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Governor Jerry Brown Turns Robber Baron with Foreclosure Settlement
A few months ago, the State of California agreed to participate in settlement with the nation’s five largest home lenders over their foreclosure procedures. California Attorney General Kamala Harris had walked away from the settlement discussions several months earlier. She only agreed to return to them when the banks agreed to pay more money to California residents who had been impacted by their procedures. In the final agreement, the banks agreed to allocate $410 million which was to be used to compensate those who lost their homes through foreclosures that used illegal procedures. But now Gov. Brown has decided that he wants to use that money for other purposes. Specifically, to plug some holes in the state’s $16 Billion deficit.
California was key to the bank settlement. The state has the largest overall number Read the rest of this entry »
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Foreclosures Likely to Rise as Direct Result of State Settlement with Banks
It is no small irony that this past week’s announcement of a settlement between the nation’s five largest lenders and 49 states is actually expected to cause a spike in foreclosure activity. The settlement negotiations directly involved the procedures that banks use when foreclosing. But now that those talks are done, and an agreement has been reached, these same banks now feel that they are on firm legal footing to proceed with many foreclosures that they had held off on. The end result is likely to be a big increase in the number of foreclosures in California in the coming few months.
The banks involved in the negotiations had been reluctant to foreclose on properties because any increase in foreclosure activity was likely to bring added Read the rest of this entry »
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Will Settlement Between States and Nations Five Largest Banks over Bad Mortgages Amount to Another Bank Bailout?
For some time now, there have been talks going on between the 50 state Attorneys General and the nation’s five largest banks. Those discussions have involved the issue of robosigning, violation of state real estate laws in foreclosures and costs to the states and to individual borrowers. Last year, both Nevada and California walked away from the talks to pursue their own legal remedies. The feeling was that group settlement that the talks would produce would not be in their best interest.
For some time now, the states that have continued in the talks and the federal government have been saying that a deal is close. Now there is a rumor Read the rest of this entry »
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California Attorney General Sues Fannie Freddie over Foreclosures
California’s Attorney General, Kamala Harris, has filed suit against Fannie Mae and Freddie Mac. She is accusing both companies of hindering her investigation into certain foreclosure practices used within the state.
The suite is an outgrowth of an investigation into foreclosure procedures used by the five largest US banks. A number of lenders have been accused of using foreclosure procedures that are illegal here and in most other states.
California was originally involved in settlement talks with the banks and all other states. Harris withdrew the state from those talks last year because she didn’t believe that California would receive adequate compensation in any settlement. She was also dissatisfied with the fact the banks were asking for immunity from further suits before agreeing to a settlement.
In the suits filed against Fannie and Freddie, Harris is trying to find out if there is any drug dealing or prostitution that takes place in homes that the companies now own. I’m guessing that the answer to those questions is “yes”. I’ve actually had to stand outside a home, waiting to go in for an inspection, while the police arrested squatters in the house on felony drug charges. I’m not sure that the house I’m talking about was a Fannie Mae or Freddie Mac mortgage, but since they own roughly 60% of the foreclosed mortgages in the state, there is a fair chance that one of the companies owned that one.
Harris is also trying to determine if military families have been illegally foreclosed on, and if taxes are being paid on the properties now owned by companies.
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Courts Nationwide Getting More Involved in Foreclosures
Two more court cases have cropped up that are likely to have an impact here in California. One involves the 7th Circuit Court of Appeals reviving a Truth in Lending Act case against Bank of America. I wrote about this case earlier today and you can find the article here. The second case is taking place in Florida. As with cases taking place in Massetchusetts, the Florida case involves the practice of robosigning. What makes this case unusual is that even though the parties actually settled the case and asked the court to drop it, the Florida State Supreme Court has decided that the litigation needs to move forward. And the outcome could be very bad news for lenders nationwide.
According to an article in the St. Augustine Record, a sharply divided State Supreme Court is going to force the parties to the lawsuit to litigate, even though both sides want to drop the case. The 4 to 3 ruling involves a case agains Melon Bank in which the homeowner accused the bank of illegally backdating documents. When the initial suit was filed, the bank stopped its foreclosure proceedings and settled.
The Fourth District Court of Appeal, ruled in favor of BNY Mellon’s motion to dismiss, but asked the state Supreme Court to review the case because “many, many mortgage foreclosures appear tainted with suspect documents.”
In a group opinion, the majority on Thursday ruled that the issue was too important to allow it to be dropped, agreeing with the 4th DCA that the case, “may dramatically affect the mortgage foreclosure crisis in this State.”
The eventual outcome of the case could impact a significant number of foreclosures in Florida and is likely to be watched by other state court systems including California. A finding against the bank could make the purchase and sale of bank owned properties even more difficult and would likely lead to a flood of additional lawsuits against the banks.
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