Unfortunately, probably not. Government
officials filed papers Monday, March 12 asking the federal court supervising
the litigation to approve a $26 billion settlement worked out between Bank of
America, JP Morgan Chase, Wells Fargo, Ally Financial and Citigroup on the one
side, and forty nine state governments on the other side. Oklahoma, the 50th
state, made a separate deal. More banks are expecte to join in the settlement
terms if the court approves them.
Documents supporting approval of
the settlement include employee reviews at Bank of America reflecting company
requirements for employees processing foreclosure paperwork to process 49
affidavits per hour, and 51 mortgage assignments per hour. That means reviewing, correcting and signing almost
one court document per minute. A review of chase paperwork reflected that only
12% of foreclosure filings actually documented the amount allegedly owed by the
homeowner, and only about 3% of the foreclosure complaaints were accurate in
respect of the amount claimed to be owed. A Wells Fargo E-mail told employees
to expect 100 affidavits delivered at 9 a.m., and they must all be signed by
noon the same day. This would mean reviewing and signing the documents at the
rate of one every two minutes without a break of any sort for three hours.
One employee at Ally signed up to 10,000 affidavits in
support of foreclosure litigation each month – or a rate of one every 64
seconds during an 8 hour work day, with no time for breaks.
Of the $26 billion, $2.5 billion will go to state
governments, including Wisconsin and Missouri, which have already announced
their intention to divert settlement funds for reduction of general state
budget shortfalls rather than using them to help struggling hoimeowners to
avoid foreclosures. Three quarters of a million homeowners who already lost
their houses in foreclosures will receive about $2,000 each in compensation –
accounting for the next $1.5 billion. Up to $17 billion will go toward
reduction of mortgage balances on homes which are underwater in today’s depressed
real property market. Another large chunk will pay more than $100,000.00 each
to active duty military servicemen and women whose homes were foreclosed in
violation of the Soldiers and Sailors Civil Relief Act.
Even the state officials who negotiated the deal
acknowledge that it won’t do much to relieve the glut of foreclosed homes
depressing the housing market, because the total depth of the underwater
housing phenomenon could reach a staggering $750 billion. Even if the number of
participating banks increases to the anticipated total of 14, and the value of
the settlement goes up to the predicted level of $30 billion, it’s just a 4%
drop in the bucket.
It could take years for the residential real property
market to clear the inventory of foreclosed and to be foreclosed houses, so new
home construction might resume some semblance of its former healthy pace.
