Az AG Takes Aim at Secret Settlements with Homeowners

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Editor’s Comment: I’ve been telling people for years that the same banks that use ridicule and derision to characterize the arguments of homeowners who defend their homes — then turnaround and enter into settlements that are sealed with confidentiality (as usual they don’t call them that, they instead use the term “non-disparagement clauses” —- but only after there is a real risk that the Bank will need to show the actual transactions through which they claim to have the right to foreclose. Those transactions do not exist. And it is has taken a long time for anyone, much less a majority of people in the justice system, to realize that fact.

Most people who heard me say that thought that I was exaggerating or even making it up. So now it is somewhat comforting to have it recognized by an attorney general and to have him inquire. The promise of confidentiality has teeth. breach it, and the Bank says they own your property and you have waived all defenses.

Now the Arizona Attorney General is taking the position that these sealed settlements represent areas of inquiry that should be open for his continuing investigation into the misbehavior of the banks (a euphemism for criminal acts). He’s probably right, although the chilling effect on those settlements is bound to cause a stir.

It is challenging to quantify, but it would appear that such settlements from all the major players number in the tens of thousands now. The point being made by the Az Attorney general, I think, is that if the there was no case there should have been no foreclosure and everyone should be given the same treatment.

From my sources, who must remain anonymous for obvious reasons, the settlements generally look like this: 40%-75% correction of principal on the loan, forgiveness of all missed payments including taxes, payment of attorney fees and sometimes payment of damages. The new loan, which is adjusted on the unrecorded note is set at 2-3% interest with 30-40 year amortization.

While this is irresistible to many homeowners who are weary from fighting the bank, it still leaves them with a title problem down the road when they seek to sell or refinance — because the very reason the Bank is settling is the same reason why they have no actual authority to settle or satisfy the mortgage once it is deemed paid in full. Thus it is important in those settlements to get a court order quieting title at the time of settlement because if you wait, the players may vanish into oblivion.

Worse yet, the AG could take the position that the settlement was collusion to continue corrupting the title registry in each of the counties of the state.

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as the nation focuses on the proposed foreclosure settlement, Arizona’s attorney general takes aim at the mortgage modification practices of Bank of America. Bloomberg Businessweek reports the bank negotiated at least 12 secret settlements with borrowers that include nondispargement clauses. Arizona AG Thomas Horne asked a judge to block the nondisparagement clauses. Bank attorneys deny the settlements have hindered the AG’s probe. The AG investigation is part of a 2010 lawsuit against the bank, and a court hearing is set for Feb. 1.

Tags: bankruptcy, BOA, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, nondisparagement clause, quiet title, rescission, RESPA, securitization, Thomas Horne, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |