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The attorneys general of all fifty states banded together last October to form a united front in the investigation into widespread foreclosure fraud in this country.  Now, their efforts are being made public, as it’s being announced that proposals are in place and that settlements with these big banks and mortgage servicers could be finalized in a few months.

The Devil is in the Details — Here’s the Paperwork so Far

There’s a 27 page settlement document that has been released to the public (read it here), designed to give everyone great comfort that justice is being done — justice for homeowners across the country who were manhandled by these fraudulent and egregious banking practices.   Tom Miller, the figurehead for the Attorneys General as a whole in their Foreclosure Fraud investigation, has released the initial terms of a deal that he’s made as the Iowa Attorney General.

The Attorneys General are hoping to have all this mess cleared up — deals done — in a few months.  At least, that is what Mr. Miller is telling everyone.

Where’s the Full Fledged Investigation?

The coalition of state attorneys general has only been in place for six months.  Many believe that there is no way that any serious investigating into the bad acts involved in foreclosures across the country could possibly have been done, and done right, in such a short period of time.  However, Gretchen Morgenson of the New York Times reports that a spokesman for Mr. Miller summarily dismissed this concern with the retort that the Attorneys General have had to deal with ForeclosureGate issues for over 3.5 years and they know what the issues are that need to be resolved.

Problem is that this pooh-poohing of a detailed investigation into what these banks have been doing and trying to solve ForeclosureGate with a broad brush doesn’t set well with lots of folk.  Including Morgenson, who points out that it’s one thing for the banks to have to defend against “talking points,” and another for the financial institution to defend against specific fact patterns.  Big difference.

Morgenson points to the lawsuits filed by Arizona and Nevada against the Bank of America based upon violations of state consumer fraud statutes.  Both lawsuits involved extensive investigations, and the pleadings were based upon, in part, 250 different consumer complaints.  Arizona and Nevada went ahead and filed these lawsuits regardless of the Coalition’s activities, much to the distress of Bank of America.

The Nevada lawsuit is currently pending as Nevada v. Bank of America before the Eighth Judicial District Court of Clark County, Nevada.  The Arizona lawsuit is pending in a Phoenix as Arizona v Bank of America, cause number CV2010- 33580, before Arizona’s Maricopa County Superior Court.

One could argue that all the states should have similar lawsuits in place.  But they don’t.

Show Us the Money

Another problem with the deal – there’s no dollars and cents coming out of the pockets of the banks referenced so far. Rumors are of $20 billion being collected by the band of Attorneys General, but so far that has not been reflected in the actual documentation that has been provided.

Meanwhile, while the Nevada lawsuit seeks an unspecified damages, and the Arizona lawsuit asks that Bank of America pay up to $25,000 for each violation of the loan agreement along with up to $10,000 for each violation of the state’s consumer fraud law.

Now, that’s money we can understand.  Specifics are good.

Banks Helped – Removal of Priorities in Liens; No Help for Homeowners  – Ignoring Their Legal Fees

The proposed deal helps banks because it would treat first and subsequent mortgages equally, turning upside down centuries-old law requiring creditors at the head of the line to be paid before second liens. Most second mortgages are owned by the nation’s largest banks; many of the firsts are held by investors in MBS (mortgage-backed securities). The banks want the first mortgages to be wiped out, leaving the second liens in tact, or at least for them both to share the pain equally.

The problem for homeowners is that they aren’t being reimbursed for their legal expenses incurred in fighting the Foreclosure Fraud or wrongdoing.  These expenses can amount to thousands of dollars, and there’s no mention of justice here in any of the proposed deals with the Attorney Generals.

Jail? Not Happening.

And, in the midst of all this, if you are wondering about who is going to face prison time because of all this — well, doesn’t look like anyone is.  No jail time in the deal.  For more here on how all this financial evildoing is going unchecked, check out Matt Tiabbi’s article in the Rolling Stone, entitled “Why isn’t Wall Street in Jail.”

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