Bove is Furious Over $25B Mortgage Settlement (BAC) (JPM) (WFC) (C)

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The five-largest U.S. banks entered into a settlement with the U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers Thursday over "mortgage loan servicing and foreclosure abuses."

The five banks -- Bank of America (NYSE: BAC), Ally Financial, Wells Fargo (NYSE: WFC), J.P. Morgan Chase (NYSE: JPM), and Citigroup (NYSE: C) -- will pay about $25 billion in the deal.

Rochdale Securities analyst Richard Bove commented in a Bloomberg interview about the deal. To put it short, he's fuming. The following is a brief synopsis of Bove's comments:

Banks have already set aside funds for a potential settlement like this, so there should be minimal financial impact.
BofA is said to have put away about $8 billion ahead of the call.
Mortgages have already been largely written down or written off.
No immediate impact should happen since the settlement will take place over a period of time.
He thinks the deal was "made in Hell," or worse.
In the deal, Bove says those actually paying their mortgage will get screwed two ways. First, their neighbor who hasn't been paying their mortgage -- who may have been banking whatever money they've been making -- will have the total value of their mortgage written down. The person who is paying is losing money on actually paying their mortgage instead of putting it in the bank. Next, the value of the person's home who has been paying will have gone down because of the lower property value their neighbor's home now boasts.
There will still be headline risk for banks -- particularly BofA -- since the U.S. Attorney General is sketching up another lawsuit over securitization irregularities.
Bove jokingly believes Obama and AG Holder have set up a specific office to continuously create lawsuits against the banks.
He noted a quote from J.P. Morgan CEO Jamie Dimon, who said his institution is facing about 10,000 lawsuits at any given time.
Expectations are for banks to set aside about $2 billion per quarter in litigation fees.