Maybe size doesn’t matter.
The whopping $17 billion settlement expected next week from Bank of America over its soured mortgage-backed securities may be the biggest ever against a single bank — but for aggrieved homeowners that might not be enough.
Consumer activists are unhappy with Attorney General Eric Holder and President Barack Obama over the reported terms of the settlement. The bank will pay about $9 billion in cash to the US Treasury and state coffers. An additional $8 billion will be in the form of “consumer relief,” while no top executives are expected to see jail time.
“They have absolutely failed the American homeowners,” Bruce Marks, chief executive officer of the Neighborhood Assistance Corporation of America, an advocacy group that helps underwater mortgagees, told The Post.
“These settlements are a public relations scheme to try to convince the American people that they’re on their side when the facts show they have been there for the banks.”
Last month, Kevin Whelan, national director of the Home Defenders League, asked Holder to “ensure that the consumers who have been the victims of predatory lending practices see the relief that is intended and has been promised” with the BofA settlement.
Marks, who formerly worked at the Federal Reserve Bank of New York, said he was skeptical of how much homeowners would receive from the bank because of past settlements.
Previous settlements “have not provided significant benefits for the homeowners,” he said. “Even though the homeowners were the most victimized, very little was done to help the homeowners.”
These settlements are a public relations scheme to try to convince the American people that they’re on their side when the facts show they have been there for the banks.
- Bruce Marks, CEO of Neighborhood Assistance Corporation of America
Last year, Holder’s Justice Department settled with JPMorgan Chase for $13 billion, where $4 billion went directly to consumer relief, including modifying home loans, providing legal assistance, and contributing to anti-blight programs.
The program is overseen by independent monitor Joseph Smith, who is tasked with making sure the bank is paying out the correct amount to affected homeowners.
So far, the bank has reviewed 100 loans, totaling $6.3 million, according to Smith’s first report in July.
Reviewing each loan can take months, Smith said, with JPMorgan reviewing the claims and then his team of about 20 people reviewing the bank’s work.
“When you get through it all, there are about 30 to 50 tests to determine,” Smith told The Post.
His next report is due by the end of the year, Smith said, and should include “significant additional relief.” He declined to give specifics about the loans being reviewed.
Under the settlement terms, JPMorgan has until 2017 to administer the relief. Smith said he expects JPMorgan to finish before its deadline, noting that it doled out relief as part of a $25 billion national mortgage settlement in about a year.
“I’m just the umpire,” Smith said. “I defend to the death my friends in the advocacy community to keep pushing. My job is to monitor this agreement.”