Banks that agreed to help troubled borrowers as part of a settlement with regulators over foreclosure misdeeds are spending most of the promised aid on sales that displace homeowners.

Bank of America Corp., JPMorgan Chase & Co. (JPM), and three other banks in last year’s $25 billion foreclosure-abuse settlement spent more than $13 billion through the third quarter of 2012 approving so-called short sales that let homeowners sell for less than they owe on their mortgages. The banks spent $2.6 billion reducing borrowers’ principal to help them stay in their homes. A report today by the settlement’s monitor, Joseph Smith, will show if those trends continued in the fourth quarter.

“The banks have shown a knack for sidestepping government attempts to have them redress their role in the foreclosure crisis and keep people in their homes,” said Arthur Wilmarth, a law professor at George Washington University in the nation’s capital. “A lot of these efforts end up helping the banks, not the homeowners.”

The short sales are enabling banks to take bad loans off their books while their lending profits increase even as regulators enforce penalties for modification missteps and foreclosures pursued with fraudulent or missing documents. Last year, mortgage revenue at the four largest lenders — Bank of America, JPMorgan, Wells Fargo & Co. (WFC), and U.S. Bancorp — surpassed the amount they spent on consumer settlements and investor demands they buy back faulty loans.

High-Maintenance
Short sales rid banks of high-maintenance borrowers as they stretch to implement more than a dozen new servicing regulations imposed by the settlement with the federal government and 49 state attorneys general. The harm done to consumer credit scores by short sales is about the same as going through a foreclosure, according to Fair Isaac Corp., inventor of the so-called FICO system of ranking risk.

Short sales “are a real relief provided to the borrower, and consumer relief is the premise of the program,” said Rick Simon, a spokesman for Charlotte, North Carolina-based Bank of America. Amy Bonitatibus of JPMorgan in New York, Tom Goyda of Wells Fargo in San Francisco, and Sean Kevelighan for Citigroup in New York declined to comment.

In the Feb. 9, 2012 agreement, Bank of America, JPMorgan, Citigroup Inc. (C), Wells Fargo and Ally Financial Inc. (ALLY) settled federal and state allegations of fraud and other misconduct without conceding guilt, receiving immunity from state civil prosecution. The pact created the Office of Mortgage Settlement Oversight now supervised by Smith, the former North Carolina Commissioner of Banks.

More Money
This year, 13 banks including Bank of America, HSBC Holdings Plc (HSBA) and Morgan Stanley (MS) settled with regulators over similar charges including so-called robo-signing, the fraudulent endorsement of affidavits used in foreclosures. The collective $9.3 billion of agreements free them from complying with a 2011 order by the Federal Reserve and the Office of the Comptroller of the Currency mandating they pay for and provide documents for independent reviews of foreclosures in which borrowers claim bank malfeasance.

“The decision to pursue a settlement allows more money to go to more consumers much more quickly than would have occurred had the independent foreclosure review run its course,” said Bryan Hubbard, director of public affairs at the OCC.

The banks will pay $3.6 billion to borrowers who were foreclosed on in 2009 and 2010, with everyone receiving something, whether they lost their home through the use of fraudulent documents or their case was pursued legitimately. The regulators will appoint a payment agent to decide the amount of money each borrower receives. In the new restitution system, as in the one it preempts, the banks will provide the information to document their conduct.

Rising Profits
Wells Fargo, JPMorgan, Bank of America and U.S. Bancorp reported $24.4 billion from home lending in 2012, according to data compiled by Bloomberg.

Combined profits for all commercial banks in the U.S. rose to a record $130.2 billion last year, beating a 2006 peak of $128.1 billion, according to Hamilton Place Strategies, a Washington consulting firm. Net income was helped by an increase in mortgage lending, particularly loan refinancings, said Patrick Sims, the firm’s director of research.

“Banks are paying big mortgage settlements — it’s definitely a big expense for them — but they have set aside reserves for that,” Sims said. “With the improvement in the economy and less troubled loans, banks now can take their capital and apply it to more profit-making activities.”

Trusting Banks
“How can anyone say we’ll trust the banks, after their mistakes got us into this situation in the first place?” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

There are no provisions in the newest settlements to cap the number of short sales banks can use to meet their $5.7 billion of promised mortgage assistance, according to the OCC’s Hubbard. Cases in the midst of third-party evaluations to determine if there was wrongdoing were dropped as part of the settlement. If aggrieved borrowers object, they should go through the banks’ internal complaint processes, the Fed said in a January statement.

“They wrecked the economy, many people lost their homes unfairly — the amount of the payouts falls way short of the amount of harm they have done,” said Alys Cohen, staff attorney for the National Consumer Law Center. “So far, the banks are getting off really easy.”

A growing number of people who say they lost homes because of bank fraud have decided to put their faith in the courts, instead of regulators’ deals. Since last year’s settlement, more than two dozen suits seeking class-action status have been filed by borrowers against banks for wrongful foreclosure.

In the prior 12 months, there was only a handful, according to a nationwide search of court dockets. Class action suits allow a group of borrowers to seek redress using lawyers who don’t get paid unless they win.

IN January, federal regulators announced an $8.5 billion agreementwith 10 mortgage servicers to settle claims of foreclosure abuses, including bungled loan modifications and the wrongful evictions of borrowers who were either current on their payments or making reduced monthly payments.

Under the deal, announced by the Federal Reserve and the Office of the Comptroller of the Currency, the mortgage servicers will pay $3.3 billion to borrowers who went through foreclosure in 2009 and 2010 and an additional $5.2 billion to reduce the principal or the monthly payments of borrowers in danger of losing their homes.

Those numbers might look impressive, but the deal is far too modest to be a credible deterrent to reckless foreclosure practices.

Consider the last big mortgage settlement. Last February, the federal government and 49 state attorneys general reached a $25 billion deal with the country’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC). They promised to help save homeowners from unnecessary foreclosure.

A year later, it’s clear that the settlement hasn’t worked as planned. Banks have dragged their feet in modifying first mortgages, much less agreeing to forgive part of the principal on homes that are underwater. In fact, the deal contained a few flaws. It has allowed banks to push homeowners into short sales, an alternative to foreclosure whereby the distressed homeowner sells the property for less than the debt that is owed. Not all short sales are bad — some homeowners are happy to walk away with the debt cleared — but as a matter of social policy, the program has failed to keep people in their homes.

A lesser-known but equally grave problem is that banks have been given a backdoor mechanism to continue foreclosures at the same pace as before.

The problem involves second mortgages, which millions of homeowners took out during the housing bubble. It’s estimated that as much as a quarter of all mortgage debt in the United States is in the form of second mortgages. Some of these loans were taken out to finance home improvements; others were part of a subprime product known as an “80/20 mortgage,” in which 80 percent of the purchase price was covered by a first, adjustable-rate mortgage, and the remainder by a second mortgage, often with a much higher interest rate.

The second mortgages have given the banks a loophole: each dollar a bank forgives goes toward fulfilling its obligation under last year’s settlement. But many lenders have made it a point to almost exclusively modify secondary loans while all but ignoring the troubled, larger primary mortgages.

It’s a real problem: when it comes to keeping your home, it’s the first mortgage that counts.

Take Tiberio Toro, a Queens resident who took out an 80/20 mortgage in 2006 when he purchased his home, and who now owes far more to the bank than his house is currently worth. Recently, Wells Fargo told him that it completely forgave his second loan. But at the same time, it declined to modify his first mortgage — an adjustment Mr. Toro needs to get his monthly payment to a level he can afford.

Why would a bank forgive a second mortgage completely but move forward with foreclosure on the first mortgage?

Surprisingly, such a tactic often makes sense for banks. When a lender forecloses on a first mortgage, the house in question is typically sold at auction. If the house is worth less than the loan amount, the bank gets only part of its money back. But after the sale, of course, there’s no asset left to pay off any of the second loan. The holder of that second loan — which has lower priority than the holder of the first — gets nothing.

So a lender can forgive a second mortgage — which in the event of foreclosure would be worthless anyway — and under the settlement claim credits for “modifying” the mortgage, while at the same time it or another bank forecloses on the first loan. The upshot, of course, is that the people the settlement was designed to protect keep losing their homes.

The five banks covered under last year’s settlement are wiping out second mortgages in record numbers. In New York State, for example, during the first six months of the settlement period, three times as many homeowners received second-mortgage forgiveness(2,933) as received permanent modifications on first mortgages (967).

In New York State, 36.2 percent of the banks’ credits under the settlement have been related to second loans, compared with only 18.2 percent for first mortgages.

In 2011, the five banks that are subject to last year’s settlement sent 230,678 pre-foreclosure notices to New York State homeowners, according to data I obtained from the Finance Department through the Freedom of Information Law.

As is well known, many of those at greatest risk of losing their homes are African-American or Latino. Under the settlement, banks get more credit for forgiving mortgages that they own (“portfolio loans”) than those they sold to Wall Street and currently only service. These portfolio loans are largely conventional loans; those sold to Wall Street were subprime. It was these notorious subprime loans that were marketed, often throughpredatory lending practices, to black and Latino borrowers during the housing bubble.

There is a lesson to be learned from the deficiencies of the National Mortgage Settlement. And the new deal reached by the Fed and the comptroller of the currency provides an opportunity to get right what the 49 attorneys general got wrong. At a Senate Banking Committee hearing on Thursday, Senator Elizabeth Warren, Democrat of Massachusetts, called on regulators to take tough enforcement actions and not settle for negotiated agreements with banks.

To do that, the government must clearly require that relief be given in the form of first-mortgage modifications. In addition, the settlement should direct the banks to provide relief in the ZIP codes hardest hit by predatory lending.

Finally, we need real transparency to monitor the new settlement. That means that the public should easily be able to determine who is getting relief, and how. Until that’s done, as we’ve seen, banks are likely to keep playing the same old shell game.

LOS ANGELES (CBS) — The taxpayers’ tab for Occupy L.A. has reached an estimated $2.3 million, and officials say there’s more to come. The new figures have sparked a debate at City Hall about who’s to blame for the costs, and whether it was really necessary to spend all that money.

A report by City Administrative Officer Miguel Santana says more than half the estimated costs were a result of police overtime. “Of the total cost, about $1.2 [million] is for L.A. police overtime,” says Santana.

The report comes at a time when the City of Los Angeles already faces a $72 million budget deficit.

City Councilman Dennis Zine says the millions in Occupy costs likely mean even more budget cutbacks.

“We already had the $70 million, and this adds on to that” says Zine. “So what you’re going to find is either more furloughs for city employees, fewer services for city employees. It impacts every tax payer, every business in the City of Los Angeles.”

Occupy L.A. activist Carlos Marroquin claims city officials are inflating the numbers and using protesters as a scapegoat for L.A.’s budget issues.

“Part of the numbers in the budget, they’re supposed to include events like this, emergencies” says Marroquin. “So it is irresponsible for them to try to blame the occupiers, Occupy L.A. for their shortfalls.”

Marroquin points out that many city officials rolled out the welcome mat for Occupy L.A. early on. “We were welcomed by the city council,” says Marroquin. “They passed a resolution for us to be here.”

Councilman Zine says that was a mistake. He insists the protesters should not have been allowed to violate city laws by camping out overnight. “When you give the welcome mat and say ‘stay as long as you wish, enjoy yourself,’ it sends the wrong message,” says Zine. “And now we’re paying the bill for that message.”

City Hall park remains closed nearly one month after the LAPD cleared out the Occupy L.A. encampment, which had lasted two months. The park will be closed indefinitely, as it is projected to take some time to restore the park to its condition prior to the demonstration.

Remaining repairs and cleanup include restoring landscaping, repairing the irrigation system, and removing graffiti. Costs for the restoration are estimated at $400,000, bringing the total taxpayer bill for Occupy L.A. into the $3 million neighborhood.

Meanwhile, the Occupy L.A. movement marches on. Organizers have reached an agreement with the Tournament of Roses to march at the end of the 2012 parade in Pasadena.

United Soccer Leagues announced the Santa Clarita Blue Heat as their newest team

United Soccer Leagues has announced the creation of the Santa Clarita Blue Heat, set to begin play the summer of 2010. A United Soccer Leagues W-League team, the Blue Heat will serve as Santa Clarita’s first ever elite women’s soccer team.

The United Soccer League has various leagues include the W-League where the Santa Clarita Heat will play

The Santa Clarita Blue Heat is locally owned by Community member and Planet Soccer owner Carlos Marroquin and will be coached by Eduardo Zatarain, a former striker for the Los Angeles Aztecs and coach for the Santa Clarita United Soccer Club.  Zatarain will be assisted by former Arsenal FC coach Russell “Finchy” Finch, and Santa Clarita Valley Magic Soccer Club director of coaching Sergio Salvadori, who will serve as the team’s Technical Director.