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JUDGE RAKOFF APPROVES SETTLEMENT
EDITOR’S COMMENT: SINCE JUDGE RAKOFF APPROVED THE SETTLEMENT, WE CAN ONLY ASSUME THAT THE NUMBERS WERE MORE IN LINE WITH WHAT WAS APPROPRIATE. But on the other hand, here you have payment from BOA to the actual creditors who advanced money for the funding of mortgages. They are getting $315 million. Why isn’t anyone asking how that affects the balances due to those creditors?
What if that payment completely resolves the outstanding balance of Joe Smith, the plumber who was foreclosed for not making payments that, it turns out, were indeed to be paid by third parties because of the faulty procedures and representations made by Merrill Lynch and the mortgage aggregators and of course the mortgage originators and mortgage brokers?
What happens to Joe’s house, now that the creditor has received payment in full? What happens to Joe’s house if the creditor received partial payment in addition to the foreclosure? Why is there no accounting to Joe, besides the 1099-A often issued to people who were foreclosed? Is this tax fraud?
You can’t pick up one end of the stick and not pick up the other. You can’t pay the creditor off, even in part, without reducing the balance owed by the debtor. This simple fact is being ignored, along with dozens of other accounting and legal issues that go with them. Will the attempt be made to categorize this as unspecified damages that have nothing to do with the balance owed to the creditor? Who is going to believe that?
And THAT is why you need the COMBO and loan level accounting together with perhaps even further research to determine if the creditor has received or agents of the creditor has received payments that should be taken into account, along with payments from the “debtor” whose debt may well have been paid off completely at closing. If so, then there was no mortgage encumbrance that should have attached to the land. The parties who were losing money on the deal had separate contracts with third parties and eventually they are getting paid even as millions of homes are being foreclosed for the SAME DEBT.
Don’t be intimidated. It is just arithmetic.
SEE FULL ARTICLE FROM ASSOCIATED PRESS.
NEW YORK (AP) — Bank of America agreed to pay $315 million to settle claims by investors that they were misled about mortgage-backed investments sold by its Merrill Lynch unit.
The settlement was disclosed in court papers filed late Monday in U.S. District Court in Manhattan and requires the approval of a judge.
The class action lawsuit was led by the Public Employees’ Retirement System of Mississippi pension fund. The fund claimed that the investments were backed by poor quality mortgages written by subprime lenders Countrywide Financial Corp., First Franklin Financial, and IndyMac Bancorp, a bank that failed in 2008.
The settlement represents another attempt by Charlotte, N.C.-based Bank of America Corp. to put its legal issues behind it. In the first half of the year alone the bank put up $12.7 billion to settle similar claims from different groups of investors.
U.S. District Judge Jed Rakoff has to approve the settlement, something that could prove difficult since the settlement includes no admission of guilt from Bank of America.
Just last week, Rakoff struck down a $285 million settlement that Citigroup Inc. reached with the Securities and Exchange Commission. The settlement would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors.
Rakoff said the public has a right to know what happens in cases that touch on “the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives.” In such cases, the SEC has a responsibility to ensure that the truth emerges, he wrote.
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