Friday, May 20, 2011

'Toontime: Fine Print?; Who Needs Fine Print?

[credit: Steve Kelly, New Orleans Times-Picayune]

Fifty states attorney generals as well as the federal government are investigating the allegations of widespread foreclosure fraud being practiced by banks as they scramble to unwind the burst real estate bubble. The evidence of extensive and abusive practices is mounting at the United States Trustee Program, part of the US Justice Department. The mistakes and outright fraud committed by banks in the foreclosure process fall into two broad categories: the inaccurate statement of amounts borrowers owe and the charging of improper fees. Federal audits by the Department of Housing and Urban Development completed by March 2011 say the claims of the five largest mortgage companies violate the False Claims Act. HUD referred its charges to the Department of Justice.

Despite all the fraud evidence, conservative attorney generals are balking at on-going settlement negotiations, objecting to monetary fines and the use of the penalties to reduce loan amounts. Banks have offered a $5 billion settlement while the AGs have suggested $20 billion, a figure the Consumer Financial Protection Bureaus says the industry saved by taking impermissible foreclosure short cuts. Southern conservatives have called the plan to use penalties for homeowner foreclosure relief "welfare" and a "regulatory shakedown". Apparently welfare is only permitted by right wingers if the recipients are multinational corporations making billions in annual profits.