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Nevada joins states in $25 billion foreclosure abuse deal
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LAS VEGAS REVIEW-JOURNAL
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Catherine Cortez Masto
LAS VEGAS REVIEW-JOURNAL
Updated: Feb. 10, 2012 | 7:52 a.m.
Nevada, one of the states hardest hit by the collapse of the housing market, will get an estimated $1.5 billion from a $25 billion nationwide settlement over foreclosure abuses, Attorney General Catherine Cortez Masto said Thursday.
"After careful deliberation and negotiation with our federal partners and banks ... I decided it was in the state's best interest to opt into the national foreclosure settlement," Masto said in a statement. "This settlement represents a step in the right direction."
Masto had earlier balked at joining any settlement that would prevent her office from going after abusive lenders, but she said the deal struck between the states and five major banks allows "criminal prosecutions and civil investigations" of the foreclosure crisis.
In a separate but related action Thursday, Masto announced that she had settled another lawsuit against Bank of America. The settlement with the nation's second-largest bank will set aside $750 million in principal reduction and short sales in Nevada and requires the bank to suspend its foreclosure sales of any borrower eligible to participate in the multistate deal.
She said the separate deal with Bank of America will "bring in more money for Nevadans than would have been available under the multi-state settlement alone."
The $25 billion settlement is between 49 states and Bank of America, JP Morgan Chase & Co., Wells Fargo & Co., Citibank and Ally Financial. It includes $5 billion in cash for states to pay for foreclosure-prevention initiatives. Oklahoma made a separate deal with the five banks.
Some $17 billion will pay for mortgage forgiveness, forbearance, short sales and other aid to homeowners. Servicers will provide $3 billion in refinancing to lower homeowners' interest rates and will pay about $1.5 billion more to homeowners harmed by foreclosure abuses.
Nevadans who have been harmed by foreclosure abuses, such as "robosigning" of documents, can expect checks for $1,500 to $2,000.
Mortgage servicers are required to fulfill these obligations within three years, according to the U.S. Department of Justice.
Larry Murphy, owner of Sales Traq in Las Vegas, said the settlement doesn't go far enough, especially because it doesn't affect mortgages issued by Freddie Mac and Fannie Mae.
"It's an insignificant amount of money," Murphy said. "I think it's not going to do a lot for Las Vegas. "I'm surprised that (Masto) bought off on it."
He said if Nevada, California and New York had held out a little longer, they might have been able to get a better deal. Only about half of the nation's mortgages are covered by the deal, he said.
"I really don't see this as being that big of a deal," said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. "In reality, the total number of dollars is still small compared to the value of mortgages that are underwater. To some extent, the numbers reflect losses the lenders would have taken anyway."
Green said the net impact of the settlement "is probably not as large as they are saying."
If approved by a federal judge, the mortgage settlement would be the largest involving a single industry since a 1998 multistate tobacco deal. The Tobacco Masters Settlement Agreement called on tobacco companies to pay $206 billion over the first 25 years of the settlement.
Senate Majority Leader Harry Reid, D-Nev., praised Masto for her role in negotiating a settlement for Nevada.
"I'm very proud of her and confident that the work she did will bring dividends to the beleaguered housing industry in Nevada," Reid said on the Senate floor Thursday.
Masto's decision to sign the landmark mortgage settlement was popular on both sides of Nevada's political aisle.
Sen. Dean Heller, R-Nev., said he was pleased that the settlement would provide more protection and some relief to Nevada homeowners.
"No state has been hit harder by the foreclosure crisis than Nevada," Heller said in a statement. "Unfortunately, abuses by the banking industry made a bad situation worse. Actions by the banking industry helped create this housing crisis. They have an obligation to help get us out."
Rep. Joe Heck, R-Nev., said he is "happy to see that an agreement was reached. At a time when Nevada families are struggling the most to make ends meet, I have high hopes that this settlement will provide them much needed relief."
Rep. Shelley Berkley, D-Nev., was hopeful the settlement achieves its intended result for Nevada, saying, "Providing relief for responsible homeowners and holding Wall Street banks accountable for their reckless behavior."
Berkley said we must "ensure this never happens again."
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Reporter Hubble Smith contributed to this report.
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Default= Win?? The radio ads offer "credit restoration" to those who have foreclosure or short sale on their record! If so, what does that say about the FICO system? The TV ads tell people to STOP paying your mortgage (don't be a fool) etc. My gosh, those who pay their debts are mocked as fools!
how about people actually read things before they sign them from now on
Rarely have so many politicians cashed in so blatantly on so little wrong-doing. In 2010, a group of AGs led by Iowa's Tom Miller spotted political gold in reports that some bank employees had approved legal documents without proper review. They quickly spun this into the fairy tale that evil banks were kicking borrowers out of their homes for no good reason.
- - It's just more "RE-Distribution of OUR wealth" ...and the prosperity of two generations has been SPENT by this marxist admin while "fundementally changing" and redistributing ..... vote RIGHT.
smoke and mirrors... Dodd Frank bill, Fannie Mae, and teh Neighborhood re-investment act - all leftist policies created the mess... forcing banks to give loans to people that could not afford to repay - yes there are some homes lost due to the layoffs - but the large majority are loans that are in the system due to the leftist policies...and then they call it "abuses by the banking industry" , again - a small portion of what's going on - and the settlement money - it amounts to about the same as what they recieved for "BAILOUTS".... smoke & mirrors.
Vote RIGHT - let's get back to those values and principles....
I still don't understand why the Gov't failed to prosecute the banks for fraud. I’m no attorney, but I always thought the unlawful theft of valuable property was a crime in this State. I thought lying to a Judge and submitting false Court documents was the same thing. Maybe it’s just a matter of scope. If you steal enough money from enough people, it’s not a crime anymore.
Next on the banker's agenda is replacing centuries worth of real estate law with their own fraudulent MERS system.
Under Comrad Bummer and the Politburo rule for another for yrs, IF you want to know what the states would look like watch Greece on any news channel. rioting chaos, want to know 10 yrs from now under Dem- rats rules. Lybia,Egypt, Syria are fine examples.there the rich are also losing everything. awful. scary.
Principle reductions?? Really??? So, it is now okay to sign a contract and break it? In fact, it is more than okay, it is encouraged by rewarding those who do it? I still don't understand the thought process that if someone cannot afford their house, they can stay. I know bad things happen to good people, and I surely don't think people losing a house is a good thing, but things happen, you deal with it, you pull yourself up and do what you can. I have been poor...I have lived in roach infested buildings when that was all I could afford. I didn't like it but I never expected anyone else to hand me a wad of cash to make it better. It was up to me to make it better...and I did.
RealityBites:
Who do you think gets paid by the mortgage insurance companies when a mortgage defaults and is foreclosed? Not the homeowner who paid for the mortgage insurance.
Who got paid the bailout money?
Are you aware that the government pays incentives to banks to approve HAMP short sales?
Who gets the money when the foreclosed property sells?
The question is: Where aren't banks getting money? No doubt that that is where they will start looking for it next!
People who think that this is all because people bought homes they couldn't afford really don't understand the big picture.