When they agreed to pay $25 billion to make their mortgage-servicing problems with, well, everyone, it apparently did not occur to the big banks that they’d be expected to live up to all of the other things they agreed to do. I mean, is not $25 billion enough for you people? Read more »
Banks Not Exactly Living Up To Terms Of Mortgage Settlement No Reason To Think That Said Settlement Isn’t Working, Settlement Authors SayBy Jon Shazar
It seems that a few boutique mortgage lenders are playing a little fast and loose with the rules they agreed to follow when they agreed to pay $25 billion to get the government to leave them alone. Read more »
I’m full of warm feelings today so let’s say nice things about the government and government-ish people who are trying to help the housing market. First, the national mortgage settlement people, who are a diffuse group of 49 state attorneys-general1 plus some federal regulatory people. A while back they got mad at some banks that serviced mortgages, because the “service” those banks provided included a whole lot of foreclosing on houses with shoddy paperwork and a certain amount of foreclosing on the wrong houses, etc. So they ended up signing a settlement with some of those banks in which the banks promised to (1) do somewhat less of that and (2) fling billions of dollars at homeowners in various forms of mortgage relief more or less unrelated to the shoddy foreclosure practices.
This was a good idea! The shoddy foreclosure practices were bad, but they were not like a massive macroeconomic problem. They were mostly a paperwork problem. If you fixed the paperwork problem then you’d still have the other problem, the one where millions of people are unable to pay their high-interest-rate underwater mortgages. Flinging billions of dollars at those people addresses that problem, which strikes many people as more important than the paperwork.
So the other day Bank of America, one of the banks that signed the settlement, announced that it is making good progress at flinging out that money, which is nice! Except there is an amusing / amusingly evil footnote to that, which is: they are mostly flinging out other people’s money. This is less nice! Here is the FT: Read more »