investor" who will help you out. But the investor is really one of their cronies who will get title to your house and then lease it back to you while you get back on your feet. But in the meantime the rescuer and the investor will strip any equity out of the house and stick you with payments so high that you will never be able to get your house back. They have other scams for owner who don't have any equity to strip, mainly involving a lot of up-front attorney fees that skirt the prohibition on taking up-front mortgage rescue fees and then producing nothing.

Fannie Mae knew that mortgage foreclosure fraud was being committed by their own retained attorney network as early as 2003 and did nothing about it. Read the report from the Inspector General.

1 comment:

Cynthia said...

Dr. McKenzie,
Your readers might find this link and info from a Washington Post article written by Eliot Spitzer enlightening.

Excerpt from the article:
"And when the attorneys general of all 50 states sought to investigate subprime lending, believing that some lending practices might be toxic, we were blocked by a coalition of the major banks and the Bush administration, which invoked a rarely used statute to preempt the states' ability to probe. The administration claimed that it had the situation under control and that our inquiry was unnecessary."