So, it was reported on Reuters today that
has agreed to pay $8.5 billion cash to settle n">nearly all of the claims related to the legacy Countrywide-issued first-lien residential mortgage-backed securitization (RMBS) repurchase exposure (see here). Yes, $8.5 BILLION DOLLARS! And, some are arguing that this is too low (see here).
n">Now, several things strike me about this settlement. First, is the fact that at least 22 institutional investors have approved the settlement. But, what really strikes me about it is that the case is in "litigation", not arbitration. So, Institutional investors want to litigate IN COURT with Bank of America, but they don’t want to litigate with consumers. They force consumers to arbitrate securities claims through FINRA. Why is it okay for Institutional Investors, large corporations, to go to court to get what they want, but it’s not okay for consumers? Hmmmm.
The second thing that strikes me about this settlement is the value and priorities we place on certain issues. Bank of America can pay out $8.5 billion in cash to institutions who made poor investments, but they cannot work with homeowners and modify their rates on their loans to help keep them in their homes. Many argue that homeowners took on too much with respect to their loans and what they could afford. Didn’t these institutional investors make risky investments and poor decisions even though they are the EXPERTS?
It just seems to me that hard working individuals should be helped out with respect to staying in their homes instead of thrown out on the street by Bank of America when it’s clear that Bank of America (and the other large banks) have the abililty to absorb some loss on the rates they have with these homeowners. Instead of giving Institutional Investors $8.5 billion in cash, why not give it to the homeowner who is working two jobs, trying to raise kids, and keep his/her home?