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Shakespeare Never Met These Mortgage Bankers

“The first thing we do, let’s kill all the lawyers”

— “Henry the Sixth,” by William Shakespeare

William Shakespeare never met the executives of JP Morgan Chase or Bank of America. Had he done so, he might have revised his line and chosen another profession to eradicate.

Bankers, it seems, have no shame.

We can only hope regulators feel the same way about the people they are supervising. Although it’s pretty clear that right now, they do not.

Why? Because even as the banking community spends a slew of advertising dollars to convince us that not only are banks to be considered trusty stewards of our money but also our most significant BFFs, they are acting otherwise. Behind the scenes they continue to promulgate the same smarmy and duplicitous behavior that helped make them Public Enemy #2 (right behind the U.S. Congress.) in the minds of millions of middle class Americans.

Completely unrepentant (and apparently just as devious), the big banks have been dragged into various legal settlements over their questionable (some would say criminal) mortgage practices, including a $25 billion agreement among the five biggest – Bank of America, JP Morgan Chase, Wells Fargo, Citicorp, and Ally Bank (formerly GMAC) – the federal government and 49 state attorneys general.

A Twist to Governmental Agreement

In addition to various assessed penalties and fines – thought to be needed to nudge the banks into helping borrowers who are underwater on their mortgages or simply have problems paying back their home loans – the settlement allows a bank to take credits against what it owes by forgiving debts owed to it.

This is not an unreasonable condition. Assuming, of course, that the debts owed to it are real ones.

And here is where the banksters seem to be trying to game the system one more time. According to a recent article by Pulitzer-winning business reporter Gretchen Morgenson of The New York Times, at least two of the big five banks – JP Morgan Chase and Bank of America – have been sending letters to thousands of homeowners forgiving their mortgage debts even after those loans have been discharged in bankruptcy proceedings. In other words, these two banks are forgiving debts that no longer exist, looking to garner credits for money they can no longer legally collect.

When financial heavyweight Morgenson contacted spokespersons from Chase and BOA, questioning why they would be attempting to forgive debts and dismiss property liens that have already been wiped out, she received what she classified as “unsatisfying” answers.

Regulator: The Banks Will Tell Us

When she called the banking regulator charged with monitoring the settlement and asked how he planned to vet banks’ claims of debt forgiveness vs. credits earned, she was told that it would be via a review of the banks’ own records. Morgenson’s printed retort: “Good luck with that.”

What is even more deceitful is the fact that the banks are informing the Internal Revenue Service of the non-existent debts they are intending to forgive. And since debt forgiveness is considered taxable income (except in the case of a debt that is discharged in bankruptcy), some borrowers may have to show the IRS how their banks have erred in claiming to have forgiven their already discharged debts in the first place.

Guilty until proven innocent!

So the next time you see a TV commercial with a smiling actor portraying a smiling banker, remember the Bard of Avon’s admonition from Hamlet – how “one may smile, and smile, and be a villain.”

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].


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