Foreclosure Sellout Settlement Update

Well, over 40 states have signed onto the deal, but the biggies, New York, California, Nevada (highest foreclosure rate in the nation), and Delaware (all the banks are covered by Delaware law, and Beau Biden is Joe's kid), are not (yet) a part of this deal, so the "deadline" has been pushed back two weeks.

We know the deal is bad.

We know that it's a sellout because:

• There has been no meaningful fact finding about wrong doing, so the deal is more like the selling of indulgences, because the only ones who know just how evil things got are the banks.
• We also know that it's a sell out because, "Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. made a last-minute demand that New York drop claims filed against them Feb. 3." which implies that they don't want even that small rock (MERS) uncovered.
• The holders of mortgage backed securities (MBS) are opposing the deal, because it allows the banks to fob off all the write-downs on them, and the banks will always spend other people's money, or as Yves Smith puts it, "the money in the end comes out of pension funds and 401(k)s."
• The deal is structure with a rather odd provision that, "states signing a nationwide accord on foreclosures will be entitled to improved terms won later by states that opt out," which makes any separate settlement prohibitively expensive for the banks.

That being said, the fact that this deal is pitting one part of Wall Street against the other, with, asset management group of SIFMA frantically lobbying negotiators for a better deal,  is a welcome development.

We also have the fact that the deal  favors 2^nd mortgages, generally held by the banks, would be favored over 1^st mortgages, which the judge who has to approve the deal might see as an illegal taking.

FWIW, if any of the biggies move, it will be California first, because (when current Governor Jerry Brown when he was AG, thanks Governor Moonbeam) they already cut a deal with Bank of America/Countrywide, the largest mortgage lender in the state, which eliminated most pre-2008 liability, so they have the least to gain from holding out.