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July 28, 2014

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Critics call foreclosure settlement ‘a slap in the face’ to affected Nevadans

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Christopher DeVargas

A home sits foreclosed and unoccupied in the 4500 block of E Sun Valley Drive, Thursday Dec. 15, 2011. A group of organizations and individuals are rallying together to put pressure on the Obama Administration to reject the 50 state settlement with Wall Street banks.

Catherine Cortez Masto

Catherine Cortez Masto

At first glance, Nevada’s $1.5 billion settlement with banks over mortgage servicing and foreclosure problems seems like a lot of money.

But for the consumers and their attorneys most affected, the deals announced Thursday are woefully inadequate.

“It’s a slap in the face,” said North Las Vegas resident Nina Griffin, who says her home faces a wrongful foreclosure involving Bank of America subsidiary Countrywide.

It’s wrongful, she says, in that it involves blatant document robosigning fraud and broken promises to her — something she brought to the attention of Nevada’s attorney general and other regulators. So far, she said, they haven’t been of much help.

Griffin, a 51-year-old federal employee, said she was troubled the settlements included a provision calling for banks to pay about $2,000 to each person who lost a home in a foreclosure tainted by robosigning issues and other problems.

That’s a small amount of money considering Griffin has seen her credit ruined and faces continuing struggles to hold on to her home.

Also troubling to Griffin are indications banks may make principal reductions in mortgages in the tens of thousands of dollar range, which won’t help her since her home is valued at $85,000 to $90,000 but is encumbered by a $256,000 mortgage.

Las Vegas attorney Matthew Callister, who regularly sues banks in hopes of helping homeowners trying to stay in their homes, also called the settlements a “slap in the face.”

“It’s not a settlement, it’s a sellout,” said Callister, who believes banks find it more profitable to foreclose than to help homeowners. “It doesn’t help anyone who needs substantial reductions in principal.”

Callister said the need for principal reductions is acute in Nevada, which has seen home prices tumble during the recession. With high levels of unemployment (12.7 percent in Las Vegas currently) and residents in some cases seeing their work hours cut, many Nevadans feel the only way they can stay in their homes is with lower payments that match their lower home values.

CoreLogic, a data provider in Santa Ana, Calif., reports that Nevada homeowners are underwater to the tune of $10.3 billion — that is the $112 billion in residential mortgage debt in the state backs properties worth only about $101 billion.

Nevertheless, government officials who announced the settlements on Thursday made the point that the deals they made with the banks were likely the best they could accomplish given the costs and risks of litigating against them in court.

Under a national settlement valued at $25 to $40 billion with five banks — Ally/GMAC; Bank of America, Citi, JPMorgan Chase and Wells Fargo — and a separate Nevada settlement with Bank of America, Nevada expects to receive some $1.5 billion in benefits.

These include Bank of America setting aside $750 million for principal reduction and short sales — part of $1.3 billion in benefits from all five banks for loan modifications and other relief.

Nevada borrowers who suffered loan servicing abuse and lost their homes to foreclosure will qualify for $57 million in cash payments to borrowers, the attorney general’s office said.

“We are continuing our criminal prosecutions and civil investigations of the foreclosure crisis. After careful deliberation, and negotiation with our federal partners and banks, and critical feedback from Nevadans including constituents, elected officials, and community leaders, I decided it was in the state’s best interest to opt into the national foreclosure settlement,” Nevada Attorney General Catherine Cortez Masto said in a statement. “This settlement represents a step in the right direction. Nevada did well.”

The settlements do not prohibit Nevada from continuing to pursue criminal actions against the banks, she said.

“The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five (loan) servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases,” the attorney general’s office said.

Masto said the separate settlement with Bank of America includes new servicing standards that “stop many past foreclosure abuses including improper documentation and lost paperwork through new mortgage servicing standards, requires strict oversight of foreclosure processing, mandates that mortgages servicers will have to evaluate homeowners for other loan mitigation options before foreclosures, restricts banks from foreclosing while the homeowner is being considered for a loan modification and creates a single point of contact for borrowers seeking information about their loans and adequate staff to handle calls.”

In 2010, Masto sued Bank of America, charging it had violated an earlier settlement involving Countrywide because of a poorly-run foreclosure operation in which homeowners were led to believe they would receive loan modifications and then were foreclosed on anyway — charges denied by the bank.

Officials on Thursday said that because of the complexities of the mortgage market, and the three-year-timeline for carrying out the national settlement, borrowers won’t immediately know if they’re eligible for help under the deals.

More details are available by clicking here.

Bank of America, which services and owns mortgages, said in a statement that among the provisions in the national settlement is one aimed at helping underwater homeowners.

“On mortgages that Bank of America owns, the company would expand refinancing opportunities or lower interest rates to provide reduced payments for many homeowners who are current on their payments but owe more than the current value of their homes,” the bank said.

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  1. Ms. Griffin,

    You are a federal employee that still has a job and chances are making more then you were when you agreed to the loan that is now $256,000.

    Why are you not able to pay for your home and why should the bank not expect you to pay the loan you agreed to?

    There are unemployed people that could use a hand to keep their homes. Those that just don't want to pay what they agreed to but can should not expect or receive anything from the banks or the taxpayers.

  2. Mr. Steve Green, could you please find out and tell us one thing, was Nina Griffin current on her mortgage or not and what are the " broken promises to her"? Did she in fact fulfill her duty as per the promissory note she signed when the bank loaned her the money to purchase the home?

    I see this as a slap in the face to those who have paid their debt, those who did not take on extra debt, those who paid cash for their homes. All these people have real losses that are not being taken care of, all this money should go to them, not the ones who walked away from the responsibility. There should be no writedown of anyone's mortgage unless everyone who owns a home gets the same deal. Write down Joe's from 200k to 175k, send Frank a check for $25k because he paid cash for his home and has no mortgage. This would be the fair deal. What the heck happens in 10 years when prices are higher? These people sell for a profit who gets that? You walk from a home, free rent for a year, get 2000 bucks, buy a home owner finance and in 10 years sell and make 50k? It can and will happen. Does the bank get paid back on that old house? NO. There is no accountability in this deal at all.

  3. The $1.5B is a slap in itself. Nevada leads the nation in foreclosures and drop in equity, yet California got $18B in relief. Thanks, Harry! Now we know where Harry has most of his land.

    The people who need the most help are those who made a regular down payment, on a conventional loan, haven't used their house as an ATM, and have had cutbacks in pay. In other words, responsible people who have been screwed by everyone else.

    This bill does almost nothing for them, unless they can get a small reduction in principal.

    Maybe those people can find a legal ground to sue if it can be shown that people responsible for the home values to decrease knew that was a strong possibility and did what they did anyway. At least then there might be a case for fraud or theft in civil court.

  4. "On mortgages that Bank of America owns..."

    That's the problem, BofA sends out reams of unsigned form letters claiming to own mortgages, but when pressed by standards imposed by actual Nevada law, they can't prove it. As I've posted before, I know a retired couple who started last summer on that path with BofA. Now, six months and 7 separate entities later, turns out BofA doesn't "own the loan," Fannie Mae claims to, yet neither one can prove it. The point is a good paper trail was made asking the simple questions of "where's our Note? Who's the Note Holder?" Not one of those 7 entities, including BofA and Fannie Mae, can answer them.

    This goes complete against our Supreme Court's decision last July in Leyva v. National Default Servicing Corp.: "The obligor on the note has the right to know the identity of the entity that is entitled to enforce the mortgage note under Article 3, see NRS 104.3301, [o]therwise, the [homeowner] may pay funds to a stranger in the case."

    "Did she in fact fulfill her duty as per the promissory note she signed when the bank loaned her the money to purchase the home?"

    petef -- you seem to be acting like the banks, skipping over the threshold point, is that bank the genuine note holder? Particularly in Countrywide to BofA cases, one can pretty much count on that being a no. See the example above.

    "This piece of legislation rewards those who are the most irresponsible."

    vegasbike -- try to keep up. This was a settlement all 50 state attorneys general have been working on since October 2010. The legislatures have nothing to do with it, except being anxious to get their hands on the funds.

    "...please tell me what you as residents of this community think is a better solution to the foreclosure crisis that our state is facing."

    eatmyd -- that would be doing what the couple did above, using common self-help remedies found in Nevada law to smoke out the culprits. Every homeowner should do what they did -- demand the same answers to "where's my Note? Who's the Note Holder?" Creating that kind of paper trail really isn't hard to do. And it's sure better than wringing one's hands waiting for the government to save them or the banks to relent.

    "The $1.5B is a slap in itself. Nevada leads the nation in foreclosures and drop in equity, yet California got $18B in relief. Thanks, Harry!"

    boftx -- another good point.

    "If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"

  5. KillerB Hate the bank all you want but anyone who does not pay their mortgage has brought on the foreclosure by themselves. These loans are all transferable per the loan docs signed. Every single person had the option to prevent the foreclosure. If there is a technicality so be it but these deadbeat homeowners who walked away do not deserve to be paid for it!

  6. "Hate the bank all you want but anyone who does not pay their mortgage has brought on the foreclosure by themselves. These loans are all transferable per the loan docs signed."

    petef -- and what do the "per the loan docs signed," specifically the Note, actually say? I wager you can't post that here. I'll give you a hint -- it's the last clause in "1. Borrower's Promise to Pay," and is 90% of everything anyone needs to know about all this.

    "Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them..... in America, it's far more shameful to owe money than it is to steal it." -- an article from the November 25, 2010 issue of Rolling Stone by Matt Taibbi "Courts Helping Banks Screw Over Homeowners"

  7. I don't understand why anyone needs a principal reduction. I mean I totally get why they want it, since it means lower mortgage payments. But when the value of these homes went UP, they didn't get an INCREASE in principal. So what's with the reduction?

  8. "LMAO....$26 billion and two states (california and florida get $24 billion of it!!)"

    stopthebus -- actually the banks won't have to come up with that much. A pretty good, but hurried, look by a Harvard Law professor is @ http://www.creditslips.org/creditslips/2...

    "...I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson in his May 28, 1816, letter to John Taylor