Labor and community groups call for action as mortgage fraud settlement nears
Take action, says Working America, the AFL-CIO affiliated community group in response to reports that the Justice Department is nearing an agreement with several banks responsible for ripping off home owners by mortgage fraud.
The banks, including JPMorgan Chase, Bank of America Corp, Wells Fargo, Citigroup and Ally Financial, were responsible for overcharging literally millions of homeowners, many of whom lost their homes.
The Justice Department investigation began when it was revealed that banks, in a rush to maximize profits, were involved in "robo-signing," that is, signing mortgage papers en masse without proper review.
To date, close to 8 million families have lost their home since the crisis began when working families were unable pay back sub-prime loans. With rising unemployment the mortgage crisis quickly spread to standard loans.
Reuters reports that "In exchange for between $20 billion to $25 billion in relief to distressed homeowners, the banks will put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing the loans."
The proposed settlement however may amount to just a pittance of what is actually owed consumers. For this reason, California's attorney general, Kamala Harris in October left negotiations with her counterparts "aimed at reaching a broad settlement over their mortgage practices," characterizing bank proposals as "insufficient" and "inadequate" in bringing relief to Californians "equal to the pain California experienced." Attorney Generals from all 50 states had joined together to demand compensation from the banks.
Harris said "too few Californians would be allowed to stay in their homes."
With an agreement near, the Justice Department is now approaching smaller banks to see if they will follow suit. "The DOJ has contacted several nationally chartered banks to determine whether they might agree to terms similar to those in the proposed deal," says Reuters.
Working America is calling for letters to be written to state attorney generals demanding real relief instead of a symbolic fine. The online letter can be signed here.
In a separate but related case, Bank of America recently agreed to pay a record $335 million settlement on behalf of its Countrywide financial unit for steering Black and Latino homeowners toward sub-prime loans.
Countrywide was the one of the architects of the sub-prime swindle. No banking officials have faced criminal prosecution for fraud.
Earlier the affected banks had entered into a much-criticized consent decree to compensate victims.
Photo: Occupy Atlanta march on Bank of America, Nov. 11, 2011. CC by 2.0