David Dayen: Mortgage Settlement Agreement Is Only An Agreement In Principle

David Dayen, who's done more than anyone to keep this mortgage settlement deal in the public eye and under the microscope, is horrified to discover that the deal announced this week doesn't actually exist in any tangible form. He calls it "a real

David Dayen, who's done more than anyone to keep this mortgage settlement deal in the public eye and under the microscope, is horrified to discover that the deal announced this week doesn't actually exist in any tangible form. He calls it "a real failing on the part of the activists, who jumped at the opportunity to pontificate on the deal, without actually seeing the term sheet, which we know now in fact does not exist:"

Well, so much for my first “making chicken salad” option. We are more than 24 hours removed from the foreclosure fraud settlement and the terms have, shockingly, not been released. In fact, American Bankerreports that the terms will not be released before the filing of the settlement in federal court, because a document with actual terms does not yet exist.

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as “coming soon.”

That’s because a fully authorized, legally binding deal has not been inked yet.

The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.

“Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com,” the representative said in an email to American Banker.

Incidentally, why is nationalmortgagesettlement.com a dot-com, not a dot-gov? What’s going on here?This is incredible. The Administration, the AGs, everyone involved in this made a big show of an agreement reached on foreclosure fraud. But there is no piece of paper with the agreement on it. There’s no term sheet. There are just agreements in principle.There’s a HUGE difference between an agreement in principle and the actual terms. I mean night and day. The Dodd-Frank bill was for all intents and purposes an agreement in principle. It left to the federal regulators to write hundreds of rules. And we have seen how that process of implementation has faltered on several key points. But the Administration wanted to announce a “big deal,” the details be damned. And they got buy-in from the AGs. Everyone else stayed silent.

Lots of people are pissed off about this:

“The devil’s in the details,” says Ron Glancz, chairman of law firm Venable LLP’s Financial Services Group. “Until you see the document you’re never quite sure what your rights are.”

“It’s frustrating,” agrees Stern Agee analyst John Nadel. “But it’s not unlike anything else that’s been going on in financial reform generally, is it?” [...]

“It is hard for me to believe that they would have gone public in the way that they did if they didn’t have it all worked out. But it is unusual that we don’t have a copy of the settlement yet,” says Diane Thompson, an attorney for the National Consumer Law Center.

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