HSBC Agrees to $470 Million Settlement Over Alleged U.S. Mortgage Abuses

About 136,000 borrowers will be compensated as a result of the settlement.

Time | February 5, 2016    Some Americans who lost their homes to foreclosure during the financial crisis will soon be eligible for relief. Today New York Attorney General Eric Schneiderman announced that the state has reached a settlement with HSBC over charges that the mortgage lender engaged in abusive foreclosures and related practices. The attorney general accused HSBC of “robo-signing” foreclosure documents and evicting people from their homes without adequate verification.

“There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices,” Schneiderman said in a statement. “The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.”  Read more here.

Falling Oil Means Rising Foreclosures in These States

Plummeting oil prices are wreaking havoc on stock markets, and they're also causing problems for some housing markets.

CNN Money | January 14, 2016   Foreclosure filings on a national level dropped to a nine-year low in 2015, but some oil-producing states weren't so lucky, according to a new report from RealtyTrac.

Foreclosures increased in Texas, Oklahoma and North Dakota last year as oil prices fell, and that can be a telling trend.

Those three states remained relatively unscathed from the 2008 housing bust, explained Daren Blomquist, vice president at RealtyTrac, which means the activity isn't due to a backlog of foreclosures left over from the crisis.

"Instead the rise in foreclosures in these states is actually a new wave of distress coming through that is mostly unrelated to the subprime loan housing crisis."

Lower oil prices have led to massive layoffs across the country, which can strain local economies with close ties to the energy sector. Read more here.

America's Foreclosure Crisis Isn't Over

CBS News |  January 26, 2016    With Goldman Sachs (GS) recently agreeing to pay $5.1 billion to settle claims related to its role in the 2008 mortgage scandal, the firm became the latest big Wall Street bank to reach a deal with the U.S. government. As part of the settlement, $1.8 billion is to be set aside for programs to help homeowners who are still trying to fend off foreclosure?

Yet nearly seven years since the Great Recession ended, the question remains: How well have these anti-foreclosure programs worked? It depends on whom you ask and where they live.

Back-stopping the nation's banking system was the top federal priority during the height of the 2008 financial crisis. But out of the $475 billion that Congress authorized for the Troubled Asset Relief Program (TARP), $46 billion was supposed to help millions of struggling families avoid foreclosure.

A subsequent 2014 settlement between prosecutors and Bank of America (BAC) netted an additional $16.6 billion, of which then-Attorney General Eric Holder said $7 billion would go to "provide relief to struggling homeowners, borrowers and communities affected by the bank's conduct."

All told, between the programs administered through the Treasury Department -- like the Home Affordable Modification Program (HAMP) -- and the pools of money committed by Wall Street banks as part of their settlements, tens of billions of dollars have been set aside to assist families facing foreclosure by modifying their mortgage terms so they can remain in their homes.  Read more here

Virginia Reaches $63 Million Pact with 11 Banks in Mortgage Bond Fraud Suit

Reuters | January 22, 2016   A group of 11 banks agreed to pay more than $63 million to settle allegations that they misled the Commonwealth of Virginia and its retirement system about residential mortgage backed-securities, Attorney General Mark R. Herring said on Friday.

The banks, which include two Bank of America Corp units , Morgan Stanley and a unit of the Royal Bank of Scotland Group PLC, defrauded the state's retirement fund by selling it shoddy mortgage bonds in the run-up to the financial crisis, Virginia's attorney general said in a 2014 lawsuit.

None of banks admitted liability in the settlement, Herring said.

The $63 million pact is the largest non-health care-related sum ever obtained in a suit brought under a Virginia law aimed at curbing fraud against the commonwealth's taxpayers, Herring said in a statement.

In the lawsuit, Herring said an analysis showed nearly 40 percent of the mortgages that backed 220 securities purchased by Virginia's retirement fund were fraudulently represented as posing a lower risk of default than they actually did.  Read more here.

Goldman Reaches $5 Billion Settlement Over Mortgage-Backed Securities

The Wall Street Journal | January 15, 2016      Goldman Sachs Group Inc. agreed to the largest regulatory penalty in its history, resolving U.S. and state claims stemming from the Wall Street firm’s sale of mortgage bonds heading into the financial crisis.

In settling with the Justice Department and a collection of other state and federal entities for more than $5 billion, Goldman will join a list of other big banks in moving past one of the biggest, and most costly, legal headaches of the crisis era.  Read more here

Are We Headed Toward Another Housing Crisis? What Hasn’t Changed Enough.

The Daily Signal |  November 8, 2015    Fannie Mae and Freddie Mac, the two government-backed housing corporations bailed out seven years ago by federal taxpayers, may be headed for trouble again.  Despite post-financial crisis pressure to reform, neither Fannie nor Freddie has done much to mitigate the risk to the American taxpayer inherent in government backing for these institutions.  Read more here.  

Delinquencies and Foreclosures Up Again; Time in Foreclosure at 1056 Days

The Economic Populist |  November 10, 2015     The Mortgage Monitor for September from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 737,254 home mortgages, or 1.46% of all mortgages outstanding, remaining in the foreclosure process at the end of September, which was down from 747,930, or 1.48% of all active loans that were in foreclosure at the end of August, and down from 1.89% of all mortgages that were in foreclosure in September of last year.  These are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the September "foreclosure inventory" remains the lowest percentage of homes that were in the foreclosure process since late 2007.   New foreclosure starts, however, rose for the second month in a row, from 76,180 in August to 79,899 in September, up more than 10% from July, while they remain lower than the 95.400 new foreclosures started in September of 2014, they've been volatile from month to month, and they have remained in a range about 50% higher than number of new foreclosures we saw in the precrisis year of 2005.  Read more here.