Did Oklahoma A.G. Scott Pruitt, Mortgage Settlement Holdout, Sell Out His State for Wall Street?

ie 2010 rslc pruitt e1328825241273 Did Oklahoma A.G. Scott Pruitt, Mortgage Settlement Holdout, Sell Out His State for Wall Street?The American government finally has something to show for the some of the largest banks in American preying on the American people and taking the economy down while they did it: a $28 Billion settlement. The settlement was agreed upon by the big five mortgage providers (Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial) and 49 of the 50 attorney generals. This comes after months of talks and holdouts by the attorneys general of Delaware, California, Nevada, and New York’s own Eric Schneiderman, who wouldn’t agree to the settlement until they felt they’d won something for their states.

But there were only 49. The 50th A.G., the one who didn’t join? It’s Scott Pruitt, the Attorney General of Oklahoma. Why did he hold out?

After the housing market burst in 2008 and took the entire economy down with it, it became clear that the country’s largest banks and their predatory behavior was to blame. If you don’t know by now, they were handing out seemingly free money, without educating those taking it on the fact that it would eventually result in something really, really bad (kind of like that scene from Alien where the baby alien bursts out of the guy’s chest and tries to kill everything around it).

In this light, Oklahoma A.G. Attorney General Scott Pruitt’s decision to not be a part of this settlement seems a little, well, odd.

Mr. Pruitt still got a settlement for the state of Oklahoma to the tune of $18.6M, independent of the one agreed to by all other 50 states.

From his office, the reason he gave for not being part of the team:

On March 16, Pruitt sent a letter to [Iowa A.G. Tom Miller, leader of the group settlement] voicing strong concerns that the settlement greatly overreached the authority of state attorneys general and warned the terms created questions of fundamental fairness and justice by rewarding homeowners who stopped paying their mortgages over families who continued to make payments even if they were underwater on their loans.

Pruitt also warned the settlement’s structure might encourage more homeowners to default on their loans so they could benefit from the settlement. “We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to establish an overarching regulatory scheme, which Congress had previously rejected, to fundamentally restructure the mortgage industry in the United States,” Pruitt said.

Again, Pruitt’s settlement wrangled $18.6M, as opposed to Nevada’s $1.5B, for example. From the Times:

A recent estimate from the settlement negotiations put the average aid for homeowners at $20,000. “I just don’t think it’s going to be a life-changing event for borrowers,” said Gus Altuzarra, whose company, the Vertical Capital Markets Group, buys loans from banks at a discount.

$20,000. Not a lot, given that:

About one in five Americans with mortgages are underwater, which means they owe more than their home is worth. Collectively, their negative equity is almost $700 billion. On average, these homeowners are underwater by $50,000 each.

Pruitt claims that his state will get the same amount of money in their settlement as they would have in the national settlement, and that he broke off of the national settlement on principle (the same way he tried to sue the Obama administration to overturn Obama’s health care policies). To be fair, Oklahoma’s foreclosure rate isn’t among the worst in the country.

But: In Oklahoma’s settlement, only 930 people would be the recipients of $20,000 (directly or indirectly) in aid.

In 2011, in Tulsa, Oklahoma alone, 5,453 houses entered foreclosure proceedings.

Again—just in Tulsa—one in every 72 homes were in foreclosure. Let’s say only half of those houses had predatory loans under them. That’s about 2,726 homes, and a very generous figure. In Oklahoma’s settlement of $18.6M, each one of those 2,726 homes would only receive $6,823, which is $13,000 less than everyone else in America in that settlement will get.

In Pruitt’s words, he did it for the community banks. And on principle, of course.

For what it’s worth, some samples from Pruitt’s 2010 donation cycle:

JP MORGAN CHASE & CO: $10,000.00
ASSOCIATED GENERAL CONTRACTORS OF OKLAHOMA: $5,000.00
ERC LAND DEVELOPMENT GROUP LLC: $5,000.00
AMERICAN FIDELITY CORP: $5,000.00
KOCH INDUSTRIES: $5,000.00
OKLAHOMA ASSOCIATION OF REALTORS: $4,000.00
OKLAHOMA BANKERS ASSOCIATION: $3,500.00

And some broader totals:

Finance, Insurance & Real Estate: $175,172.00
Lawyers & Lobbyists: $142,835.00
General Business: $125,546.00

And that’s the story of Oklahoma, the one state that didn’t agree to the National Mortgage Settlement.

fkamer@observer.com | @weareyourfek

Comments

  1. michael says:

    Good for the real principled man in the group.  As far as I am concerned, people should be going to prison for this atrocius sceme

    1. Okie says:

      Who cares what you think?  You can’t even spell “atrocious” or “scheme.”

    2. Not sure I understand your post – WHO should go to prison?

  2. guest says:

    “If you don’t know by now, they were handing out seemingly free money, without educating those taking it on the fact that it would eventually result in something really, really bad”
    … like actually having to pay it back?

  3. Aaron says:

    Clearly you don’t understand that the principle reduction is for the loans these five banks have on their OWN loans. It’s good business sense for them. They get to write down bad loans and receive credit from the Feds as part of the $25 billion. Have you run the numbers on the Presidents fundraising machine that is a wholly owned subsidiary of Wall Street??

  4. Ranbo Sooner 81 says:

    My elderly mother was harmed by this deal. Is there any legal action that can be taken?

  5. This sellout AG needs to be recalled or at least not reelected.  He looks out for the banks and throws the good people of OK under the bus.  Shame on him.

    1. Youngbill says:

       Unfortunately, Thomas, too many Okies have sipped the red koolaid, so there will be no recall.  (I know, I live in the Sooner State). We used to be a one party state—Democratic—with occasional votes for national GOP candidates. Then we started always voting for Republicans for national office, and then we just went over the right wing cliff. In 2010, for the first time ever, all elected state officials are GOP, and there are now GOP majorities in both houses. First time *ever*! Our esteemed U.S. Senator Robert S. Kerr predicted this back in the 50s or early 60s. He said Oklahoma would eventually turn Republican because of two institutions: The Oklahoman newspaper, and the Southern Baptist churches. You gotta love a man who could see that far into the future.

      1. I hear ya @youngbill, and whats worse is we’re pretty much screwed seeing most people here seem to live in the Fox/Gop talk radio bubble. They don’t even seem to pay attention to whats is really going on. I wonder if Pruitt would have felt this way about the Tobacco Co’s settlement?? I would just say no but it seems looking @ Scott’s campaign donors that the right amount of $$ might help him understand his “principles” better!! #sellout #getmoneyout

  6. Bob8406 says:

    No one is getting “$20,000″ with the federal agreement and it doesn’t help anyone who already has been wronged – other than a possible $2,000 – which doesn’t do much to pay people back for what they’ve lost. At least Oklahoma’s settlement looks like it will help people who lost their homes and apparantly they’ll get it a lot faster.

  7. Annwiliams says:

    Where on earth did this $20,000 amount come from in this story?  The direct payout to the roughly 750,000 Americans is going to be $2,000.   Get your facts straight people!

    1. Foster Kamer says:

      You’re correct about the direct payout will be $2,000. I was referencing the estimated amount of writedown relief: $20,000 per person.

      Even so, let’s focus on that $2,000 figure for a moment.

      Oklahoma wrangled only $18.6M from the five banks. Let’s take the entirety of that $18.6M and put it into a wildly exaggerated theoretical—that it will all go directly to homeowners who were either robosigned on or a victim of predatory lending practices.

      $18.6M divided evenly by $2,000 would give 9,300 homeowners $2,000 of relief, which, again, is an insulting amount given the circumstance, but the amount no less.

      In 2011, in Oklahoma, 12,016 houses had foreclosure filings on them (that statistic—provided by RealityTrac, like all the others—only covers 33 out of Oklahoma’s 77 counties). In 2010, in Oklahoma City and Tulsa alone, there were 14,394 foreclosures. Let’s get really cynical, and take half of those foreclosures from the last two years, and say they weren’t serviced by the five major lenders named in the settlement, or they’re Fannie/Freddie loans, or they’re people who were just totally irresponsible and don’t deserve any government assistance at all because their lenders were totally frank and honest with them about their loans’ respective prospects. That would still leave 3,905 deserving homeowners (or former homeowners) without their measly $2,000 that Scott Pruitt has now stiffed them on.

      1. Pruitt in 2014 says:

        My guess is that close to 90% of the loans in Oklahoma are Fannie/Freddie loans – the average home price in Oklahoma is no where near the home price in NV (one of the most inflated areas during the height of the boom). So, it isn’t unrealistic to believe that Oklahoma would have received the same amount if Pruitt had signed on to the same deal every other State did. That said, his decision of ‘principled objection’ certainly won’t get Pruitt any more votes (is that even possible in a state as red as Oklahoma?). The real story is not that Pruitt failed to get as much money as he could have, because he probably did. The story is that this guy can do something that appears to put Wall Street ahead of his constituents without the slightest fear of losing reelection. That’s the sorry state of Oklahoma…

      2. Why did you pick a name that implies the opposite of your views?

    2. Maybe you should have actually read the whole article!! Just a thought.

  8. First off, let’s start at the beginning, with the misleading title, calling Pruitt a “Holdout” – which suggests that he’s not already reached his own separate settlement, which he has, as the article states.  He’s not a “holdout” (any more) but now would be better described as “previous holdout”, “maverick”, or similar.  “Holdout” (arguably) fairly-strongly implies that he’s holding out for a *better* deal than he (and we the people of OK) would have gotten in the big one  – in order to *really* turn the screws on the banks –  but the article makes clear that most people (including the author) seem to think that it’s a worse deal , than otherwise would have been obtained for the people
    (making Pruitt a sellout, not holdout)  – this is supported by his rhetoric blaming homeowners for the ILLEGAL acts perpetrated by the big banks of robo-signing.  The article whitwashes Pruitt from the get-go, just from the TITLE of it.  Oy.

  9. Nina Flannery says:

    It’s a good thing he did it as a matter of principal, otherwise I wouldn’t hardly be able to understand his actions….

    Seems like he shouldn’t have the right to reject it.

  10. NT74136 says:

    There are 3 types of help available under the Settlement and Oklahoman’s will not be eligible for 2 of them. If you lost your home to foreclosure, there is a form you can fill out on the Attorney General’s site to apply for part of the Settlement. This part is similar to what other States are doing for foreclosed citizens.

    What we are missing out on completely are two types of aid for underwater homeowners and homeowners who are behind on a mortgage on his or her primary residence. There is $17billion the rest of the States will distribute to delinquent homeowners needing a loan modification. Nothing for us. There is also $3 billion available to underwater homeowners who are current to help bring the loan amount better in line with the property value and take advantage of today’s interest rates which should help bring mortgage payments to an affordable amount.

    The National Settlement was a start. Like Obama or not he was clear in his latest press conference the Settlement was a start. But based on the beginning in OK we are at serious risk of the rest of the Country’s real estate market starting the recovery ahead of us.

    Go to the Attorney General’s website and the National Mortgage Settlement website. I pushed the AG’s office and received an e-mail that stated in no uncertain terms that only foreclosed upon Oklahomans will receive any assistance under his separate Settlement.

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