Is the Foreclosure Fraud Settlement Overbroad?

posted by Adam Levitin

We don’t actually know the terms of a foreclosure fraud settlement.  All that we’re really hearing now is a proposed $20B figure.  There could well be other substantive terms in a settlement, but it’s worth considering some of the arguments made by the banks in objection to a large dollar settlement.

Basically, the banks’ argument is no harm, no foul.  Yes, they did some robosigning, but it was all fun and games, and no one got hurt.  Moreover, using any settlement dollars to help homeowners would reward undeserving profligates and encourage strategic defaulting, which would be bad morally and for the housing market.

There are a lot of problems with this line of argumentation.

Read about the problems here…