The end of the year is a time to review the year that just was. If, like me, you write about the financial services industry, this means you tend to find yourself drinking heavily and/or upping your blood-pressure medication as you total the year’s supply of vile shenanigans unleashed on innocent financial consumers.
Instead, I choose to vent my wrath in the annual Funny Money Piggy Banker Awards or, for short, “The Piggies.” These awards honor the most swinish, selfish and greedily pig-headed anti-consumer practices by banks, credit card firms and other lenders, along with their bought-and-paid-for legislative protectors.
Usually, it’s a depressing litany of jacked-up fees, sleazy hidden surcharges, frustrating customer non-service, and the many underhanded tricks bankster swine use to rig the U.S. financial system so they can steal your money. We have many deserving candidates among the undeserving hucksters, but this year, one segment has completely out-soiled the rest. So here we go with the 2013 Piggies: Mortgage Bankers Special Edition.
The mortgage bomb
In case you missed it, during the housing boom mortgage bankers (and their porcine brethren in investment banks) sold a bunch of gullible consumers mortgages they couldn’t afford. The banksters knew this, but didn’t care, because they pushed the lousy loans onto investors. Everybody figured someone else would get stuck paying the bill.
That someone was us. And the world economy, which was hit with the worst economic downturn since the Great Depression. Four years after the official end of the recession in the U.S., we still had 10.9 million workers out of a job during November, including more than 4 million who’d gone without a paycheck for more than six months.
Thanks to the recession they didn’t create, millions of innocent homeowners with completely decent, affordable home loans lost their jobs, then lost their homes to foreclosure. The do-nothing Obama administration trotted out a sham foreclosure prevention program that, according to a warning in 2010 from a special inspector general, actually created new foreclosures.
Foreclosure + misery = profit
The reason was that banks figured out that their mortgage servicing departments made more money on foreclosures than by preventing them. Yes, even though bankers are quick to claim, “We don’t want to foreclose,” they were lying, which we should have known, because their lips were moving. Nonetheless, five huge banks — Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo — agreed to pay $26 billion in fines in a 2012 deal over foreclosure abuses with nearly every state plus the Justice Department.
That came on top of a previous settlement with 13 mortgage servicers that called for reviewing more than half a million botched or illegal foreclosures in 2009 and 2010. After two years of review, by the way, consultants got $2 billion and homeowners got nothing. So another deal was hatched to send $3.6 billion to the wronged borrowers earlier this year.
So, now everything is cool?
Of course not.
That $3.6 billion deal? The first round of checks issued for “relief” bounced. Then, in May, the consulting company issuing the checks short-changed more than 100,000 victims. And the kicker: 568,476 borrowers got just $300 each.
That’s right. Under neither deal did wrongly foreclosed homeowners get back their homes, or the value of their lost homes plus damages. In the bigger national deal, nearly all of the money went to help future foreclosed homeowners, veterans and to repay states for their investigation. And the banksters get to write off almost all of it on their corporate taxes.
But at least they’ve mended their ways, learned their lessons and handle foreclosures properly now, right?
Still feeding at the trough
In October, New York state sued Wells Fargo, saying it wasn’t adhering to the terms of the settlement, and threatened to sue Bank of America, until the bank — once again — agreed to stop violating the agreement. In December, the office overseeing the national mortgage settlement reported that more than half of the banks involved — Citibank, Bank of America and JPMorgan Chase — were still failing to treat troubled borrowers fairly.
And if you thought that $26 billion would be enough to scare other mortgage servicers straight, think again. Also this month, the Consumer Financial Protection Bureau, 49 states and the District of Columbia ordered $2 billion in penalties against the largest nonbank mortgage servicer in the country, Ocwen Financial Corp. Ocwen must also refund $125 million to more than 180,000 wrongly foreclosed homeowners.
According to Ocwen’s most recent financial filing, that $125 million refund equals about six weeks of what the company collects just in loan servicing fees.
By the way, banks are subject to fines of up to $5 million if they fail tests under the foreclosure settlement. None have been fined to date. So if your hear those mortgage banksters squealing, remember that it’s not from any real pain inflicted by our legal system or our elected representatives. It’s from delight.
From The Detroit News: http://www.detroitnews.com/article/20131230/BIZ01/312300026#ixzz2p7QmzglN