Corporate Crime: A Love Story
With fewer than 6 weeks until Valentine's Day, leave it to federal regulators to bend the rules for their beloved bankers and give them their gift early. In the greatest "forget-me-not" in history, the bankers, who most agree caused the global financial meltdown and pocketed trillions of dollars in the process have been told, by regulators, to pay back $8.5 billion of it.
Now, before you start thinking that's a lot of money, remember there are 4.4 million homeowners currently either in danger of losing their homes or who have already lost them to unscrupulous, and often illegal practices. That equates to a little over $2,000 per home. Not much for people who have lost everything. According to Gretchen Morgenson, financial writer for the New York Times, "It’s not clear which borrowers will receive what money, but divvying up $3.75 billion among millions of people doesn’t amount to much per person. If, say, half of the 4.4 million borrowers were subject to foreclosure abuses, they would each receive less than $2,000, on average. If 10 percent of the 4.4 million were harmed, each would get roughly $8,500." Regulators originally called for $15,000 and the reversal of foreclosure for those who had gone through foreclosure while undergoing review for a loan modification (which is called "dual-tracking" and illegal in most states) and $125,000 for those who had already lost their houses and could not get them back. If they had stuck to that plan, it would have called for, instead of $8.5 billion paid back, something like $75 billion.
So the banks don't have to outline who, exactly, will be getting this money and they are paying only a small fraction of what regulators told Americans would be required.
Further she writes, "Another problem is that the money will be doled out to wronged borrowers based on work done by consultants hired by the banks responsible for the improprieties. How can their findings be trusted? What’s more, the reviews’ conclusions about harm are based on the servicers’ side of the story, not homeowners’."
So, the banks themselves get to choose who qualifies and who does not and how much those homeowners should get. To add insult to injury, if the homeowner left the home while owing money to the bank, the bank can use the borrower's request for compensation to hit them with a bill...and make a little more cash on the deal. It's the gift that, literally, keeps on giving.
Finally, an estimated 233,000 homeowners may never even receive notice that this program exists, much less how it works and how to apply.
And of course, this final review of the banks will draw the federal scrutiny of their practices to a close. It's the goodnight kiss for millions of foreclosed and underwater homeowners.
There hasn't been a more tragic lovestory written since two star cross'd lovers took their own lives...and this one isn't fiction.