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» VISIT US ONLINE @ DSNEWS.COM 59 59 COVER STORY M ARKET PUL SE INDUSTRY INSIGHT INDUSTRY INSIGHT Attorney Erik Gunderson's voice shakes a little when he recalls the homeowner who broke down weeping in open court. e attorney with Palm Dale-based Charlton Weeks says the nurse, a mother to two kids, saw a cutback in her hours at work during the recession. She came up short for the mortgage she and her disabled husband had taken out with a stated income loan. Gunderson laments what happened next: sheriffs escorting the woman from property that now belonged to his clients. He is less sympathetic when it comes to the nation's largest servicers, recently parties to several landmark multibillion-dollar settlements that keep setting new precedents. Federal officials made Bank of America the largest and most recent example of these in August when the mortgage giant agreed to pony up some $16 billion in pre-tax consumer relief. When it came to signing off on the mortgages and securitized loan pools that precipitated the Great Recession, he says. "ey should have said, 'e risk of this loan is not justified by the collateral.'" It was a tough climate to work within. e same government that is now demanding that the banks pay record penalties related to the sale of faulty RMBS was then pressuring the financial institutions to relax their threshold of acceptable risk so as to expand homeownership to a larger pool of citizens. Some servicers like Bank of America are on the hook not necessarily because of their own misdeeds, but for the roles many of their acquisitions, like now-infamous Countrywide Financial, played in buying and selling securitized loans for properties that homeowners couldn't afford. at isn't stopping the Justice Department and other officials from extracting a combined $40 billion in separate settlements with Bank of America, Citi, Goldman Sachs, JPMorgan Chase, and Wells Fargo—none of which even includes the $25 billion some of these banks paid out under 2012's national mortgage settlement, or the various billion dollar shareholder derivative suits and securities payouts from the last few years. In the wake of the financial crisis, six banks are paying nearly $65 billion in recent landmark settlements to the federal government, trying to put the past behind them. But are the motivations behind government's actions pure and are the settlements really in the best interest of the American consumer?

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