Ritholtz: Why foreclosure fraud is so dangerous to property rights

[Winehole23]

Why Foreclosure Fraud Is So Dangerous to Property Rights (http://www.ritholtz.com/blog/2010/10/why-foreclosure-fraud-is-so-dangerous-to-property-rights/)



By Barry Ritholtz - October 12th, 2010, 8:00AM



There seems to be a misunderstanding as to why the rampant and systemic foreclosure fraud is so dangerous to American system of property rights and contract law. Some of this is being done by people who are naked corporatists (i.e., the WSJ Editorial Board (http://www.ritholtz.com/blog/2010/10/clueless-or-liars/)) excusing horrific conduct by the banks. Others are excusing endemic property right destruction out of genuine ignorance.


This morning, I want to explain exactly why this RE fraud is so dangerous, and explain the significance of the rights that are currently being trampled. I also want to demonstrate that the only way the nation could have the quantity and magnitude of errors we see is by willful, systemic fraud.
Perhaps this commentary will allow for a more intelligent debate of this issue, and focus on what can be done to fix the problems, rather than the blind parroting of talking points.
~~~
The process of purchasing a home in America culminates with an event called “the Closing.” It is an hour plus long contract signing that ensures the buyer is legitimately taking title, possession and legal ownership of a unique parcel of land and any structures upon it. The process gives any buyer specific rights to that property that cannot be abrogated under the laws of the United States.


At the closing, buyers sign and initial numerous documents. The goal is to accomplish the following:

1) Papers are signed that will be filed with the County Clerk (or appropriate officer) along with recording fees, for the official transfer of title from the prior owner to the new owner. The enabling purchase loan (i.e., mortgage note) is also filed with the Clerk.
2) The buyer receives title (ownership) of the land;
3) The mortgage lender establishes a new interest in that property contingent upon their mortgage note;
4) All other claims, liens, tax obligations and prior mortgages, home equity lines or second notes are satisfied and extinguished before title passes to the new owner.
5) Third party claims of any interest in that property superior to the buyer are eliminated;
6) Title Insurance is purchased and issued so the buyer has a recourse in case of defects in ownership occurs.
Every step of the process is designed to protect the property rights of all parties. The result is more than a mere transaction selling property from one party to another; rather, this has created a system where ownership interests are clearly defined; where title history can be reviewed going back decades and centuries. There is a certainty to the purchasers of this property against all future claims.


Everything about this process has been created to make sure the transfer goes off perfectly. In a nation of laws, contract and property rights, there is no room for errors. Indeed, even small technical flaws can be repaired via a process called “perfecting title.”


As we noted previously (http://www.ritholtz.com/blog/2010/10/foreclosure-fraud-reveals-structural-legal-crisis/), esteemed economists such as Hernando de Soto (http://ild.org.pe/mystery/chapter3) have identified that the respect for title, proper documentation, contract law and private property rights are the underlying reason capitalism works in Western nations, but seems to flounder elsewhere.


We cannot have free market capitalism without this process. So what does it mean if banks have been systemically, fraudulently and illegally undermining this process?

~~~
The closing process described above took place with all parties participating voluntarily. The buyer wants the house, the seller wants the transaction, the financing bank wants to make the mortgage loan.


What happens during a proper foreclosure? The prior closing is essentially reversed, only its done involuntarily. The process requires another RE closing, only this time, the Note holder is exercising their right to repossess the house if the borrower has failed to uphold the terms of the mortgage note. It typically states that if a borrower fails to make the requisite payments, they become delinquent. After an extended period of delinquency, they go into default. That allows the note holder to exercise their rights to foreclose on the property, and take title and possession.


The same care and attention to detail that occurred during the initial closing must also occur in the foreclosure process. All of the steps noted in our initial closing must occur here also. But since it is an involuntary process for the (soon-to-be former) property owner, extra care must be taken to make sure that property rights are being maintained and respected. The entire process is, if anything, is even more rigorous.
The law does not tolerate any errors in this process. What does the foreclosure process legally require? It varies by state and mortgage note, but the following is a good outline:

1) Notice of Delinquency is sent to a borrower who has fallen behind his payment schedule;


2) Notice of Default is sent to a delinquent borrower who has missed the requisite number of mortgage payments;


3) Notice of Foreclosure is sent to the defaulted borrower, and the process begins;


4) Affadavit by the bank’s representative are signed attesting to: Ownership of the note, who the borrower is, the property in question, the date of last mortgage payment, amount of delinquency, tax escrow owed, other payments (such as homeowners insurance);


5) Notarized documents: A Notary Public affirms that the affidavit was actually signed by the signatory, and this allows it to be entered into the court as documentary evidence;


6A) Notice of Pendency (Lis Pendens) is filed with the County Clerk putting the world on notice as to the foreclosure action;


6B) Summons and Complaint are prepared by bank attorneys, who further verify the specific information attested to by the bank executives. The attorneys then file the Complaint, commencing the Foreclosure Action;


7) Service of Process is filed, either hand delivered to the home owner, or nailed to the door of the home;


8) Referee is Appointed to review and process the case; calculate the amount owed, and report back to the Court; The Referees report is also notarized;


9) Judgment of Foreclosure is moved for by Note holder;


10) Court orders the property auctioned. The court specifies a notice of the auction, publicizing the property auction;


11) Bidders must Close on the auctioned house in 30-90 days; In the event of no sale, the bank takes possession (REO);
The fraud that has come to light are primarily occurring in steps 4, 5, 6 and 7. The verification of the specific data that is mandated legally is not taking place by bank executives. Reviewing a file can take anywhere from, 20 minutes to well over an hour. Yet some bank employees are testifying that they have signed off on as many as 150 per day (Wells Fargo (http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a.cnC4YcjzeE)) or 400 per day (Chase (http://4closurefraud.org/2010/05/27/full-deposition-of-beth-cottrell-chase-home-finance-robo-signer-extraordinaire/)).


It is impossible to perform that many foreclosure reviews and data verifications in a single day. The only way this could happen is via a systemic banking fraud that orders its employees to violate the law. Hence, how we end up with the wrong house being foreclosed upon, the wrong person being sued for a mortgage note, a bank without an interest in a mortgage note suing for foreclosure, and cases where more than one note holders are suing on the same property that is being foreclosed.


This is more than mere accident or error, it is willful recklessness. When that recklessness is part of a company’s processes and procedures, it amounts to systemic fraud. (THIS IS CRIMINAL AND SHOULD BE PROSECUTED).


The next step in our cavalcade of illegality is the Notary. Their signature and stamp allows these fraudulent documents to be entered into court as actual evidence (no live witness required). Hence, we have no only fraud, but contempt of court on top of it (BOTH OF WHICH REQUIRE PROSECUTION).


Law firms preparing the legal documents are not doing their job of further verifying the information. And, it seems certain states such as Florida have foreclosure mills who were set up from the outset as fraudulent enterprises. (EVEN MORE PROSECUTION NEEDED).


Lastly, some service processors are not bothering to do their job. This is the last step in the foreclosure proceedings that would put a person on notice of the errors (YET MORE FRAUD).


There are multiple failsafes and checkpoints along the way to insure that this system has zero errors. Indeed, one can argue that the entire system of property rights and contract law has been established over the past two centuries to ensure that this process is error free. There are multiple checks, fail-safes, rechecks, verifications, affirmations, reviews, and attestations that make sure the process does not fail.


It is a legal impossibility for someone without a mortgage to be foreclosed upon. It is a legal impossibility for the wrong house to be foreclosed upon, It is a legal impossibility for the wrong bank to sue for foreclosure.


And yet, all of those things have occurred. The only way these errors could have occurred is if several people involved in the process committed criminal fraud. This is not a case of “Well, something slipped through the cracks.” In order for the process to fail, many people along the chain must commit fraud.


That it is being done for expediency and to save a few dollars on the process is why the full criminal prosecution must occur.


~~~
The approach of most Western nations to property is an important legacy. In the United States, it has been enshrined in the Constitution. Even the rare exercise by the State to take private property during Eminent Domain (http://www.expertlaw.com/library/real_estate/eminent_domain.html) requires an extensive and proper process. The Fifth Amendment to the US Constitution guarantees that no “private property be taken for public use, without just compensation.” The Supreme Court has detailed the process required for the State to seize any citizen’s private property without the owner’s consent.


There is simply no reason we should tolerate unlawful property seizure merely when it is done by banks. They are not the State, not the King, and not above the law.

[LnGrrrR]

The author seems to have gotten most of this right on the money. As I've said before, the financial industry seems to have been infiltrated by morons and crooks. One guy starts betting on CDS's, and greedy firms decided they need to make as many profits as the other guy, so they all start using CDS, chopping them up, etc etc.

Is it really that much of a surprise when we found out that bank attorneys are cutting corners in other areas? These are the exact areas where we shouldn't deregulate, where deregulation means that hundreds or thousands of people can be foreclosed upon incorrectly and are forced to sue for their own homes, because banks are just trying to cut corners to make some extra cash.

The fact that Dems and Repubs are willing to help out the financial industry is fucking amazing.

[boutons_deux]

Too Big To Fail

Too Big To Jail

Too Numerous to Prosecute

This is how banks roll, forever. Lend money with tiny reserves, often at usurious rates, cause a financial crisis, grab the property and collateral (hard capital) paying little or nothing.

This is just like the BP blowout. There wasn't a single point of failure checked by others working points in the chain, but a willful and/or negligent cheap-skate/corner-cutting SYSTEM of failures/frauds.

America is fucked. The VRWC/capitalist coup d'etat est un fait accompli, enabled and pushed by the Repugs, as the dickless, equally corrupted Dems stood by.

The diseased, lard-assed, celebrity-ogling, reality TV watching Americans are passive dumbfucks.

There's been a few good articles how the passive, bad-ass Americans take getting buggered by the ruling/capitalist class by shrugging their shoulders and bending over grabbing their ankles, while millions of cheese-eating surrender monkeys are demonstrating all over France.

============

In the Great American Tradition, CRIME PAYS:

About three dozen of the top publicly held securities and investment-services firms—which include banks, investment banks, hedge funds, money-management firms and securities exchanges—are set to pay $144 billion in compensation and benefits this year, a 4% increase from the $139 billion paid out in 2009, according to the survey. Compensation was expected to rise at 26 of the 35 firms[...]

Overall, Wall Street is expected to pay 32.1% of its revenue to employees, the same as last year, but below the 36% in 2007. Profits, which were depressed by losses in the past two years, have bounced back from the 2008 crisis. But the estimated 2010 profit of $61.3 billion for the firms surveyed still falls about 20% short from the record $82 billion in 2006. Over that same period, compensation across the firms in the survey increased 23%.

http://thinkprogress.org/2010/10/12/wall-street-record-compensation/

[ElNono]

The author seems to have gotten most of this right on the money. As I've said before, the financial industry seems to have been infiltrated by morons and crooks. One guy starts betting on CDS's, and greedy firms decided they need to make as many profits as the other guy, so they all start using CDS, chopping them up, etc etc.

Is it really that much of a surprise when we found out that bank attorneys are cutting corners in other areas? These are the exact areas where we shouldn't deregulate, where deregulation means that hundreds or thousands of people can be foreclosed upon incorrectly and are forced to sue for their own homes, because banks are just trying to cut corners to make some extra cash.

The fact that Dems and Repubs are willing to help out the financial industry is fucking amazing.

They're certainly not morons, and it's a lot easier to be a crook when you're hiding behind the structure of a corporation.

[boutons_deux]

"morons and crooks"

Are you fricking kidding me?

The financial sector seduces with signinng bonuses and high salaries, the best and brightest of the top schools, across all disciplines, America's Got Talent. No morons need apply.

[boutons_deux]

And the chickenshit/Wall St-owned White House can't even see, even with investment banker Rahm Emmanuel gone and Wall ST financed Summers on the way out, the huge electoral advantage they would gain with a foreclosure moratorium now, until (for many months, even not years), the foreclosure fraud was stopped, sorted out, and prosecuted.

[CosmicCowboy]

And the chickenshit/Wall St-owned White House can't even see, even with investment banker Rahm Emmanuel gone and Wall ST financed Summers on the way out, the huge electoral advantage they would gain with a foreclosure moratorium now, until (for many months, even not years), the foreclosure fraud was stopped, sorted out, and prosecuted.

You are kidding, right? Wall Street and Goldman Sachs in particular OWNS Obama.

[boutons_deux]

Did I indicate anything differently?

[LnGrrrR]

They're certainly not morons, and it's a lot easier to be a crook when you're hiding behind the structure of a corporation.

I'd say the people who ended up taking the fall were morons, anyone who got away with it were criminal masterminds.

[ElNono]

I'd say the people who ended up taking the fall were morons, anyone who got away with it were criminal masterminds.

Who took the fall? All I hear is that the process has been suspended and politicos talking how it was 'just a mistake'. That's why articles like the one above are being written.

The most I expect of this is banks stopping the practice, and going to do things by the book. But I wouldn't bet that they're not going to wait a year or two and go back at it.

[RandomGuy]

Who took the fall? All I hear is that the process has been suspended and politicos talking how it was 'just a mistake'. That's why articles like the one above are being written.

The most I expect of this is banks stopping the practice, and going to do things by the book. But I wouldn't bet that they're not going to wait a year or two and go back at it.

The banks are going to be stuck with MUCH higher realized losses because of this.

I will dig up some articles on it, but it is looking more and more as if some portion of the promissary notes that should have been passed around actually got shredded, because it was too cumbersome to deal with (gasp) real paperwork.

If that is the case, you will start to see people challenging their mortgages.

"produce the note".

You want of fuck your bank? Ask them to do this. If they can't, stop paying them, and see what ultimately happens.

If they can't provide the piece of paper you signed saying you will pay the mortgage lender (and their successors as the loan is passed around like a cheap whore between sailors on shore leave), then they can't prove in a court that they have the legal standing to evict you.

I am not sure what the ultimate procedure for clearing a lien on a property title is, but if the bank can't then prove it has a lien when you take them to court, that' is that. You then have a free title to your house.

You can remove any lien on a property by challenging the underlying claim that created the lien.

Normally when you buy a house, the lender files with the appropriate governmental body (county where property is located in Texas, if memory serves) a lien that must be cleared upon sale, if you want to find out.

[Winehole23]

The really scary thing is all he investors lining up for their piece, after the robo-signing issue is settled. The related derivatives were considerable, and a lot of em were rated AAA.

[Winehole23]

There's a few people feel they were misled and will say so in court.

[RandomGuy]

The really scary thing is all he investors lining up for their piece, after the robo-signing issue is settled. The related derivatives were considerable, and a lot of em were rated AAA.

Eyup.

That is one of the reasons that I think this will get ugly for the banks.

If as much of the paperwork is fucked up as it appears to be, that gives investors who lost money when these toxic assets tanked cause to recover money from the banks who packaged the loans and sold them as bonds.

[boutons_deux]

Jamie Dimon is whining that there'd be NO PROBLEM if the homeowners were paid up, and that they are 100% responsible for the mess.

The paper work problems are merely procedural. HE LIES, they're criminal fraud.

Expect the Repugs to try to exonerate retroactively the Wall St's crimes, like they retroactively exonerated the telcos for illegal spying.

[Nbadan]

http://www.salon.com/ent/comics/this_modern_world/2010/10/19/this_modern_world/story.jpg

[Winehole23]

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1684729

[Winehole23]

The New York Fed and Pimco sue Bank of America (http://www.businessinsider.com/bank-of-america-getting-crushed-on-news-that-ny-fed-and-pimco-want-to-put-back-mortgages-2010-10) over Countrywide Mortgages.

[boutons_deux]

This way too long for right-wingers, but the you other three people: :lol

Bank of America Mortgage Settlement Fiasco

In fact, the settlement has functioned more as loss mitigation for BofA and investors in mortgage-backed securities than as recompense for victims of predatory lending, says Alan White, an associate professor of law at Valparaiso University and an expert on the subprime crisis. "You are not actually asking [Bank of America] to give up money," says White, who frequently testifies before Congress on mortgage issues. "You are asking them to do something that will make them more money or mitigate their losses. It is a weird way to have somebody pay for past misconduct."

"The state attorneys general have done far more than anyone else, and they were under tremendous pressure not to act," says William Black, an associate professor of economics and law at the University of Missouri, Kansas City, and a federal fraud investigator during the savings and loan scandal. "That said, the settlement does not go to the basic problem, which was fraud by Countrywide."

The lawsuits described a vast "conspiracy" in which Countrywide provided financial incentives to large networks of brokers in exchange for their duping borrowers into taking out toxic loans. In violation of state law, brokers concealed or misrepresented the steep monthly payment increases borrowers faced when mortgage rates readjusted a year or two down the road.

( "Honesty from corporations is privilege, not a right" -- WC :)

and

"Individuals deserve to be defrauded by corps if they can't spot it" :lol )

the scam worked. Countrywide grew from originating $62 billion in loans in 2000 to more than $463 billion in 2006, while the lender's securities trading volume more than quintupled, from $647 billion in 2000 to $3.8 trillion in 2006. The company's CEO, the flashily dressed and perma-tanned Angelo Mozilo, became one of the highest-paid executives in the nation, with an influence on markets approaching that of Alan Greenspan.

By the end of 2007, according to Countrywide's own estimates, a staggering 27 percent of the lender's subprime loans were delinquent.

public employee pension funds that invested heavily, and disastrously, in Countrywide's mortgage-backed securities.

Only about 12 percent of the first-lien loans initiated by Countrywide remain on BofA's books. Investors in mortgage-backed securities, including major pension funds like CalPERS (the California Public Employees' Retirement System), own the other 88 percent, and it is these investors who will bear most of the expense of complying with the settlement, in the form of permanently reduced principal and interest payments on their bond holdings.

etc, etc, etc

"BofA press release. "Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus." "

:lol :lol :lol :lol aka "fraudulent corporate bullshit"

http://readersupportednews.org/off-site-news-section/81-81/3662-foreclosuregate-what-bank-of-america-isnt-saying

===========

So let's all give the supposedly empty and bankrupt Social Security fund to Wall St. Wall St always pays off big to public pension funds.

And let's not regulate Wall St or any corporation. They're completely and effectively self-regulating, self-policing and completely trustworthy.

And of course, Countrywide was a Bad Apple, a Rogue Operator. The rest of the financial sector is sweet-smellingly, virginally pure, and scrupulously honest.

[boutons_deux]

a new financial euphemism to learn: PUT-BACK

Citi Could Face A $22 Billion Loss On Put-Back Mortgage Bonds

So how large is Citigroup’s exposure? Using some figures from Citi’s earning’s presentation and financial analyst Dick Bove, I’ve concluded that as much as $58 billion in bubble-era home loans packaged in mortgage backed securities serviced by Citi have or will likely default. Citi may be liable for buying back as much as $35 billion of the loans. After recovering some of that through foreclosure sales, Citi may be looking at a loss of $22 billion.

http://www.cnbc.com/id/39737924

======

Freddie and Fannie could destroy all the big banks and lenders by demanding put-backs for all the toxic mortgages F&F were defrauded with.

[boutons_deux]

A CNBC financial sector cheerleader:

Sorry Folks, The Put-Back Apocalypse Ain't Gonna Happen

Here’s what is going to happen: Congress will pass a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act.

There’s a big difference between the financial crisis of 2008 and the new crisis. In 2008, banks were destabilized by the growing realization that they were over-exposed to the real estate market. Huge portions of their balance sheets were committed to mortgage-linked investments that were no longer generating the expected revenues or producing losses. That was a problem of economics that could only be solved by recapitalizing banks or letting some of the biggest banks in the U.S. fail.

The put-back crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.

http://www.cnbc.com/id/39686897

[ElNono]

Here’s what is going to happen: Congress will pass a law called something like “The Financial Modernization and Stability Act of 2010” that will retroactively grant mortgage pools the rights in the underlying mortgages that people are worried about. All the screwed up paperwork, lost notes, unassigned security interests will be forgiven by a legislative act.

Completely agree this is what we're looking at. There will probably be a few cases settled, then legislation will pass that will 'loosen up' the requirements outlined in OP under the guise of more 'flexibility' while eroding property rights in the process.
It's simply a better investment for the bank to spend on lobbying to legalize the practice than simply writing-down the loses, and losing what I would think they consider an 'important tool' in their toolbox. They're already freaking out after losing the credit card penalties and rate hikes, I don't think they're going to be the loser on this one.

[boutons_deux]

Foreclosuregate Fallout: How Bad Can It Get For Wall Street?

URL to article: http://blogs.alternet.org/speakeasy/2010/10/20/foreclosuregate-fallout-how-bad-can-it-get-for-wall-street/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=alternet

Foreclosure fraud is ruffling a lot of feathers on Wall Street, and while the full scope of losses remains unclear, even major banks are now acknowledging that this is a multi-billion-dollar disaster, not just a set of minor paperwork headaches.

So how bad will it get for Wall Street? There are several disaster scenarios in which the housing market simply shuts down, where the potential losses for Wall Street are simply incalculable. But even situations that do not directly rip apart the basic functioning of the mortgage system could be enough to shut down one or more big banks, creating serious trouble for the financial system, and a major test of the recent Wall Street reform bill.

JPMorgan Chase loves using its research department to push its political agenda, and the bank is currently characterizing the foreclosure fraud outbreak as a set of “process-oriented problems that can be fixed.” That makes them the rosy optimists for this crisis, and they’re projecting a total of $55 billion to $120 billion in losses for the entire industry, spread out over a few years.

But take a look at the analysts’ methodology. The actual scope of losses gets drastically larger if you just change a few arbitrary assumptions.

JPMorgan’s analysts look at about $6 trillion in mortgages issued between 2005 and 2007—this is the height of the bubble, but it excludes plenty of lousy loans issued in 2003, 2004 and 2008. They then estimate defaults of $2 trillion and losses of $1.1 trillion on those defaults.

So far, these estimates are reasonable. According to Valparaiso University Law School Professor Alan White, banks lose about 58 percent of the value of a subprime loan at foreclosure. JPMorgan is estimating 55 percent. The notion that one-third of mortgages issued at the height of the bubble will default may seem extreme, but the analysis includes both first-lien mortgages and second-lien mortgages (home equity loans). For houses with multiple mortgages, there’s going to be a double-hit when the first lien goes bad. Right now, the official statistics from Mortgage Bankers Association indicate that 14 percent of first mortgages are delinquent or in foreclosure. The longer unemployment stays near 10 percent, the higher that figure will go.

Things don’t get out of control until JPMorgan’s analysts start deploying their assumptions. First, they assume that Fannie and Freddie will attempt to sack banks with losses from 25 percent of the defaults they see. Of those 25 percent, they assume Fannie and Freddie will successfully force banks to eat losses on 40 percent, leading to total losses of 10 percent. Why 25 percent? Why 40 percent? The analysts don’t say. For lawsuits brought by private-sector investors, JPMorgan expects just 5 percent to be successful, citing a host of technical legal hurdles that make it hard for investors to have their cases heard in court.

So JPMorgan’s loss projections are nothing more than a guess—and a low-ball guess at that. JPMorgan is assuming that only five to 10 percent of looming foreclosure losses will actually hit big banks. Change that assumption—20 percent, 60 percent, 80 percent—and things get far worse for Wall Street than JPMorgan’s “worst-case” scenario predicts.

Let’s consider the exposures of a single bank to put things in context, and let’s pick Bank of America, since analysts seem to agree that BofA has the most to worry about right now. They were a big issuer of mortgages themselves, but they also purchased the notoriously predatory Countrywide Financial and also picked up securitization behemoth Merrill Lynch in 2008, giving them far more problems (hilariously, BofA actually paid cash to acquire these balance-sheet-busters).

The most dire estimates for losses on Fannie and Freddie loans at BofA have come from Christopher Whalen at Institutional Risk Analytics and Branch Hill Capital. Whalen has estimated $50 billion in Fannie and Freddie losses for the megabank, while Branch Hill has estimated $70 billion.

The trick is, BofA has $2.1 trillion in total exposure to Fannie and Freddie, according to Whalen. That means even Branch Hill’s massive loss projection only amounts to a loss rate of about 3.5 percent.

As of July 2010, Fannie Mae had a serious delinquency rate of 4.82 percent—these are loans where families have missed at least three payments, but haven’t been evicted. For Freddie Mac, the number is 3.83 percent. Not all of those losses can be pushed back on the banks, but those numbers will go up as the unemployment rate stays high. Tip the scales just a few percentage points and it’s easy to envision catastrophic losses for banks.

But there’s reason to believe that Bank of America is in even worse shape with regard to Fannie and Freddie than any of its peers. Countrywide was the single largest provider of loans to Fannie Mae during the housing bubble. Literally 28 percent of the loans Fannie Mae bought up in 2007 came from Countrywide. Fannie even featured a full-page, smiling photograph of Countrywide CEO Angelo Mozilo in their 2003 Annual Report (.pdf, see page 16).

It’s much easier for banks to lose money on bad loans they sold to the GSEs than it is for them to lose money on securities they sold to purely private-sector investors. The fact that Bank of America’s most notorious wing was the top provider to Fannie Mae during the peak years of the housing bubble does not bode well for the bank’s balance sheet.

But this is just exposure to Fannie and Freddie. The private sector is angry about all kinds of things—from wronged borrowers to deceived investors. Investors are already organizing against both mortgage servicers—for improperly handling troubled loans—and against investment banks—for selling them garbage. They aren’t just angry about fraudulent foreclosures—evidence is mounting that mortgage servicers can’t even handle the profits from mortgages correctly, and aren’t sending investors reliable, verifiable payments.

Yesterday investors sent a letter pressuring Countrywide’s servicing arm to push losses from bad mortgage bonds back on the bank that sold them. Legally, it’s a complicated maneuver, since Countrywide itself issued those bonds—but that just shows the multiple levels at which megabanks like BofA are exposed to fraud losses. Their original sale of mortgages to borrowers, the packaging of those mortgages into securities, the handling of payments and foreclosures, and the accounting for all of these activities—all of this is about to be subjected to serious fraud examinations by people who are trying to make money.

Up until yesterday, big banks thought they had a get-out-of-jail free card on investor lawsuits. Investors have to bring together 25 percent of the buyers of any mortgage bond in order to sue the bank that issued it—even if the actual lawsuit is an open-and-shut fraud case. Investors had not been cooperating. But yesterday’s letter to Countrywide is a big deal—even though it’s not (yet) a lawsuit, some of the biggest names in finance were going after Countrywide’s cash: BlackRock, PIMCO and even the New York Federal Reserve.

Bill Frey, who runs the hedge fund Greenwich Capital, has organized a massive clearinghouse of mortgage investors for the express purpose of bringing lawsuits against big banks that issued bogus mortgage-backed securities. He told me this afternoon that he’s about to move: In the next couple of weeks Greenwich and other investors will bring big lawsuits against major banks.

Will these combined troubles be enough to sink any big banks? If investors can win a couple of lawsuits, easily.

============

Holy shit.

[boutons_deux]

Regulator for Fannie Set to Get Litigious

The federal regulator overseeing Fannie Mae and Freddie Mac hired a law firm specializing in litigation as the agency considers how to move forward with efforts to recoup billions of dollars on soured mortgage-backed securities purchased from banks and Wall Street firms.

The Federal Housing Finance Agency, which in July issued 64 subpoenas to issuers of mortgage securities, bank servicing companies and other entities, is working with Quinn Emanuel Urquhart & Sullivan LLP, a Los Angeles-based firm that specializes in business litigation, to coordinate its investigations.

http://online.wsj.com/article/SB10001424052702304011604575564631414300418.html#p rintMode

========

Will they have the balls to cram down Wall St's throat these toxic mortgages?

[Winehole23]

Richard M. Bowen (http://search.bloomberg.com/search?q=Richard%20M.%20Bowen&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1&partialfields=-wnnis:NOAVSYND&lr=-lang_ja), former chief underwriter for Citigroup (http://www.bloomberg.com/apps/quote?ticker=C:US)’s consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.


“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”
http://www.bloomberg.com/news/2010-10-21/banks-fight-two-front-war-over-flawed-mortgages-with-investors-homeowners.html

[Wild Cobra]

http://www.bloomberg.com/news/2010-10-21/banks-fight-two-front-war-over-flawed-mortgages-with-investors-homeowners.html
Sounds like they have a problem, should fire and press charges against their employees who did this.

[Winehole23]

Sounds like they have a problem, should fire and press charges against their employees who did this.Sounds more like banks knew about he wave of defective mortgages three or four years ago and instead of fixing the problem, redoubled their reliance on fraudulent practices. Charges should be pressed against the banks too.

[boutons_deux]

And Franklin Raines walked away with 100 of $Ms.

There ya go, WC, punish the individual, never the institution

The originators/sellers of the fraudulent mortgages have to eat the bad mortgages. Estimates this week are that F&F's hit on the taxpayers could approach $300B in the next couple years.

btw, liar borrowers of "liar loans"/stated income are also federal criminals.

[boutons_deux]

The Elephant In The Foreclosure Fraud Room: Second Liens

There’s been plenty of recent media attention to the prospect of investor lawsuits over fraudulent mortgages and mortgage securities. But investor lawsuits against mortgage servicers could be even more damaging than these other lines of legal inquiry. The four largest banks hold nearly half a trillion dollars worth of second-lien mortgages on their books—loans that could be decimated if investors successfully target improper mortgage servicing operations. The result would be major trouble for the financial system. The result would be major trouble for too-big-to-fail behemoths.

Bank of America, Wells Fargo, JPMorgan Chase and Citigroup service about half of all mortgages in the United States. They also have multi-trillion-dollar businesses whose interests often conflict with those of mortgage security investors.

The most glaring conflicts involve second-lien mortgages. Much of the foreclosuregate coverage has focused on first-liens—ordinary mortgages that people take out when they want to buy a home. But during the housing bubble, banks frequently sold second-lien mortgages in an effort to cash-in on inflated home prices.

even when home prices have declined dramatically, losses from foreclosure on first liens only eat up about 58 percent of the value of the loan, according to Valparaiso University Law Professor Alan White. The second lien, by contrast, is 100 percent gone.

Many investors believe that banks are servicing first-lien mortgages for the benefit of second-liens. That’s because the megabank servicers own the second liens, while mortgage security investors own the first liens. This is a conflict-of-interest. A servicer is supposed to maximize the value of the first-lien for the investor. But it’s conceivable that servicers–JPMorgan Chase, BofA, Citi, Wells Fargo– are systematically screwing over both borrowers and investors in order to maximize profits on second-lien mortgages that are, by any reasonable economic analysis, already worthless

investors are organizing to go after improper mortgage servicing itself, not just fraudulent loan and security sales. That means investors are trying to sack banks with second-lien losses—and second-lien losses could easily dwarf the other losses that analysts have focused on so far.

http://blogs.alternet.org/speakeasy/2010/10/21/the-elephant-in-the-foreclosure-fraud-room-second-liens/#

[Winehole23]

Some judges chastise banks over foreclosure paperwork


By Ariana Eunjung Cha (http://projects.washingtonpost.com/staff/articles/ariana+eunjung+cha/)
Washington Post Staff Writer

Tuesday, November 9, 2010; 12:07 AM



EAST PATCHOGUE, N.Y. - A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company's paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower so "repugnant" that he erased the family's $292,500 debt and gave the house back for free.


Your Take: Could regulators have done more to prevent the foreclosure mess? (http://wapo.st/dwEMt5)
Some judges chastise banks over foreclosure paperwork (http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110806583.html)
Foreclosure Nation (http://www.washingtonpost.com/wp-dyn/content/graphic/2010/10/18/GR2010101806640.html)
Timeline: The foreclosure debacle (http://www.washingtonpost.com/wp-srv/business/foreclosure-freeze/timeline.html)
Full coverage: Foreclosure system in chaos (http://www.washingtonpost.com/wp-srv/business/foreclosure-freeze/index.htm)
Thousands of foreclosures are put on hold (http://www.washingtonpost.com/wp-dyn/content/gallery/2010/10/04/GA2010100406108.html)



The judgment in favor of the homeowner, Diane Yano-Horoski, which is being appealed, has alarmed the nation's biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation's foreclosure system.



It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110806583.html?tid=wp_featuredstories

[boutons_deux]

Expect the newly elected Repug state A/G's to pull out of the group of state A/G going after the lenders. That's why the VRWC financed their campaigns.

[Winehole23]

Expect the newly elected Repug state A/G's to pull out of the group of state A/G going after the lenders. That's why the VRWC financed their campaigns.Eh, we'll see.

Your emphasis on second-lien financing was more on point. Still, thanks for momentarily staying on topic. :tu

[boutons_deux]

THREAD DRIFT ALERT!!

Judge Dismissed $292,500 in Debt Due to Shady Lender Practices -- Wall St. Freaks Out

Last year, Long Island judge Jeffrey Spinner dismissed a foreclosure case––and $292,500 in debt––because the paperwork was so haphazard, reports the Washington Post. He called the lender's behavior "repugnant" and gave homeowner Diane Yano-Horoski's her house back. The ruling is being appealed by lender OneWest Bank, but if it sets a legal precedent it could have strong implications on the future of foreclosure cases

http://www.alternet.org/newsandviews/article/325710/judge_dismissed_%24292%2C500_in_debt_due_to_shady_ lender_practices_--_wall_st._freaks_out/

[Winehole23]

lol

[Winehole23]

(http://clippings.ft.com/clipthis/?url=http%3A%2F%2Fftalphaville.ft.com%2Fblog%2F201 0%2F11%2F05%2F396356%2Fciti-slapped-with-subprime-rmbs-lawsuit%2F&title=Citi+slapped+with+subprime+RMBS+lawsuit&note=No+sooner+had+rumblings+over+Citigroup%27s+%2 2toxic+mortgage+pipeline%22+began+--+than+the+bank+becomes+the+next+in+line+to+be&datepublished=2010-11-05+16%3A19%3A08&tags=citigroup%2Cforeclosure+scandal%2Clawsuits%2C rmBS%2CUS+mortgages)
Citi slapped with subprime RMBS lawsuit

Posted by Tracy Alloway (http://ftalphaville.ft.com/blog/author/tracyallowayftcom/) on Nov 05 16:19. No sooner had rumblings over Citigroup’s “toxic mortgage pipeline (http://www.cnbc.com/id/39916451)” began — than the bank becomes the next in line (http://ftalphaville.ft.com/blog/2010/10/20/376631/those-blemished-countrwide-credit-loans/) to be embroiled in a mortgage-related lawsuit.


Spotted in Citi’s just-filed third-quarter 10-Q (http://www.sec.gov/Archives/edgar/data/831001/000104746910009274/a2200785z10-q.htm):

In addition, beginning in July 2010, several investors, including Cambridge Place Investment Management, The Charles Schwab Corporation, the Federal Home Loan Bank of Chicago and the Federal Home Loan Bank of Indianapolis, have filed lawsuits against Citigroup and certain of its affiliates alleging actionable misstatements or omissions in connection with the issuance and underwriting of residential mortgage-backed securities. As a general matter, the plaintiffs in these actions are seeking rescission of their investments or other damages. Additional information relating to these actions is publicly available in court filings under the docket numbers 10 Civ. 11376 (D. Mass.) (Gorton, J.), 10 Civ. 4030 (N.D. Cal.) (Illston, J.), 10 CH 45033 (Ill. Cook County Cir. Ct.), LC 091499 (Cal. L.A. County Super. Ct.) and 10 PL 045071 (Ind. Marion County Super. Ct.).


The subprime-mortgage-related proceedings described above are in their preliminary stages. Accordingly, Citigroup cannot at this time estimate the possible loss or range of loss, if any, for these actions or predict the timing of their eventual resolution.
A sharp-eyed Wall Street Journal (http://online.wsj.com/article_email/SB10001424052748704353504575596200966008026-lMyQjAxMTAwMDAwNTEwNDUyWj.html) has picked up the story, and reports that Charles Schwab has no fewer than 10 other ‘big bank’ mortgage lawsuits pending.


We’re guessing there’s lots more to come.
http://ftalphaville.ft.com/blog/2010/11/05/396356/citi-slapped-with-subprime-rmbs-lawsuit/

[Winehole23]

Bank of America Corporation (NYSE (http://247wallst.com/2010/11/05/bofa-tally-on-mortgage-securities-375-billion-bac/#): BAC) filed its quarterly report with the SEC today as its 10-Q. Generally speaking these filings are often nebulous and contain many factoids that are often taken as both good and bad. After looking through the litigation and legal proceedings sections, Bank of America has quantified the size of its mortgage-fraud related suits. The company has not admitted any guilt and it did not quantify or project any expected outcome. The figure is a shocking $375 billion.

Read more: BofA Tally on Mortgage Securities: $375 Billion (BAC) - 24/7 Wall St. (http://247wallst.com/2010/11/05/bofa-tally-on-mortgage-securities-375-billion-bac/#ixzz15ZEElstf) http://247wallst.com/2010/11/05/bofa-tally-on-mortgage-securities-375-billion-bac/#ixzz15ZEElstf

[boutons_deux]

House Tries To Bailout Foreclosure Fraudsters, Again


A month ago, President Barack Obama vetoed a bill that would have made it far more difficult for borrowers to prove that banks were engaging in foreclosure fraud. The bill was a complex, highly technical bailout for megabanks that have defrauded millions of borrowers, flaunted the rule of law and and driven our economy off a cliff. The legislation passed both houses of Congress quietly and without much attention, but once consumer advocates sounded the alarm, Obama rejected the legislation, and the bill appeared dead.

( boutons brilliance: looking for diff bewteenr Dems and Repugs? dubya or McLiar would not have vetoed the bill)

Not anymore. Despite widespread public anger and presidential rejection, the House will vote on the issue again today in an attempt to override Obama’s veto. The legislation was reintroduced by Rep. Bobby Scott, D-Va. The bill would require every state to accept notary signatures from any other state. This essentially defeats the purpose of notarization itself, since a notary is supposed to attest to having first-hand knowledge of a specific case. If two parties sign a mortgage contract in Ohio, a notary from New York probably wasn’t there to watch it happen.

In foreclosure fraud, this is important because banks are robo-signing documents in order to cover-up problems with their loan documentation. In the GMAC scandal that ignited the recent controversy, a robo-signer named Jeffrey Stephan had hundreds of thousands of these documents notarized in Pennsylvania, even though they concerned foreclosure cases all over the country. If courts have to accept out-of-state notarizations, it becomes much more difficult to demonstrate that GMAC is committing rampant fraud.

http://blogs.alternet.org/speakeasy/2010/11/17/house-tries-to-bailout-foreclosure-fraudsters-again/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=alternet#

========

America never ceases to amaze how fast it's going down the toilet, flushing itself it faster than any right-wing external fantasy threat.

[Winehole23]

UPDATE:
Rep. Scott’s PR guy just told me the Congressman just happened to be around to make a procedural vote. He says Scott “was in the wrong place at the wrong time” and does not support the legislation. David Dayen at Firedoglake argues that this entire reconsideration of the bill is likely a separation of powers dispute between Congress and President Obama (http://news.firedoglake.com/2010/11/17/hr3808s-resurrection-seems-more-about-separation-of-powers/) regarding the technical procedure Obama used to veto the bill. The legislation may not even come up for a vote. Or it might, for separation of powers purposes, and the result might be bad.
Is there some reason you didn't post the update, boutons?

[Winehole23]

Looking back at George W. Bush’s 2007 claim of a pocket veto, the situation there was that a House-originated bill met with Bush’s disapproval at a time when the House was adjourned, but the Senate was holding pro forma sessions — exactly as is the case with H.R. 3808. Thing is, Bush actually returned the bill as well, just to be sure it wasn’t enacted, but he claimed that it was a pocket veto anyway, because he wanted to prevent any chance at an override.
By what logic did Bush claim a pocket veto if he returned the bill? He said that the House, which originated the bill, was in adjournment and that Senate pro forma sessions didn’t count for the purposes of determining if the Congress was in session. That’s a view rejected at the time by Speaker Pelosi’s office (http://thehill.com/homenews/news/13989-democrats-say-bush-cant-pocket-veto-defense-bill):


“Congress vigorously rejects any claim that the president has the authority to pocket-veto this legislation, and will treat any bill returned to the Congress as open to an override vote,” said Nadeam Elshami, a spokesman for Pelosi. He said the Speaker is keeping all legislative options on the table.
http://news.firedoglake.com/2010/11/17/hr3808s-resurrection-seems-more-about-separation-of-powers/

[Winehole23]

This is procedural rigamarole, boutons. The bill won't pass, but Congress will assert its override privileges.

[boutons_deux]

Is there some reason you didn't post the update, boutons?

I posted the link to the article.

[Winehole23]

Disingenuous. It changes the whole tenor of the article.

[TeyshaBlue]

Disingenuous. It changes the whole tenor of the article.

that's the "brilliance" of boutons.:lmao

[Winehole23]

I wonder why boutonski is ginning up bogus alarm on a subject he putatively cares about.

Maybe he's a Repug disinfo agent, sent to poison the well. :lol

[boutons_deux]

The point was not exec/legislative mechanics, but that the bill gives the criminally fraudulent, predatory financial sector a stay-out-of-jail card, fucking over citizens and property law, which used to be sacred until they were buggered.

[Winehole23]

Sure. And you clipped the supporting article in such a way that suggested the bill was about to pass. Misleading.

[coyotes_geek]

The point was not exec/legislative mechanics, but that the bill gives the criminally fraudulent, predatory financial sector a stay-out-of-jail card, fucking over citizens and property law, which used to be sacred until they were buggered.

Funny, I thought the point was looking for differences between dems and repugs.


( boutons brilliance: looking for diff bewteenr Dems and Repugs? dubya or McLiar would not have vetoed the bill)

Nevermind that small detail about the bill breezing through two dem controlled houses without debate.........

[TeyshaBlue]

Myopic troll is myopic.

[boutons_deux]

It doesn't matter who passes it.

the financial sector's crimes are going to be unprosecuted/absolved by the govt at the expense of the citizens.

and we won't hear a peep out of Fox, the Repugs, Beck, Palin, etc.

[TeyshaBlue]

It doesn't matter who passes it.

the financial sector's crimes are going to be unprosecuted/absolved by the govt at the expense of the citizens.

and we won't hear a peep out of Fox, the Repugs, Beck, Palin, etc.

nor the House Democrats.

[TeyshaBlue]

It doesn't matter who passes it until it does!

[Winehole23]

the financial sector's crimes are going to be unprosecuted/absolved by the govt at the expense of the citizens.The investor class (and its intermediaries) may have something to say about that in civil and criminal process before this is all over.

[boutons_deux]

Yeah, the fat lady ....

just a reminder how property transfers and ownership have been buttressed by extreme levels legal, procedural, multi-party controls

http://www.alternet.org/module/printversion/148898

[Winehole23]

That's the OP, boutons.

lol

[Winehole23]

(meh)

[TeyshaBlue]

:facepalm:

[coyotes_geek]

It doesn't matter who passes it.

Right. It doesn't matter who passes it, it only matters that there might be a repug out there who didn't voice objection to it and that "proves" that dems are better than repugs.


the financial sector's crimes are going to be unprosecuted/absolved by the govt at the expense of the citizens.

and we won't hear a peep out of Fox, the Repugs, Beck, Palin, etc.

We've officially moved on to stage 3 of a boutons topic.

Stage 1: boutons crafts a one sided, biased and misleading arguement against repugs
Stage 2: someone calls him on it and points out culpability on the other side
Stage 3: boutons ignores democrat culpability and takes the discussion to a more transcendental state along the lines of "the man" trying to keep everybody down.

All we need now is another round of rebuttals (stage 4) and the inevitable boutons retreat involving some kind of personal insult (stage 5) and our business will be done here.

[TeyshaBlue]

Right. It doesn't matter who passes it, it only matters that there might be a repug out there who didn't voice objection to it and that "proves" that dems are better than repugs.



We've officially moved on to stage 3 of a boutons topic.

Stage 1: boutons crafts a one sided, biased and misleading arguement against repugs
Stage 2: someone calls him on it and points out culpability on the other side
Stage 3: boutons ignores democrat culpability and takes the discussion to a more transcendental state along the lines of "the man" trying to keep everybody down.

All we need now is another round of rebuttals (stage 4) and the inevitable boutons retreat involving some kind of personal insult (stage 5) and our business will be done here.

Brilliant!:lol
http://i3.photobucket.com/albums/y64/teyshablue/brilliant.jpg

[Winehole23]

Do you read the links, boutonski?No. boutonski barely reads anything at all. He just spams us with his RSS feeds and free-associates.

[Winehole23]

How else would he end up reposting the OP on page three?

[RandomGuy]

No. boutonski barely reads anything at all. He just spams us with his RSS feeds and free-associates.

All part of the internet flora and fauna.

I have become somewhat sanguine about boutons and bizzaro_boutons et al.

Occasionally, boutons will drop the schtick and post genuine, surprisingly well-thought out original stuff. There is a real person under the persona that I suspect would be good to have a beer with.

[Winehole23]

There is a real person under the persona that I suspect would be good to have a beer with.I've not seen much evidence for that.

[Winehole23]

But it could be true.

[Winehole23]

(http://www.bloomberg.com/apps/quote?ticker=USB%3AUS)US Bancorp (http://www.bloomberg.com/apps/quote?ticker=USB%3AUS) and Wells Fargo & Co. lost a foreclosure case in Massachusetts (http://topics.bloomberg.com/massachusetts/)’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real estate law. The ruling drove down bank stocks.

http://www.bloomberg.com/news/2011-01-07/us-bancorp-wells-fargo-lose-pivotal-massachusetts-foreclosure-case.html

[Winehole23]

The closely-watched decision involves two foreclosures: that of Antonio Ibanez and Mark and Tammy LaRace and whether U.S. Bancorp and Wells Fargo, respectively, had proper legal standing to take back the homes after the borrowers missed their payments.


After examining the paperwork filed by the banks, a lower court judge, the Massachusetts Land Court's Keith C. Long, said he had determined that the mortgage "note" that proves who the owner is had not been properly transferred when the banks auctioned off houses.


Long's decision hits on one of the most sensitive issues related to how mortgages were securitized: something called "endorsements in blank." In the rush to aggregate and sell and then resell mortgages, many of the mortgages documents were transferred without explicitly naming who the note was being sold to.



The financial services industry has argued that this practice is legally valid but Long ruled, "These blank mortgage assignments were never recorded and they were not legally recordable."


The banks had appealed Long's decision, arguing that they had clear title to the properties. But on Friday, Massachusetts Supreme Court Justice Ralph D. Gants wrote that the court agreed that the banks "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure."
http://voices.washingtonpost.com/political-economy/2011/01/ruling_in_massachusetts_forecl.html

[Winehole23]

(H/T, Daily Bail (http://dailybail.com/).)

[ElNono]

What property rights? /sarcasm

[Winehole23]

Like Hernando De Soto (http://www.cato.org/special/friedman/desoto/index.html) said recently, this is how things look when trust breaks down. Trust is breaking down in the US.

[Winehole23]

FDIC Calls for Better Disclosure of Servicer Conflicts of Interest in Second Mortgages (http://www.nakedcapitalism.com/2011/01/fdic-calls-for-better-disclosure-of-servicer-conflicts-of-interest-in-second-mortgates.html)

There are lots of reasons why servicers are failing to make deep enough mortgage mods to salvage viable borrowers (ones who still have a decent level of income). One of the most troubling is that the parent bank often also has a large book of second mortgages, and writing down first mortgages would require them to ding their second mortgage book. Various conservative estimates have indicated that more realistic valuations of second mortgages would blow a big hole in the balance sheets of the four biggest banks in the US. (The banks’ defense is that borrowers are often still paying their second mortgages when they’ve defaulted on their first. And that occurs because borrowers who are stressed try to stay current on as many obligations as they can, so if they can’t pay both their first and second mortgage, they will often default on the first but keep paying like clockwork on the smaller second mortgage. BTW, that also is in contrast to the widespread “deadbeat borrower” meme, the fact that borrowers keep trying to stay current on the obligations they can meet).


The FDIC seems to be the lone regulator trying to protect investors. And this is simply common sense. Investors are refusing to buy any new deals save those with some sort of government guarantee precisely because securitization industry participants behaved so badly during the housing bubble. Yet the industry refuses to implement even minor measures to make it safe for investors to get back into the pool (no pun intended).
Even more peculiar are the efforts underway by the Treasury (which will also be taken up with even more vigor by the incoming Republican house) to “reform” Freddie and Fannie, which is code for “reduce the role and have more done in private markets”. That’s a great goal in theory, but there IS no private market now. You can’t sensibly be in favor of Fannie and Freddie reform and not also be promoting reform of the securitization process. Yet bizarrely, that is exactly the posture the Administration is taking.



From MarketWatch (http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201101100818dowjonesdjonline000 143&title=fdic-weighing-second-mortgage-disclosure-rule-for-banks):

…the FDIC is considering whether big banks that own both servicers and second-lien loans should need to disclose to mortgage investors, before loans are packaged and sold, what would happen to the second-lien loan if the first mortgage comes into distress…


In many cases big bank holders of second lien loans haven’t disclosed what their arrangement is on those loans with the corresponding owner of the primary mortgagee….


The servicer won’t modify the second-lien loan because of what it means for their parent bank’s balance sheet, and the mortgage investors of the primary loan, in return, won’t want to modify the primary mortgage if the second lien is not being modified,” says Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys. “However, the servicer is supposed to act in the best interest of all parties, not just the second-lien loan its parent bank owns.”…


Regulators may soon want banks issuing primary mortgages for securitization to disclose in pooling and servicing agreements with mortgage investors what happens to the second lien they own if the first lien is in trouble.


With this kind of disclosure, Sommer insists, investors would only agree to buy mortgage securities from banks that agree in advance in the PSAs to completely write off or proportionately write down the second-lien loans in situations where the primary mortgage comes into distress…


One way bank regulators are considering to address this issue would be to have significant disclosure and PSA requirements of this kind for mortgages that are approved as “qualified residential mortgages.” The FDIC and other bank regulators are working on writing a definition for what kind of mortgages would fall into this category. The definition of what constitutes a QRM is controversial because these types of mortgages would be exempt from soon-to-be- approved “skin in the game” rules requiring banks to retain some of the risk of loans they package and sell.


Greater disclosure is a much less intrusive response than that being sought by a group of 10 Democratic lawmakers on Capitol Hill. Rep. Brad Miller (D., N.C.) and nine fellow Democrats want regulators to go one step further and require bank regulators and a newly formed Financial Stability Oversight Counsel to consider requiring big banks to divest their servicer units.
http://www.nakedcapitalism.com/2011/01/fdic-calls-for-better-disclosure-of-servicer-conflicts-of-interest-in-second-mortgates.html

[Winehole23]

http://ftalphaville.ft.com/blog/2011/01/10/453621/the-economic-impact-of-the-foreclosure-slowdown/

[Winehole23]

Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.”



But New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”
http://www.nytimes.com/2011/01/11/business/11lawyers.html?_r=1&ref=business

[Winehole23]

“When the consequence of a lawyer plying his trade is the loss of someone’s home, and it turns out there are documents being given to the courts that have no basis in reality, the profession gets a very big black eye,” Professor Gillers said.

[Winehole23]

The mortgage servicing industry should fund a new commission to compensate homeowners who may have wrongly been kicked out of their homes, a top U.S. banking regulator said on Wednesday.


Federal Deposit Insurance Corp Chairman Sheila Bair said this claims commission could be modeled on those created to compensate victims of the BP oil spill and Sept. 11, 2001 attacks. She said the size of such a claims fund would have to be negotiated.http://www.reuters.com/article/idUSN1922390420110119

[boutons_deux]

I read where "some think" Congress will make all the paperwork fraud legal ex post facto, as being the only way to "settle" a hyper-complicated, humongous pile of shit the predatory, avaricious lawyers, yes the fucking lawyers, and the predatory, avaricious financial sector have shafted the mortgage system while stealing from citizens.

Trust has broken down? G M A BIG FAT F B

A "country of laws" not of men? G M A BIG FAT F B

USA is fucked into UCA, and is unfuckable.

[Winehole23]

F b?

[Winehole23]

Uca?

[boutons_deux]

the Internet abbreviation dunce strikes again

fucking break

United Corporations of America

[boutons_deux]

Requiem for MERS (and the Banks That Created the Frankenstein Monster)


It is now widely recognized that MERS facilitated fraud by lenders, servicers, foreclosers and securitizers. Even on the most charitable interpretation it is very difficult to believe that MERS was not fraudulent by design.

http://www.huffingtonpost.com/l-randall-wray/requiem-for-mers-and-the-_b_812940.html?view=print

==========

Sure bet:
no one will go to jail,
no one will even be fined,
taxpayers will not regurgitate the toxic shit Geithner forced them to eat to save the bankrupt financial sector.

Also sure bet: Repugs will defund/emasculate the SEC and CFPA and banking regulations, if they can't actually kill it all.

[Winehole23]

the Internet abbreviation dunce strikes again

fucking break

United Corporations of AmericaYeah well the syntax fairy gave you a beating with her wand of ungrammatical elocution, so it evens out.

[boutons_deux]

History Repeats Itself: Wall St. Wants a Part of Fannie and Freddie’s Gov’t-Guaranteed Deal

banks are suggesting that they be allowed to take over some of Fannie and Freddie’s work of issuing securities backed by a government guarantee. That guarantee can be quite convenient for businesses, which get to keep the profits in good times and—as we saw during the housing market collapse—get to socialize the losses by passing them onto the government. From the Times:

Government data shows Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.

… Fannie and Freddie, Cecala says, didn’t start making a big move into riskier mortgages until the mortgage boom was already under way, and they were fighting to reclaim market share they’d lost to more aggressive Wall Street players. Even then, they were more cautious than Lehman Brothers and other investment banks. For example, just over 15 percent of Fannie- and Freddie-backed loans made in 2007 have been seriously delinquent, compared to nearly 42 percent of mortgages bankrolled by Wall Street, according to the FHFA.

http://www.propublica.org/blog/item/history-repeats-itself-wall-st.-banks-gun-for-fannie-and-freddies-business

=========

Barry is now sucking off corps and Wall St, assuring that America stays fucked as UCA.

Repug Congress will exonerate retroactively financial sector criminal fraud, and the Dems/Barry will go along "for the good of the economy".

And you right-wing fucktards here, please repeat the lie that CRA and Fannie and Freddie were entirely responsible for the housing crisis.

[Winehole23]

Have pity on us poor fucktards, o great boutons. The gods did not give us the sagely foresight they gave you, nor the steely self-certainty.

[boutons_deux]

WH, you jerks are so damn lucky I stoop low to participate in this forum.

[TeyshaBlue]

WH, you jerks are so damn lucky I stoop low to participate in this forum.

Troof! You've provided a steady diet of amusement and a couple of absolute laugh out loud moments.:lol

[Winehole23]

WH, you jerks are so damn lucky I stoop low to participate in this forum.The strain on your back couldn't be any worse than the hurting you put on the English language every day.

[Winehole23]

American Banker posted the 27 page term sheet (http://cdn.americanbanker.com/media/pdfs/27_page_settlement2.pdf) presented by the 50 state attorneys general and Federal banking regulators to banks with major servicing operations.http://www.nakedcapitalism.com/2011/03/mortgage-settlement-term-sheet-bailout-as-reward-for-institutionalized-fraud.html

[Winehole23]

http://market-ticker.org/akcs-www?post=181755

[Winehole23]

Nevada on the attack:


The attorney general of Nevada is accusing Bank of America (http://topics.nytimes.com/top/news/business/companies/bank_of_america_corporation/index.html?inline=nyt-org) of repeatedly violating a broad loan modification (http://topics.nytimes.com/your-money/loans/loan-modifications/index.html?inline=nyt-classifier) agreement it struck with state officials in October 2008 and is seeking to rip up the deal so that the state can proceed with a suit against the bank over allegations of deceptive lending, marketing and loan servicing practices.

In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009.



In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says.
http://www.nytimes.com/2011/08/31/business/bank-of-america-accused-of-breaching-mortgage-accord.html?_r=1

[Winehole23]

FHFA, representing Fannie Mae and Freddie Mac, sue 17 banks:


In the suit filed against Bank of America, the agency alleges that bank sold securities that “contained materially false or misleading statements and omissions.” The company and several individual bankers named as defendants “falsely represented that the underlying mortgage loans complied with certain underwriting guidelines and standards, including representations that significantly overstated the ability of the borrowers to repay their mortgage loans,” the suit says. Fannie Mae and Freddie Mac bought $6 billion in securities from the bank between September 2005 and November 2007. http://www.nytimes.com/2011/09/03/business/bank-suits-over-mortgages-are-filed.html

[Wild Cobra]

Yes, I heard about this also on today's radio.

My assessment from what I heard is it will not go anywhere. They were warned in 2006 not to keep buying these bulk packages from banks. Their experts should be able to know good from bad. The banks may have been devious, but did nothing illegal to my knowledge.

lawful evil is still following the law.

[ElNono]

You mean they did nothing illegal other than sell junk bonds as AAA bonds? You know those mortgages were already rated by the time they arrived to Fannie and Freddie, right?

[Winehole23]

What makes these discussions so utterly absurd, so ridiculous, and farcical, is that robo-signing, an abuse the banks have admitted to and clam they’ve ceased, is still going on. The AP reported this in July (http://www.cbsnews.com/stories/2011/07/18/national/main20080533.shtml%3C/p%3E%3Cp%3E); mortgage servicers in Nevada have stopped foreclosing because of a law explicitly criminalizing robo-signing (http://www.housingwire.com/2011/10/21/potential-felony-charges-make-servicers-pause-nevada-foreclosures). Yes, the banks are asking for a release of claims on acts, or perhaps crimes, that are ongoing. And these abuses are extensive: lying to investors about the quality of the mortgages; violating their own contracts by failing to convey mortgages properly to securitization trusts; charging fees that are impermissible under Federal law and the contracts; making a mess of property records and engaging in deceptive consumer practices through the use of MERS; and engaging in document forgeries and fabrications in foreclosures. All these people trying to give the banks “a settlement” are in fact immunizing banks against acts they are committing and will commit going forward. Only in the future, when a voter complains to his or her state AG, that official will have to explain to that voter that his/her rights have been given away.

We’re talking about an ongoing case of criminal theft of private property by mortgage servicers charging illegal fees and then using fraudulent documents to foreclose. Now, a settlement implies that this practice is over, and that the banks are remediating past wrongs. It isn’t over, but the AGs and Federal regulators are treating it as if it is. Think about this incentive – why should a bank change its mortgage servicing once it has immunity for robo-signing, origination, pyramiding of fees, etc? The last consent decrees weren’t enforced, why would this one be enforced?http://www.nakedcapitalism.com/2011/11/matt-stoller-why-a-foreclosure-fraud-settlement-is-a-ridiculous-idea.html

[boutons_deux]

ongoing case of criminal theft of private property by mortgage servicers charging illegal fees and then using fraudulent documents to foreclose.

Why are you jealous of wealthy people who work hard and earned every penny?

--WC

[Winehole23]

Oct. 27 (Bloomberg) -- Merscorp Inc., the operator of a national mortgage registry used by banks, was sued by Delaware’s attorney general for allegedly using deceptive practices that hide information from borrowers.


The MERS database, which tracks ownership interests in mortgages, impeded the ability of homeowners to fight foreclosures and obscures its data, Delaware Attorney General Beau Biden said in a complaint filed today.


“MERS engaged and continues to engage in a range of deceptive trade practices that sow confusion among consumers, investors and other stakeholders in the mortgage finance system, damage the integrity of Delaware’s land records, and lead to unlawful foreclosure practices,” Biden said.


http://www.businessweek.com/news/2011-10-27/mortgage-registry-mers-sued-by-delaware-attorney-general.html

[Wild Cobra]

http://www.businessweek.com/news/2011-10-27/mortgage-registry-mers-sued-by-delaware-attorney-general.html

Now hiding information does need to be persecuted. However, don't expect me to reward people's bad choices.

If we reward people's bad choices, how about the rest of us? What about bad choices we made? Should be get bailouts too?

[Winehole23]

Whose bad choices are being rewarded?

[Wild Cobra]

Whose bad choices are being rewarded?
I don't know if they are, but I keep hearing advocates pushing for such actions.

[Winehole23]

What actions? WTF are you talking about?

[Wild Cobra]

What actions? WTF are you talking about?
To bail individuals out.

[Winehole23]

Red herring. That's not anywhere in this thread. What I just posted isn't a proposed bailout. It's a lawsuit for deceptive trade practices.

[Wild Cobra]

Red herring. That's not anywhere in this thread. What I just posted isn't a proposed bailout. It's a lawsuit for deceptive trade practices.
If the deception is the the level of a few posts back, I agree. Prosecute.

[boutons_deux]

the "bad choices" should never have been offered by the predatory, criminal lenders.

The lenders, regulated and unregulated, bank and non-bank, have always been able to defend themselves against "liar's loans" by demanding years of IRS forms, credit/bank/utilities statements, but they accepted "stated income", wrote the loans, pocketed the fees, and sold the mortgages into the Wall St casino.

WC will always defend the powerful institution's actions and crimes vs the individual.

[Wild Cobra]

the "bad choices" should never have been offered by the predatory, criminal lenders.

The lenders, regulated and unregulated, bank and non-bank, have always been able to defend themselves against "liar's loans" by demanding years of IRS forms, credit/bank/utilities statements, but they accepted "stated income", wrote the loans, pocketed the fees, and sold the mortgages into the Wall St casino.

WC will always defend the powerful institution's actions and crimes vs the individual.
Well Boutons. Unlike you, I believe in freedom, which means the freedom to make mistakes.

Tell me... are you still wearing your diapers, and having mommy take care of you?

Did you miss the part where I agree deceptive practices should be prosecuted? As long as there is disclosure, and the individual makes a bad choice, why do you want to reward their poor choice?

Some people simply do not have the means to sign up for what they committed themselves to. The terms were high interest in many cases because of risk. Maybe the right choice would have been to rent rather than buy.

[FuzzyLumpkins]

Red herring. That's not anywhere in this thread. What I just posted isn't a proposed bailout. It's a lawsuit for deceptive trade practices.

Sometimes it literally is like talking with a downs patient. Downey, Jr was right: never go full retard. He just mindlessly parrots the same taglines and spin hes been fed over and over. At least hes not a disgusting liar like Darrin though.

[Winehole23]

Sometimes it literally is like talking with a downs patient.In my experience it's not. The comparison to WC is unfair to people with Down's syndrome.

Please feel free to shove it where the sun don't shine.

[Winehole23]

Two employees of Lender Processing Services (LPS (http://finance.yahoo.com/q?s=LPS): 18.52 -3.29%) were indicted in Nevada on alleged robo-signing charges connected to foreclosure filings, according to the Office of the Nevada Attorney General.


Gary Trafford and Gerri Sheppard, both California residents described as title officers, were indicted on a total of 606 counts by a Clark County grand jury.
http://www.housingwire.com/2011/11/16/nevada-grand-jury-indicts-2-on-robo-signing-charges

[Winehole23]

A former employee supervised by Trafford and Sheppard said she forged signatures on more than 25,000 (http://www.8newsnow.com/story/16057296/breaking-news-nevada-ag-seeks-indictments) notices of default, according to KLAS-TV in Las Vegas.ibid

[Winehole23]

”The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,”said Chief Deputy Attorney General John Kelleher.http://www.ritholtz.com/blog/2011/11/nevada-attorney-general-robo-signing-indictments/

[Winehole23]

LPS has cooperated fully with the investigation, the Jacksonville, Fla.-based company said in a media statement Thursday morning.


"Earlier this month, the attorney general's office confirmed that the company was not a target of this inquiry," the company said.

[boutons_deux]

Denial in the Mortgage Industrial Complex

I just came back from the AmeriCatalyst conference in Austin, which was a packed two days focused on the state of the housing and securitization market. The panels were very informative,

But the biggest undertone was the “borrowers are deadbeats” meme. In the first panel I was one, one of the other speakers went on about borrower fraud in the widely criticized HAMP program.

It was pretty clear that the American Securitization Forum party line, that these were mere errors or sloppiness, is widely shared. Too few are willing to accept the point made by Levitin:

To raise the “it’s just paperwork” argument in the context of securitization, however, is unreal. Securitization is all about legal fictions and paperwork. Why on earth would anyone every bother with the complex legal structures of securitization (typically involving two shell entities) other than to take advantage of legal fictions?

As I’ve noted in other venues, securitization is the legal apotheosis of form over substance, and the basis on which this is legally tolerated is the punctilious observance of formalities. Failure to do so can result in a securitization failing to be bankruptcy remote or to lose its off-balance sheet accounting status or lose its pass-thru tax status, any of which are disasterous. Securitization deals were so heavily lawyered precisely because the paperwork matters. They aren’t like a sale of a used sofa over Craigslist.

The “it’s just paperwork” argument quickly proves too much. Is the borrower’s signature on the loan “just paperwork”? How about a co-signor’s? If it’s just paperwork, why bother to have the borrower or co-signor sign, especially as it can create federal Equal Credit Opportunity Act issues when a spouse is involved.

So it isn’t surprising that a lawyer who represents investors made an impassioned plea for servicers to wake up and smell the coffee, that he’d rather work with them and negotiate a deal, but he was too often left with no other option than to sue. And that means that this battle will continue to play out in the courtroom.

http://www.nakedcapitalism.com/2011/11/denial-in-the-mortgage-industrial-complex.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

=======

The Big (VRWC/financial) Lie: The borrowers are deadbeats, the lenders are perfect, conscientious knights in shining armor who were defrauded.

[boutons_deux]

Devastating Analysis of MERS

The full paper, “The MERS Mortgage in Massachusetts” was sent by the author Robert Ludden to 4ClosureFraud, and you can download it there.

A “continuity” made of smoke and mirrors. In the MERS model, the mortgage doesn’t pass by assignment from one owner to the next by formal assignment; in fact, it really doesn’t pass at all, at least not in any ordinary sense that would involve time and a sequence of events. Rather, in the Mersian world there is a kind of simultaneity of time and event in which all ownerships of the mortgage exist ab initio by virtue of the MERS membership agreement and do not have to be independently established. It is very much a framework of interrelationships in the form of a venn diagram. Let’s say that a particular mortgage changes hands three times before it is foreclosed— which would mean a total of four owners. And let’s use a circle to represent each of the four owners. In the MERS model, these four circles are arranged symmetrically so that each one overlaps the other three in equal measure to form a common area at the center. That common area is MERS acting, as Arnold has said, as a “common agent” with respect to that mortgage. Because each owner is already tied conceptually to the mortgage, there is no need for an assignment and MERS, in its capacity as agent, may therefore simply remain the mortgagee of record at the local land office. Indeed, the MERS model is in many ways quite elegant. But the complex and recondite nature of the thing has served well to obscure its falsity under well-settled principles of agency and contract law.

http://www.nakedcapitalism.com/2011/11/devastating-analysis-of-mers.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

massive fraud, ML settles, nobody to jail

Merrill Lynch To Pay $315 Million To Settle Charges It Misled Mortgage Investors

http://thinkprogress.org/economy/2011/11/18/372597/merrill-lynch-mortgage-fraud-settlement/

[boutons_deux]

5,000 Military Families Illegally Foreclosed On -- How We Can Prosecute Bank Crimes

Shahien Nasiripour has a great scoop in the FT – bank regulators have uncovered up to 5000 military families who were foreclosed on illegally by mortgage servicers. Foreclosures on active duty troops is usually a big no-no, for a lot of reasons – for instance, when your credit rating is damaged by a foreclosure, it can impact your national security clearance. In addition, there’s enormous stress that the soldier goes through when his or her family is facing a threat of eviction, and it’s the kind of stress that makes him or her less equipped to be ready in a warzone. Congressman Bob Filner has even accused banks of “homicide” against American troops, blaming the banks for suicides resulting from the increased stress brought on by aggressive debt collection techniques.

“The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings.”

Much has been made of President Obama’s argument that the banks did nothing illegally, and various other scholars and officials have argued that prosecuting the banks is far too expensive and difficult. Yet, the SCRA is a simple law with teeth; it carries real jail time, and the parties have already confessed to the crime. Here’s Section 303(d)(1) of that law, which spells out penalties.

(1) MISDEMEANOR.—A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both.

Interestingly, the Department of Justice seems to agree with this interpretation. Here’s a press release from the Department of Justice on a settlement of some of these claims, from Bank of America. I’ve bolded the important part.

The Justice Department announced today that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).

http://www.alternet.org/module/printversion/153249

=========

Too Big Too Jail

[Winehole23]

The borrowers are deadbeats, the lenders are perfect, conscientious knights in shining armor who were defrauded.True colors. Your wage slaves are plotting your richly deserved demise as we speak, corporate-American scum.

[boutons_deux]

Gfy

[Winehole23]

too bad you're basically fucked and unfuckable, or I would say same to you

[boutons_deux]

A Banker Speaks, With Regret

"On the application, you don't put down a job; you don't show income; you don't show assets," he said. "But you still got a nod.""If you had some old bag lady walking down the street and she had a decent credit score, she got a loan," he added.

some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers - those with less education, without previous mortgage experience, or without fluent English - and nudged them toward subprime loans.These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

http://mobile.nytimes.com/article?a=874638&f=28&sub=Columnist

??? Didn't the Repugs and right-wing hate media tell us it was CRA that forced banks to lend the red-lined poor neighborhoods?

btw, the guy above worked for REGULATED lender. Easy to imagine the predatory fraud was much worse with non-regulated lenders.

[Winehole23]

Easy for you, mr boss man. We're can't all be world class exploiters.

[Winehole23]

Someone's got to shine your shoes, press your shirt and toil in your immaculately manicured garden. Those grass clippings won't take themselves to the curb.

[Winehole23]

http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf

[Winehole23]

The Massachusetts attorney general has filed a lawsuit against five large U.S. banks accusing them of deceptive foreclosure practices, a signal of ebbing confidence that a multi-state agreement can be worked out.

Attorney General Martha Coakley said on Thursday the lawsuit was filed in state court in Boston against Bank of America Corp, JPMorgan Chase & Co Inc, Citigroup Inc, Wells Fargo & Co and GMAC.

It also names the banks' private mortgage registry, MERS, as a defendant.

"Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law," Coakley said in a statement. "http://www.baltimoresun.com/business/sns-rt-us-banks-foreclosuretre7b01ur-20111201,0,4010430.story

[Winehole23]

Coakley had indicated she is open to joining the settlement, Miller said.

"We're optimistic that we'll settle on terms that will be in the interests of Massachusetts," Miller said.ibid.

[boutons_deux]

The Collapse of Financial Regulation Since 1980 and Its Consequences: A Nice Summary from Lawrence Lessig

Before 2008, the zeitgeist was deregulation, and Wall Street succeeded in getting deregulation. Frank Partnoy calculated for me that in 1980, 98 percent of financial assets traded in our economy were traded subject to the normal rules of transparency, anti-fraud requirements, basic exchange-based rules of the New Deal. By 2008, 90 percent of the assets traded were traded invisibly because they were not subject to any of these basic requirements of transparency and anti-fraud exchange-based obligations.

Every discussion about the economic crash of 2007-2009, which was touched off by a massive financial crisis, should begin with the striking fact that there were no serious financial crises in the United States between the New Deal and the beginning of the Reagan administration. This was no accident. During the 1930s a remarkably intelligent set of regulations was enacted to cover banking and the rest of the financial sector, and it worked.

At the same time, in a vicious cycle of mutually reinforcing processes, the financial sector—including a whole “shadow banking system”—metastasized out of control and swallowed up an ever-larger share of the economy. The overflowing funds, increasing political clout, and ideological prestige of the financial system were used, in turn, to promote further deregulation. And it so happens that during the same period, starting in the 1980s, we have once again experienced recurrent financial crises (and massive bailouts), escalating most recently into the great financial crash of 2007-2009 from whose consequences we are still recovering.

Instead, the fault lies entirely with quasi-governmental institutions like Fannie Mae and Freddie Mac and with the consequences of the Community Reinvestment Act (which supposedly forced banks to issue subprime mortgages to poor people and minorities). This nonsense was recently summed up, in an astounding statement that seems to vindicate the crudest versions of a Marxist theory of class-bound ideology, by none other than New York City Mayor Michael Bloomberg:

It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp [....] But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

Some intelligent, serious, and well-informed people have been taken in by this propaganda, and like most propaganda it does contain some grains of truth, but overall it’s just a fable. (For a patient explanation of some of the reasons why, see here.) However, this nonsense is far from being harmless, since as long as the real sources of the problem are ignored or obscured or distorted out of recognition, it will be hard to generate the political will to do anything constructive about them.



http://www.dissentmagazine.org/atw.php?id=619

[Winehole23]

Cat got your tongue, boss man? :lol

[boutons_deux]

gfy

[boutons_deux]

Mortage Lender GMAC Retaliates Against Massachusetts Lawsuit By Ending Most Lending In The State

GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices. The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there.

http://thinkprogress.org/special/2011/12/02/381115/mortage-lender-gmac-retaliates-against-mass-lawsuit-by-ending-most-lending-in-the-state/

[Winehole23]

The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.


The government also hasn't brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.


But this part of the financial system, a Reuters examination shows, is filled with potential leads.


Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge's rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country.


Banks in the past two years have foreclosed on the houses of thousands of active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Refusing to grant foreclosure stays is a misdemeanor under federal law.


The U.S. Treasury confirmed in November that it is conducting a civil investigation of 4,500 such foreclosures. Attorneys representing service members estimate banks have foreclosed on up to 30,000 military personnel in potential violation of the law.


In Alabama, a federal bankruptcy judge ruled last month that Wells Fargo & Co. had filed at least 630 sworn affidavits containing false "facts," including claims that homeowners were in arrears for amounts not yet due.


Wells Fargo "took the law into its own hands" and disregarded laws banning perjury, Judge Margaret A. Mahoney declared.


And in thousands of cases, documents required to transfer ownership of mortgages have been falsified. Lacking originals needed to foreclose, mortgage servicers drew up new ones, falsely signed by their own staff as employees of the original lenders - many of which no longer exist.


But the mortgage-foreclosure mess has yet to yield any federal prosecution against the big banks that are the major servicers of home loans.


http://www.reuters.com/article/2011/12/22/us-foreclosures-idUSTRE7BL0MC20111222

[Winehole23]

http://www.ft.com/intl/cms/s/0/8cc25a5a-2972-11e1-8b1a-00144feabdc0.html (http://www.ft.com/intl/cms/s/0/8cc25a5a-2972-11e1-8b1a-00144feabdc0.html#ixzz1gyFaI0Rr)

[Winehole23]

Banks in the past two years have foreclosed on the houses of thousands of active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Refusing to grant foreclosure stays is a misdemeanor under federal law.


The U.S. Treasury confirmed in November that it is conducting a civil investigation of 4,500 such foreclosures. Attorneys representing service members estimate banks have foreclosed on up to 30,000 military personnel in potential violation of the law.
link @ reuters, above

[Winehole23]

In Alabama, a federal bankruptcy judge ruled last month that Wells Fargo & Co. had filed at least 630 sworn affidavits containing false "facts," including claims that homeowners were in arrears for amounts not yet due.same

[Winehole23]

however, inasmuch as prosecution impedes the rate of clearance, it is considered bad medicine, like all that does not serve the utmost expedience of business

[Winehole23]

the good of letting all the fraudulent paper pass as good outweighs the legal accountability of fraudsters, or restoring adherence to law. in fact a thorough legal accounting could be injurious to our economic well-being, well-placed and reliable sources say...

[Winehole23]

hugq2HWRt8o

[Winehole23]

tCpTkfYVHpQ

[Winehole23]

GaIxiJRAhPY

[Winehole23]

multi-state settlement could leave investors holding the bag:

http://www.ft.com/intl/cms/s/0/ae95572e-37f3-11e1-9fb0-00144feabdc0.html#ixzz1iesnyXnP

[boutons_deux]

LPS on Mortgages: "Trend toward fewer loans becoming delinquent has halted"


The November Mortgage Monitor report released by Lender Processing Services, Inc. shows that while mortgage delinquencies at the end of November 2011 were nearly 25 percent less than the January 2010 peak, the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted. At the same time, new problem loans – those loans seriously delinquent as of the end of November that were current six months prior – have not improved significantly in the last year. This degree of stagnation indicates that while the situation is not getting markedly worse, it is not improving either, and inventories of troubled loans remain significantly higher than pre-crisis levels across the board.

http://www.calculatedriskblog.com/2012/01/lps-on-mortgages-trend-toward-fewer.html

[boutons_deux]

Details of Mortgage Servicing Settlement Between Banks and AGs Begin to Emerge

The big number is the $25 billion that the banks will commit to three categories of the settlement: $5 billion in cash payments, mostly to the states, $3 billion in refinancing for underwater mortgages, and $17 billion in principal reduction. Here’s the breakdown:

http://swampland.time.com/2011/12/23/a-few-details-of-the-ag-banks-deal/

===

No doubt that the banks will "settle" for a handslap. $25B is chump change compared to the profits they made and the taxpayer bailout, even chump change compared to the executive bonuses.

[Winehole23]

Federal Reserve Governor Sarah Bloom Raskin (http://topics.bloomberg.com/sarah-bloom-raskin/) said the central bank should fine mortgage servicing companies that broke the law and are partly to blame for the current “foreclosure crisis” in U.S. housing.



“The Federal Reserve (FDTR) (http://www.bloomberg.com/apps/quote?ticker=FDTR:IND) and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law,” Raskin said in a speech today in Washington. “The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties,” she said.



The Fed in April (http://www.federalreserve.gov/newsevents/press/enforcement/20110413a.htm) initiated formal enforcement actions against 10 banking organizations to address a “pattern of misconduct and negligence” in mortgage loan servicing and foreclosure processing.



“One purpose of monetary penalties, when they are appropriately sized, is to incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models,” Raskin said. “This is an operational purpose, but as mentioned earlier, monetary penalties also remind regulated institutions that non-compliance has real consequences.”



The 10 institutions the Fed announced enforcement actions against included Bank of America Corp. (BAC) (http://www.bloomberg.com/apps/quote?ticker=BAC:US), Citigroup Inc. (C) (http://www.bloomberg.com/apps/quote?ticker=C:US), Ally Financial Inc., HSBC North America Holdings, Inc., JPMorgan Chase & Co. (JPM) (http://www.bloomberg.com/apps/quote?ticker=JPM:US), MetLife, Inc., PNC Financial Services Group, Inc., SunTrust Banks, Inc., U.S. Bancorp, and Wells Fargo & Co.
http://www.bloomberg.com/news/2012-01-07/mortgage-servicing-companies-that-broke-law-should-be-fined-raskin-says.html

[boutons_deux]

New York Investigates Forced-Place Insurance Scams

The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance.

JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private.

Mr. Lawsky’s office issued 31 subpoenas or other legal notices related to the case in early October, just as the state’s insurance and banking departments were merged under his new agency. His office has already turned up instances where mortgage servicing units at large banks steered distressed homeowners into insurance policies up to 10 times as costly as the homeowners’ original plans.

In some cases, those policies were offered by affiliates of the banks themselves, raising questions about conflicts of interest; in other cases, there may have been kickbacks between unrelated companies, according to the person briefed on the investigation.

Dodd-Frank made this type of forced-place insurance scam illegal. Yet, despite the fact that we’ve known about this for years, it takes the New York State Department of Financial Services to run the investigation. Presumably the Consumer Financial Protection Bureau, now newly bolstered with the ability to regulate non-bank financial operations like mortgage servicers, can get involved. But Dodd-Frank makes it unclear who is supposed to regulate forced-place insurance scams at the federal level. Until then, we have to rely on the states.

, they also found the exact same robo-signing problem we’ve seen in foreclosure fraud:

In April of last year, Chase ceased filing claims altogether in Dade County. That month, The Wall Street Journal first reported that Chase had dropped “more than a thousand” consumer debt cases around the country. Some contract attorneys cited documentation irregularities for the move, the paper reported.

Robo-signing, or the high-volume production of signed legal documents, has been a key element of the governmental and media foreclosure reviews. Chase’s current pullback raises at least the possibility that at least some banks may have documentation problems in other business lines.

Any “deal” made with banks on their crimes simply perpetuates an industry that mostly profits off those crimes.


http://news.firedoglake.com/2012/01/11/new-york-investigates-forced-place-insurance-scams/

I assume the entire financial sector is one big criminal fraud, a house of cards, a Wizard of Oz, until proven otherwise. But it's so powerful, it's effectively immune from policing and prosecution, beyond a couple token cases.

[boutons_deux]

Occupy the Neighborhood: How Counties Can Use Land Banks and Eminent Domain


An electronic database called MERS (Mortgage Electronic Registration Systems) has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

http://www.truth-out.org/occupy-neighborhood/1326472096

[boutons_deux]

Foreclosure-to-Rental Screwjob

“The paper also signaled that the Fed…. will try to involve banks more directly in housing-revival approaches… One area involves efforts to turn foreclosed homes into rental properties….

Banking regulations typically direct banks to sell foreclosed homes quickly, although the rules do recognize this isn’t always practical and so these properties can be held up to five years. The Fed said it is now “contemplating issuing guidance” to banks and regulators that would possibly allow banks to turn some of these foreclosed homes into rental properties…..The hope is this may help stanch the flow of foreclosed properties into markets…” (“Fed Up With the Depressed State of Housing”, Wall Street Journal)



Bingo. The banks are not only sitting on 1.7 million shadow inventory of homes they’ve stockpiled to keep prices artificially high. They also have millions more in the pipeline when a settlement is finally reached on the robo-signing scandal. So, what are they going to do with all that backlog?

That’s easy. They’ll schluff it off on the taxpayer by creating a foreclosure-to-rental swindle where the government provides lavish incentives for banks and private equity scavengers to buy the homes (in bulk) for pennies on the dollar with loans provided by–you guessed it–Uncle Sam. Here’s a summary of what’s going on behind the scenes:



“As the Obama administration and federal regulators work on a program to sell government-owned foreclosures in bulk to investors, those investors aren’t wasting any time stockpiling cash and buying foreclosed properties at auction and from the major banks.

Oakland, California-based Waypoint Real Estate Group, a major acquirer of so-called “REO to Rental” (Real Estate Owned) just announced a partnership with a private equity firm, Menlo Park, California-based GI Partners, to buy foreclosed properties….

“Our approach to buying distressed single-family houses, renovating them, and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation’s housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint in a press release. “Our partnership with GI Partners ensures we can take the next step in our company’s evolution.”

GI is taking an increasingly popular bet on distressed real estate, closing on a $400 million fund with Waypoint, which has plans to purchase $1 billion in distressed real estate assets over the next two years, according to its release. (“Private Equity Readying a Run on Foreclosures”, Diana Olick, CNBC)



So, what do these guys know that we don’t know? And why are they plunking down big money when the details have not even been released yet?

None of this really passes the smell test, does it? The only thing we know for sure is that the “fix is in” and that Bernanke will do what he always does when the banks are in a pinch. Throw them a lifeline.

http://www.counterpunch.org/2012/01/13/the-foreclosure-to-rental-screwjob/

[Winehole23]

http://www.emptywheel.net/2012/01/20/wells-fargo-freddie-bank-of-america-and-ubs-at-doj/

[Winehole23]

http://www.reuters.com/article/2012/01/20/us-usa-holder-mortgage-idUSTRE80J0PH20120120

[boutons_deux]

One of Barry's major re-election comments: "the banks didn't do anything illegal"

The financial sectors OWNS the federal govt.

[boutons_deux]

"Here's some pocket change, we keep the houses, and we promise not to do it again"

http://mobile.sfgate.com/sfchron/db_41688/contentdetail.htm?contentguid=3E6cLHBK&full=true#display

[Winehole23]

http://brown.senate.gov/imo/media/doc/011912%20AG%20Settlement%20Letter.pdfhttp://brown.senate.gov/imo/media/doc/011912%20AG%20Settlement%20Letter.pdfhttp://www.nakedcapitalism.com/wp-content/uploads/2014/01/Screen-shot-2012-01-22-at-11.51.12-PM.pnghttp://brown.senate.gov/imo/media/doc/011912%20AG%20Settlement%20Letter.pdf (http://www.nakedcapitalism.com/wp-content/uploads/2014/01/Screen-shot-2012-01-22-at-11.51.12-PM.png)

[boutons_deux]

Thanks NC Readers! Tom Miller Says No Mortgage Deal Imminent

Readers no doubt saw both on this site and elsewhere that the Obama Administration was cranking the heat up on the mortgage settlements talks, and was apparently planning to go ahead with the Federal regulators inking a pact, on the assumption they’d get enough state attorneys general to provide at least a modest fig leaf. The assumption also seemed to be that the Administration could enlist Congressmen to pressure some of the current and rumored dissident Democrat AGs to fold and join the Obama camp.

That effort appears to have gotten such a large repudiation today, when the settlement terms were presented in Chicago to Democratic AGs and discussed over the phone with the Republican AGs that Tom Miller who is leading the attorney general negotiations has done a major climbdown:

FOR IMMEDIATE RELEASE
January 23, 2012

STATEMENT FROM ATTORNEY GENERAL TOM MILLER

(CHICAGO, Illinois) State Attorneys General from both parties, along with our federal partners, are today discussing the details of the progress we have made so far in settlement negotiations, including the terms we must still resolve. We have not yet reached an agreement with the nation’s five largest servicers, and we won’t reach a settlement any time this week.

What is intriguing here is the Miller camp claim (effectively) that there never had been a deal on the table. That contradicts the story in the Financial Times last week and a report I had gotten from an investor with good contacts on the Republican side. Since Miller has repeatedly played fast and loose with the truth, I’m not sure I believe the message implied here, that they are still moving forward on a deal, just more slowly than they had messaged, as opposed to a deal on the table came unglued and they need to regroup in a more serious way.

We will hopefully get more intelligence (or maybe just better attempts at disinformation) but I read this as an indication the deal agreed between the Federal regulators and the biggest servicers somehow came unglued. Possibilities include: someone exposed a definitional/drafting flaw (the Feds thought it meant one thing and the banks thought it meant another); someone (one of the banks?) retraded the deal; the Administration has assumed it could rely on a certain minimum number of AGs to fall in line and they regarded that minimum number as essential, and the pow wow today exposed that they are below that level.

Regardless, this is positive news, since it vindicates the courageous attorneys general who are pressing forward with investigations and prosecutions rather than trying to cover up pervasive fraud by servicers. Thanks so much to NC readers for your calls to attorneys general. You helped play a role in telling the Administration that the public will not support coverups when enforcement and reform are what is really needed.

http://www.nakedcapitalism.com/2012/01/thanks-nc-readers-tom-miller-says-no-mortgage-deal-imminent.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[Winehole23]

http://readersupportednews.org/images/stories/alphabet/rsn-T.jpghere is a lot to digest in a recent series of events on the Prosecuting Wall Street front - the two biggest being Barack Obama's decision to make New York Attorney General Eric Schneiderman the co-chair of a committee to investigate mortgage and securitization fraud (http://www.lohud.com/article/20120126/NEWS05/301260028/Obama-picks-New-York-G-Schneiderman-lead-national-mortgage-abuse-probe?odyssey=mod%7Cnewswell%7Ctext%7CNews%7Cs), and the numerous rumors and leaks (http://www.bloomberg.com/news/2012-01-23/foreclosure-probe-meeting-in-chicago-targeted-by-protesters.html) about an impending close to the foreclosure settlement saga.


There is already a great debate afoot about the meaning of these two news stories, which surely are related in some form or another. Some observers worry that Schneiderman, who over the summer was building a rep as the Eliot Ness of the Wall Street fraud era, has sold out (http://www.nakedcapitalism.com/2012/01/is-schneiderman-selling-out-signs-up-to-co-chair-committee-designed-to-undermine-defectors-to-mortgage-settlement-deal.html) and is abandoning his hard-line stance on foreclosure in return for a splashy federal posting.


Others looked at his appointment in conjunction with other recent developments - like the news that Tim Geithner won't be kept on and Obama's comments about a millionaire's tax - and concluded that Barack Obama had finally gotten religion and decided to go after our corruption problem in earnest.


At the very least, Obama's recent acts were interpreted as a public move toward economic populism: if the president was looking to associate himself with that word, he did a good job, since there were literally hundreds of headlines about Obama's "populism" (http://campaignstops.blogs.nytimes.com/2012/01/25/the-bully-populist/) the day after his State of the Union (http://www.whitehouse.gov/photos-and-video/video/2012/01/25/2012-state-union-address-enhanced-version) speech.


I think it's impossible to know what any of this means yet. There is a lot to sort out and a lot that will bear watching in the near future.
http://readersupportednews.org/opinion2/277-75/9649-is-obamas-economic-populism-for-real

[boutons_deux]

Sundering the Social Contract


there is a new battleground in what’s known as the housing market with as many as 14 million Americans in or facing foreclosure.

Jean-Jacques Rousseau

The defense of property rights is the holy of the holies for the propertied classes with a whole industry set up to enforce their claims of ownership.

We have seen how this plays out with the courts, run by often bought-off and complicit judges rubber-stamping claims by banks and realty interests even when laws are disregarded amidst fraudulent filings, biased contracts, and phony robot signings.

They control the marshals who seize your property and they constantly denigrate the real victims as “irresponsible.” It’s not surprising any more to read about banks foreclosing on properties they don’t even own.

“The concept is that man standing alone is more vulnerable than many men united each in defense of the other. This condition makes it impossible for one to hurt an individual without hurting the whole group or for one to hurt the group without affecting each individual.

“There is now a social contract where individual rights are combined. In this case, it is in the best interest of the individual to give over his rights to the group since he has a more powerful protective base than standing alone.”

And yet many of us today do “stand alone:” in the commercial marketplace where borrowers are seen as suckers by lenders and fraud is pervasive. Abuse, lying and theft are built into the equation.

“During the Savings and Loan crisis, Bill Black reminds us that there were about a thousand FBI agents working on the various cases. That’s one hundred times the number of people working on a scandal that is about forty times larger and far more complex.

“To put it another way, let’s say that this scandal cost the American public $5-7 trillion in lost home equity. That’s about $100 billion of lost home equity per person assigned to this task force. If someone stole $100 billion a corporation, like say, if somehow Apple’s entire cash hoard which is roughly that amount, suddenly disappeared, I’m guessing that the FBI would assign more than one person to the case

“There are two underlying structural problems with the new(ish) Federal task force on financial fraud,” he writes. “One, it is the policy of the administration to protect the banking system’s basic architecture, which means the compensation structure and the existing personnel who run these large institutions.

“Any real investigation into the financial collapse will inevitably lead to the collapse of this architecture. Thus, any real investigation will be impeded when it begins to conflict the basic policy framework of the Obama administration. And this framework is set by Obama. It’s what he believes in. He made this clear in his first State of the Union, when he said a priority of the administration was to ensure that ‘the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.’”

Perhaps this is why so few bankers have spoken out loudly about this latest effort to target their financial frauds. They know it’s not serious and recognize that political business, like the news business, is now a branch of show business.


http://consortiumnews.com/2012/01/28/sundering-the-social-contract/

[Winehole23]

A federal auditor has warned that the Obama administration’s failure to crack down on recalcitrant banks risks harming distressed borrowers.

The warning, offered in a report released early Thursday, contrasts with comments earlier in the week by Barack Obama, US president, who chided banks for giving borrowers the “runaround” when it came to lowering their mortgage payments through refinancings.


The US Treasury department has the authority to penalise banks for their noncompliance with the administration’s Making Home Affordable programme, but it has not been using that authority to ensure banks are not harming homeowners and improperly benefiting from taxpayer-provided aid, according to the Special Inspector General for the Troubled asset relief programme (Sigtarp).


The audit underscores the degree to which, three years after coming into office, Mr Obama has fallen short on promises to help troubled borrowers keep their homes (http://www.ft.com/intl/indepth/us-foreclosure-crisis). Initiatives launched beginning in early 2009 have fizzled out, disappointing members of Congress, key administration officials and Mr Obama’s supporters.
http://www.ft.com/intl/cms/s/0/53ec3a44-47b7-11e1-9a92-00144feabdc0.html#axzz1kadWIzO5

[Winehole23]

A federal auditor has warned that the Obama administration’s failure to crack down on recalcitrant banks risks harming distressed borrowers.

The warning, offered in a report released early Thursday, contrasts with comments earlier in the week by Barack Obama, US president, who chided banks for giving borrowers the “runaround” when it came to lowering their mortgage payments through refinancings.


The US Treasury department has the authority to penalise banks for their noncompliance with the administration’s Making Home Affordable programme, but it has not been using that authority to ensure banks are not harming homeowners and improperly benefiting from taxpayer-provided aid, according to the Special Inspector General for the Troubled asset relief programme (Sigtarp).


The audit underscores the degree to which, three years after coming into office, Mr Obama has fallen short on promises to help troubled borrowers keep their homes (http://www.ft.com/intl/indepth/us-foreclosure-crisis). Initiatives launched beginning in early 2009 have fizzled out, disappointing members of Congress, key administration officials and Mr Obama’s supporters.
http://www.ft.com/intl/cms/s/0/53ec3a44-47b7-11e1-9a92-00144feabdc0.html#axzz1kadWIzO5

[Winehole23]

New York's attorney general on Friday accused some of the nation's largest banks of deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures while saving banks over $2 billion.

Democrat Eric Schneiderman (http://www.seattlepi.com/?controllerName=search&action=search&channel=news&search=1&inlineLink=1&query=%22Eric+Schneiderman%22) sued Bank of America, J.P. Morgan Chase and Wells Fargo (http://www.seattlepi.com/?controllerName=search&action=search&channel=news&search=1&inlineLink=1&query=%22Bank+of+America%2C+J.P.+Morgan+Chase+and+ Wells+Fargo%22) over their use of the Mortgage Electronic Registration Systems (http://www.seattlepi.com/?controllerName=search&action=search&channel=news&search=1&inlineLink=1&query=%22Mortgage+Electronic+Registration+Systems% 22) Inc., or MERS (http://www.seattlepi.com/?controllerName=search&action=search&channel=news&search=1&inlineLink=1&query=%22MERS%22), claiming the banks submitted court documents containing false and misleading information that appeared to provide the authority for foreclosures when there was none.


The lawsuit also names the registry operator, MERSCORP Inc. of Virginia.
Schneiderman claims the MERS system has eliminated homeowners' ability to track property transfers through traditional public records. He said the electronic system now stores that data and is plagued by inaccuracies and what the lawsuit calls "faulty and sloppy document preparation and execution practices."


"The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages," Schneiderman said Friday. "Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law."
Read more: http://www.seattlepi.com/news/article/NY-s-Schneiderman-sues-banks-in-foreclosure-effort-2993231.php#ixzz1lXKSvnBW

[boutons_deux]

MERS also allowed lenders to evade local property transfer fees.

[boutons_deux]

Shitbag lawyers, lazy/biased judges, lenders and banks have been stealing $Bs and homes for a LONG TIME

A Mortgage Tornado Warning, Unheeded

In 2003, when home prices were flying high, he compiled a dossier of improprieties on one of the giants of the business, Fannie Mae.

In hindsight, what he found looks like a blueprint of today’s foreclosure crisis. Even then, Mr. Lavalle discovered, some loan-servicing companies that worked for Fannie Mae routinely filed false foreclosure documents, not unlike the fraudulent paperwork that has since made “robo-signing” a household term. Even then, he found, the nation’s electronic mortgage registry was playing fast and loose with the law — something that courts have belatedly recognized, too.

You might wonder why Mr. Lavalle didn’t speak up. But he did. For two years, he corresponded with Fannie executives and lawyers. Fannie later hired a Washington law firm to investigate his claims. In May 2006, that firm, using some of Mr. Lavalle’s research, issued a confidential, 147-page report corroborating many of his findings.

And there, apparently, is where it ended. There is little evidence that Fannie Mae’s management or board ever took serious action. Known internally as O.C.J. Case No. 5595, in reference to the company’s Office of Corporate Justice, this 2006 report suggests just how deep, and how far back, our mortgage and foreclosure problems really go.

“It is axiomatic that the practice of submitting false pleadings and affidavits is unlawful,” said the report, a copy of which was obtained by The New York Times. “With his complaint, Mr. Lavalle has identified an issue that Fannie Mae needs to address promptly.”

Almost all of the abuses that Mr. Lavalle began identifying in 2003 have since come to widespread attention. The revelations have roiled the mortgage industry and left Fannie, Freddie and big banks with potentially enormous legal liabilities. More worrying is that the kinds of problems that Mr. Lavalle flagged so long ago, and that Fannie apparently ignored, have evicted people from their homes through improper or fraudulent foreclosures.

LIKE most people, Nye Lavalle had little interest in the mortgage industry until things got personal. Raised in comfortable surroundings in Grosse Pointe, Mich., just outside Detroit, he began his business career in the 1970s, managing professional tennis players. In the 1980s, he ran SMG, a thriving consulting and research firm.

Then he tried to pay off a loan on a home his family had bought in Dallas in 1988. The balance was roughly $100,000, and the property was valued at about $175,000, Mr. Lavalle said. But when he combed through figures provided by his lender, Savings of America, he found substantial discrepancies in the accounting that had inflated his bill by $18,000. The loan servicer had repeatedly charged him late fees for payments he had made on time, as well as for unnecessary appraisals and force-placed hazard insurance, he said.

Mr. Lavalle refused to pay. The bank refused to bend. The balance rose as the bank tacked on lawyers’ fees and the loan was deemed delinquent. The fight continued after his mortgage was allegedly sold to EMC, a Bear Stearns unit.

Unlike most people, Mr. Lavalle had the time and money to fight. He persuaded his family to help him pay for a lawsuit against EMC and Bear Stearns. Seven years and a small fortune later, they lost the house in Dallas. Back then, judges weren’t as interested in mortgage practices as some are now, he said.

report didn’t conclude that Mr. Lavalle was wrong on the legal issues. It simply said that few people would have the financial resources to challenge foreclosures. In other words, few people would be like Mr. Lavalle.

http://www.nytimes.com/2012/02/05/business/mortgage-tornado-warning-unheeded.html?_r=1&scp=1&sq=tornado&st=cse

[boutons_deux]

Why State Attorneys General Shouldn't Settle on Robo-Signing



http://www.truth-out.org/print/12237

[boutons_deux]

Will the Attorneys General Sell Out the Pension Funds?

A shocking aspect of the proposed foreclosure fraud settlement among bailed-out banks,... namely the bailed-out banks' ability to pay their "penalty" with other people's money

The federal government really wants the B.O.B.s to use pension fund money to pay their "penalty."

The feds see the banks' ability to spend firefighters', teachers' and cops' money as a design feature, not a flaw.

I am fixating on the pension funds because attorneys general usually protect state pension funds from theft.

http://www.huffingtonpost.com/abigail-caplovitz-field/bank-bailouts-pensions_b_1255152.html

==========

Obama to Use Pension Funds of Ordinary Americans to Pay for Bank Mortgage “Settlement”

http://www.nakedcapitalism.com/2012/01/obama-to-give-banks-mortgage-get-out-of-jail-almost-free-card-pressures-state-attorneys-generals-to-capitulate.html


============

HUD Secretary Expects “Substantial” Payment of Foreclosure Fraud Settlement with MBS Investor Money

Housing and Urban Development Secretary Shaun Donovan mostly confirmed that private-label mortgage-backed securities investors, not banks or servicers, will end up shouldering the cost of much of the imminent foreclosure fraud settlement despite the risk of litigation from investors who are likely to challenge the forced losses on their securities in court.

http://news.firedoglake.com/2012/02/04/hud-secretary-expects-substantial-payment-of-foreclosure-fraud-settlement-with-mbs-investor-money/

====

Wall St gain and fuckup, Human-Americans risk and pays for them again.

and you right-wingers want to hand SS to Wall St? :lol

[boutons_deux]

Mirabile Dictu! Missouri Attorney General Files Criminal Lawsuit on Robosiging

“Linda Greene” has become a household word to those on the foreclosure fraud beat. And it turns out, for once, that the work of diligent investigators such as the foreclosure attorneys around Max Gardner, and investigators like Lynn Szymoniak and Lisa Epstein led to press coverage which in turn spurred prosecutors to act.

What is striking about the indictment by a Missouri grand jury is that the Missouri AG Chris Koster has decided to challenge the banks’ party line that robosigning and related abuses were mere “paperwork problems.” He’s called robosiging what it is: forgery. The 136 count indictment is for forgeries and false declarations, and the targets are LPS subsidiary and its founder and past president, Lorraine Brown. From a press release by Koster:

Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters,” Koster said. “Mass-producing fraudulent signatures on millions of real estate documents across America constitutes forgery. When you file those documents in our state, you are committing a crime under Missouri law.

The forgery and false declaration counts each allege that the person whose name appears on 68 notarized deeds of release on behalf of the lender is not the person who actually signed the paperwork. The documents were then submitted to the Boone County Recorder of Deeds as though they were genuine…

DOCX’s role in the robo-signing process came to national attention when 60 Minutes reported that Linda Green, an employee of DOCX, purportedly signed thousands of mortgage-related documents on behalf of several different banks and in multiple handwritings. The 68 documents on which the indictments are based were purportedly signed by Linda Green, but were in fact allegedly signed by someone else.

Forgery is a Class C felony and False Declaration is a Class B misdemeanor. If convicted on the most serious count, Brown could face up to seven years in prison for each count. DOCX could be fined up to $10,000 for each forgery conviction and $2,000 for each false declaration conviction.

http://www.nakedcapitalism.com/2012/02/mirabile-dictu-missouri-attorney-general-files-criminal-lawsuit-on-robosiging.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

deep-red, right-wing Missouri, of all places??

[boutons_deux]

Faulty Mortgages And Fraudulent Foreclosures Have Cost The Big Banks $72 Billion And Counting

Part of the hesitation on the part of several of the AGs is that a settlement would limit investigations into the extent of the fraud perpetrated by the banks. In the meantime, between shoddy foreclosure and faulty loans, the biggest U.S. banks have already lost $72 billion — with the most losses coming at Bank of America — and are preparing to lose even more:

Costs from faulty mortgages and shoddy foreclosures have topped $72 billion at the biggest U.S. banks as they near a settlement of a 50-state probe into the industry’s practices.

Wells Fargo & Co., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Ally Financial Inc., the five largest home lenders during the real estate boom, tallied at least $6.78 billion in new costs tied to mortgages during the second half of 2011, according to data compiled by Bloomberg. Bank of America, ranked second among U.S. banks by assets, contributes $41.8 billion of the overall total.

“It’s a colossal failure of basic banking,” said credit analyst David Knutson. “It’s surprised everyone in terms of persistence and longevity and I think it will continue to surprise.”

http://thinkprogress.org/economy/2012/02/08/421266/faulty-mortgages-foreclosure-costs/

[Winehole23]

deep-red, right-wing Missouri, of all places??horror of horrors, values voters occasionally have and practice the values they profess.

Bona fides is not just a quaint legal euphemism. Courts normally take the validity of submitted documents very seriously and so do midwestern voters.

It would actually be more surprising if everybody decided to do nothing; it's encouraging that doesn't appear to be happening.

[boutons_deux]

"values voters"

vote Family, God, Guns, Gays, Hate, Paranoia, Culture Wars, etc, but they vote AGAINST their own financial interests (eg, for Repugs) repeatedly.

[Winehole23]

bully on the Missouri AG, regardless

[boutons_deux]

Financial sector's fraud and theft has been completed successfully, indicating how they can repeat in the future. aka, redistribution of wealth upward. It's The American Way

=========

The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

The mortgage settlement terms have not been released, but more of the details have been leaked:

1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

The Times is also subdued:

Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Here are the top twelve reasons why this deal stinks:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since, according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.


http://www.nakedcapitalism.com/2012/02/the-top-twelve-reasons-why-you-should-hate-the-mortgage-settlement.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

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TBTFail

TBTJail

TBTPunish

$26B is just a (tax deductible?) cost of doing thieving, fraudulent business. Carry on, nothing to see. No fucking way to stop it.

"why do you envy and regret the 1% for their hard-earned wealth?"

--WC

[boutons_deux]

Rep. Eric Cantor Blocked Foreclosure Crisis Fix While Owning a Financial Stake in Mortgage Businesses

Congressman Eric Cantor (R-VA) is managing the House version of the Stock Act. Since it appears unlikely that Cantor will attach Brown’s meaningful amendment, Cantor’s own history of legislating on issues that affect his bank account deserves a renewed look.

Throughout 2009, Cantor helped lead opposition to mortgage cramdown — a no-cost measure to help borrowers negotiate lower interest rates and avoid foreclosure. While Cantor marshaled opposition to these policies, he did not disclose that both his own wealth and his wife’s were connected to the mortgage industry:

–- Cantor invested in several mortgage banks, and owned a portion of a Cantor-family run mortgage company. According to Cantor’s 2009 personal finance disclosure, Cantor owned up to a $500,000 share of a mortgage company called TrustMor run by his brother.

–- While Cantor blocked a fix to the foreclosure crisis, his wife Diane Cantor served as the managing director of a bank with a high foreclosure rate. Diane Cantor at the time worked as a managing director to New York Private Bank & Trust, a major mortgage bank and TARP recipient. SNL Financial later reported that Cantor’s bank was among the top three banks in the mortgage business “with the the greatest percentage of family loans in the foreclosure process.”

In 2009, Eric Cantor also owned a portion of a family debt collection law firm. According to his personal finance disclosure, Cantor owned up to a $100,000 stake in Cantor & Cantor, the debt collection law firm run by his family.

http://www.truth-out.org/rep-eric-cantor-blocked-foreclosure-crisis-fix-while-owning-financial-stake-mortgage-businesses/1328

So Cantor's family runs a Shylockian, shark-y debt collection gang?

[coyotes_geek]

US reaches mortage settlement with banks (http://finance.yahoo.com/news/holdout-states-lured-back-mortgage-002546032.html;_ylt=Al.puZP4QafRBUGySkKER0OiuYdG;_ ylu=X3oDMTNyYmFhNXZsBG1pdANGUCBUb3AgU3RvcnkgTGVmdA Rwa2cDMDZjMDQ2NTEtMTM4ZS0zZjM5LWEwMTItMjM1NjFmNmQ1 NTEwBHBvcwMyBHNlYwN0b3Bfc3RvcnkEdmVyAzRkODI5YjUwLT UzMzYtMTFlMS1iN2ZlLWNiZjA5NTk0OGY0ZA--;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRw c3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ ylv=3)

Looks like it's a done deal. Pretty crappy one TBH. But at least politicians nationwide will have an ample supply of people who got to refinance an underwater mortgage as a result of this settlement to use as a campaign prop.

[Winehole23]

The deal does little to ease bank investor fears, industry analysts said.


"We believe any initial euphoria over the deal will quickly fade as investors realize the flood of additional mortgage-related litigation that the major banks face," said Guggenheim Partners analyst Jaret Seiberg in a note on Thursday.

[coyotes_geek]

U.S. bank regulators roll fines into mortgage pack (http://finance.yahoo.com/news/u-banks-regulators-settle-foreclosure-154032671.html)

[Winehole23]

The penalties are the result of mortgage servicing problems that burst into public view in 2010 when government agencies began investigating bank foreclosure practices, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day.and tens of thousands overall. this quote gives an idea of how radical the settlement is. each instance of robosigning -- only one of the corrupt practices at issue -- was a felony. this settlement is a settlement for pervasive, systemic fraud. for tens of thousands of felonies.

hard to see, given the lightness of the penalty, where the incentive to straighten up is.

[Winehole23]

but maybe the whole point was to begin rehabilitating the banks officially, before they have paid any price

[coyotes_geek]

Looks to me like the point was to have something done before the next election......

[Winehole23]

that too

[Winehole23]

olly olly oxen free

[Winehole23]

this is totally reminiscent of the way Obama "turned the page" on torture

[Winehole23]

It's time for us all to get over it -- torture, government surveillance, overzealous security enforcement, systematic fraud by banks, whatever. We need to evolve and grow as a country. We can't do that if we keep punishing each other.

[Winehole23]

the page was turned by forgoing any investigation into the extent of (alleged) crimes

[coyotes_geek]

Yep. Just get what money you can out of the banks as fast as you can and dispense it to as many people......errr....voters as you can.

It's a settlement for illegally forclosing on people. Yet the people who actually got illegally foreclosed on only get a $2,000 check and a bunch of people who were not illegally foreclosed on get principal writedowns and refi's? Looks to me like the deal is to write down mortgages at the expense of people who were illegally foreclosed on.

[coyotes_geek]

dp

[boutons_deux]

F & F (DeMarco) refuse to bail out the homeowners after the homeowners (taxpayers) bailed out F & F.

Why Millions Won’t Get Help From Big Mortgage Settlement

The two companies aren't directly part of the settlement. They don't service mortgages, or deal directly with borrowers. But Fannie and Freddie do guarantee or own roughly half of the mortgages in the U.S. They also hold more than 3 million of the nation's nearly 11 million underwater mortgages. Since Fannie and Freddie are backing the loans -- and are the ones who will take a loss if the mortgage isn't paid back in full -- they often have a veto on whether homeowners get a break.

Even if Bank of America, for example, services your mortgage, you would not be eligible for principal reduction if Freddie or Fannie back it.

. The administration recently tried to encourage Fannie and Freddie by offering to triple incentives for principal reduction. So far, the companies and their federal overseer, DeMarco, have declined to do so. An FHFA spokesperson said that the agency is "not a party to the agreement. We await a copy of the agreement to determine its implications."

Lowering the amount of money owed on a loan would result in at least short-term losses for Fannie and Freddie, as well as to any other investors in mortgages that are reduced. But many economists and analysts argue that Fannie and Freddie would ultimately benefit since such moves could help restore the health of the housing market as a whole.

The reluctance by Fannie, Freddie and others to take on principal reduction is partly why the administration's mortgage modification programs have been so ineffective.

http://www.propublica.org/article/why-millions-wont-get-help-from-big-mortgage-settlement

[Winehole23]

An investigation, and a multi-billion dollar settlement. That sounds like a lot, until you put it into perspective. Here are the numbers. Roughly half of homeowners with mortgages are underwater, which means they owe more than they own, to the tune of $1 trillion or so. And housing values are still declining so far in this "recovery", throwing more homes underwater. In terms of an investigation, the Savings and Loan crisis used roughly 1000 FBI investigators to uncover fraud -- this task force taking on a crisis forty times more severe will employ 10 FBI agents.


There's a reason this is so inadequate to the problem at hand. For the last three years, the policy has been to impose a political solution to a math problem. It hasn't worked. America simply has too much mortgage debt to pay back. Serious economic thinkers across the spectrum, from Democrat Alan Blinder to Republican Martin Feldstein to New York Fed President William Dudley, believe that there is only one solution -- writing down the enormous creaking mound of debt. This solution is currently off the table, because writing down these unsustainable debts could cost our fragile banks enormous sums of money and possibly lead to a restructuring of one or more of our major banks. Avoiding this clear policy choice has resulted in our economy falling into a Japan-style "zombie bank" torpor, with debts carried on the books at full value which everyone knows will not be paid back at par.
http://www.huffingtonpost.com/dylan-ratigan/mortgage-settlement_b_1267710.html

[Winehole23]

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."
That's because a fully authorized, legally binding deal has not been inked yet.
The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed.


"Once the documents are finalized, they'll be posted to nationalmortgagesettlement.com (http://www.nationalmortgagesettlement.com/)," the representative said in an email to American Banker.


Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete documents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.


Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.
http://www.americanbanker.com/issues/177_29/mortgage-servicers-settlement-1046574-1.html

[boutons_deux]

Foreclosure Deal to Spur New Wave of U.S. Home Seizures, Help Heal Market

The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures, inflicting short-term pain on delinquent U.S. borrowers while making a long-term housing recovery more likely.

Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.

“The best thing about the settlement, frankly, is that it will be done,” said Stan Humphries, chief economist for Seattle-based Zillow Inc. (Z), a provider of home-sales data. “The shadow of the settlement hung over the market for a year now.”

The backlog of foreclosures has trapped homeowners in properties they can no longer afford, depressed neighborhood prices by increasing the number of abandoned homes and led banks to tighten mortgage credit standards because of uncertainty about the cost of their potential obligations. Foreclosure starts fell 46 percent in December from October 2010, when the investigation into the so-called robo-signing of mortgage documentation began, according to Irvine, California-based RealtyTrac Inc.

The agreement will direct $17 billion to writing down debt to buffer about 1 million homeowners from foreclosure through mortgage forgiveness, forbearance or loan modification programs, according to Housing and Urban Development Secretary Shaun Donovan. About 750,000 borrowers may get direct payments of as much as $2,000 to compensate them for servicing errors.

http://www.bloomberg.com/news/print/2012-02-09/foreclosure-deal-to-spur-new-wave-of-u-s-home-seizures-help-heal-market.html

========

So the predatory, corrupt, criminal capitalists, having allowed/lent the toxic mortgages and bankrupted themselves, are free to pillage Human-Americans. A "wealth redistribution" that right-wingers love.

[Winehole23]

Wisconsin will use a chunk of its $140 million share of a national settlement over foreclosure and mortgage-servicing abuses to help the state budget rather than assist troubled homeowners, Gov. Scott Walker and state Attorney General J.B. Van Hollen said Thursday.http://www.jsonline.com/news/wisconsin/state-to-receive-140-million-to-settle-mortgage-claims-qh44q6v-139014139.html


State government also receives $41 million. Earlier this week, (Missouri) Gov. Jay Nixon proposed using nearly all that to soften a budget cut for colleges and universities.http://www.businessweek.com/ap/financialnews/D9SQJ97O0.htm

[Winehole23]

Critics also pointed to the fact that millions of mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac, would not be covered under the deal, excluding about half the nation’s mortgages. http://www.nytimes.com/2012/02/10/business/states-negotiate-26-billion-agreement-for-homeowners.html?_r=1

[Winehole23]

But perhaps the largest question looming over this settlement is how it will be policed. Recent history is littered with agreements that required banks to take specific steps to make amends. All too often, the banks have skated away from their promises.



A prime example is a settlement over predatory lending that was reached by Countrywide Financial in 2008. Led by attorneys general in California and Illinois, that deal had Countrywide vowing to provide $8.4 billion in loan relief to borrowers in the form of lower interest rates and loan modifications (http://topics.nytimes.com/your-money/loans/loan-modifications/index.html?inline=nyt-classifier).



It sounded good on paper. But Bank of America, Countrywide’s parent, defied many aspects of the settlement, according to Catherine Cortez Masto, Nevada’s attorney general. She sued Bank of America last summer, contending that it had raised interest rates on loan modifications even though Countrywide had promised to lower them.



Bank of America also declined to provide loan modifications to qualified homeowners as required in the deal and improperly proceeded with foreclosures while borrowers’ modification requests were pending, Ms. Masto’s suit said. Furthermore, the bank failed to meet the settlement’s 60-day requirement on granting new loan terms, allowing months — and in some cases, more than a year — to go by with no resolution, the lawsuit said.
http://www.nytimes.com/2012/02/12/business/mortgage-settlement-leaves-much-to-be-desired-fair-game.html?_r=1&adxnnl=1&ref=business&adxnnlx=1329080940-Sw3no4OVs8u23rQMuGIhXg

[Winehole23]

The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. This fact is demonstrated by a November report by Syracuse University’s Transitional Records Access Clearinghouse (TRAC), “Criminal Prosecutions for Financial Institution Fraud Continue to Fall (http://trac.syr.edu/tracreports/crim/267/).”

The truth is that neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis, in contrast to over 1,000 elite felony convictions arising from the Saving & Loan debacle in the 1980s. Yet today's ongoing crisis caused losses more than 70 times greater than the S&L debacle, and the amount of elite fraud driving this crisis is also vastly greater. Bank CEOs leading what I call "accounting control frauds” now do so with impunity. They become wealthy through fraud, and even if they are sued civilly they almost invariably walk away wealthy with the proceeds.http://www.alternet.org/story/154038

[Winehole23]

We have forgotten the successes of the past. During the S&L debacle, Congress responded to the S&L crisis, once the presidentially-ordered cover up of the scope of the crisis ended in 1989, by ordering and funding a dramatic increase in DOJ resources dedicated to prosecuting the S&L accounting control frauds that drove the second phase of the debacle. President Bush (II), President Obama, and Congress have each failed to emulate such policies. DOJ and the S&L regulators made the prosecution of the elite frauds a top priority by their deeds as well as their words.

[Winehole23]

DOJ should have been issuing grand jury subpoenas to every lender making liar’s loans and every entity packaging liar’s loans no later than September 2004 when the FBI warned that there was an “epidemic” of mortgage fraud and predicted that it would cause a financial “crisis.”

[Winehole23]

An audit by San Francisco county officials of about 400 recent foreclosures (http://topics.nytimes.com/top/reference/timestopics/subjects/f/foreclosures/index.html?inline=nyt-classifier) there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.



The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.



Commissioned by Phil Ting, the San Francisco assessor-recorder, the report (http://aequitasaudit.com/images/aequitas_sf_report.pdf) examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.


The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.



In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.



In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.
http://www.nytimes.com/2012/02/16/business/california-audit-finds-broad-irregularities-in-foreclosures.html?_r=1

[Winehole23]

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office. same

[boutons_deux]

The 1% doing what they do best, stealing from and defrauding the 99%.

[Winehole23]

boutons doing what he does best, pseudo-plaititudinous finger-pointing.

[boutons_deux]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/how-citibank-dumped-lousy-mortgages-on-the-government

=======

Boutons doing what he does best, delivering the bitch-slapping goods.

[TeyshaBlue]

lol @ boutons forgetting the bitch-slapping he took on 3 pages of this thread.

:lmao:lmao

[boutons_deux]

TB always adding a informative comment and only to try to reach high enough to hit The Great Boutons

[boutons_deux]

Subprime Mortgage Bonds Back In Fashion

http://i.huffpost.com/gen/503344/thumbs/r-DYNAMITE-large570.jpg

The home loans responsible for blowing up the housing market are regaining popularity.

Prices are climbing for some bonds backed by subprime mortgage loans given to higher risk borrowers, with one index rising 14 percent, according to the Wall Street Journal.

These home loans, given to anyone essentially with a pulse during the housing boom, saw massive defaults and helped cause the foreclosure crisis. Subprime bond investors suffered enormous losses in the crash--financial institutions collapsed because of subprime exposure.

Investors' belief that the housing market has finally hit bottom could be fueling their return to these riskier mortgages. Despite the mess that took place in 2008, investors are eager to try again. Investors who made hundreds of millions betting against subprime mortgage loans in 2007 jumping into the market for risky mortgage securities, say that today's subprime mortgage bonds are priced to withstand an economic slowdown, according to Bloomberg.

If demands for these kinds of bonds rise, banks may loosen up and do more lending to higher-risk borrowers. Already, some mortgage lenders may be starting to loosen standards, according to Time.

In addition, as the economy has started to recover, Americans are becoming less gun shy about taking on more debt. After de-leveraging in the years immediately following the recession, credit card use climbed last year, even as Americans contended with falling incomes, according to statistics from First Data.

But if history is any indication, a boost in investor appetite for these types of bonds may spell disaster. Indeed, the fallout from subprime is ongoing. The Securities and Exchange Commission sued six former Fannie Mae and Freddie Mac executives at the end of last year, alleging they misled the public about the mortgage giants' exposure to subprime mortgages during the crisis. In addition, the SEC may be preparing a lawsuit against some of the country's biggest banks over their subprime mortgage loan practices.

http://www.huffingtonpost.com/2012/02/16/subprime-mortgage-_n_1282157.html?view=print&comm_ref=false

[Winehole23]

http://www.naca.net/sites/default/files/NACA%20NCLC%20NACBA%20Wrongful%20Foreclosure%20Sur vey%20Results%20February%2022%202012.pdf

[Winehole23]

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York (http://topics.bloomberg.com/new-york/), in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.



“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”
http://www.bloomberg.com/news/2011-02-14/merscorp-has-no-right-to-transfer-mortgages-u-s-judge-says.html

[Winehole23]

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.” same

[Winehole23]

The case is In re Agard, 10-77338, U.S. Bankruptcy Court (http://topics.bloomberg.com/u.s.-bankruptcy-court/), Eastern District of New York Central Islip (http://topics.bloomberg.com/central-islip/)).

[boutons_deux]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners' default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/how-citibank-dumped-lousy-mortgages-on-the-government

[boutons_deux]

While state govts' are stealing the funds the Feds intended for homeowners, homeowners risk getting raped harder by the IRS

Homeowners Who Negotiate Debt Relief Could Soon Face Massive Tax Bill


You bought your house when the market was high and then lost your job. In order to avoid foreclosure, you negotiated a short sale for half of what you paid, ruining your credit rating for years and draining your bank account. But there is a tiny silver lining: Thanks to a 2007 law, you don't have to pay taxes on the $100,000 of debt your bank forgave as part of the short-sale agreement.

This week, real estate columnist Kenneth R. Harney pointed out that this important tax break will expire at the end of 2012 -- and, because of opposition from conservative members of Congress, might not be renewed.

http://www.propublica.org/article/homeowners-who-negotiate-debt-relief-could-soon-face-massive-tax-bill

[Winehole23]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners' default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/how-citibank-dumped-lousy-mortgages-on-the-governmentyou posted this ten posts back, brainiac.

http://www.spurstalk.com/forums/showpost.php?p=5651860&postcount=191

[TeyshaBlue]

:lol

[boutons_deux]

Mortgage Settlement Fails to Address Banking Criminal Enterprise



As Dave Dayen has pointed out, it was two county registers of deeds, Jeff Thigpen in Guiford County, North Carolina, and John O’Brien of South Essex County, Massachusettes, who were the first to look at their own records to see how extensive the frauds were. O’Brien has called his office a “crime scene” and refused to register any more fraudulent deeds. He also performed a study of his own, and the results were released in June 2011. As Dayen reported, the study found widespread failures and apparent fraud, just like the later San Francisco exam:

Register John O’Brien revealed the results of an independent audit of his registry. The audit, which is released as a legal affidavit was performed by McDonnell Property Analytics, examined assignments of mortgage recorded in the Essex Southern District Registry of Deeds issued to and from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America during 2010. In total, 565 assignments related to 473 unique mortgages were analyzed.

McDonnell’s Report includes the following key findings:
• Only 16% of assignments of mortgage are valid
• 75% of assignments of mortgage are invalid.
• 9% of assignments of mortgage are questionable
• 27% of the invalid assignments are fraudulent, 35% are “robo-signed” and 10% violate the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could only be determined for 287 out of 473 (60%)
• There are 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership can be traced.

http://www.nakedcapitalism.com/2012/02/john-obrien-mortgage-settlement-fails-to-address-banking-criminal-enterprise.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[boutons_deux]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners' default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/ho...the-government

[Winehole23]

boutons_deux-ing what he does best, repeating himself needlessly

[boutons_deux]

Banks Colluding with Insurers to Rip Off Homeowners, Lawsuit Alleges

A class action suit in Florida that moved forward this week highlights a little-appreciated aspect of the housing market—the cozy relationship between banks and insurance companies that often results in overpriced home insurance for already struggling borrowers.

As the American Banker reported, a federal judge in Miami on Tuesday opened the door to a class action against Wells Fargo. More than 20,000 Florida homeowners can now sue Wells Fargo and an insurance company, QBE, for allegedly overcharging for insurance. More than $50 million in insurance premiums are at issue, according to American Banker.

The suit itself, filed last year, is sealed, but the judge, Robert Scola, laid out the allegations against Wells Fargo. The judge didn’t rule on the case itself, but rather allowed it to go forward as a class action. In his decision, the judge cited the plaintiff’s claims that Wells Fargo and QBE “colluded in a scheme to artificially inflate the premiums charged to homeowners.”

The judge also said that Wells Fargo has actually threatened to retaliate against homeowners who join the suit.

A spokesman for Wells Fargo said in an emailed statement that, “the judge’s recent ruling only addresses the certification of the class in this case and not any of the underlying claims. We disagree with a number of the representations made by the plaintiffs’ attorneys.”

They also disputed the judge’s claim that they were threatening retaliation for the suit, saying “we made our argument in a purely procedural context in connection with the class certification motion. Wells Fargo has no intention of taking the actions referenced with regard to our customers.”

http://www.propublica.org/article/banks-colluding-with-insurers-to-rip-off-homeowners-lawsuit-alleges

=======

Big Boys colluding to screw customers on price of required mortgage insurance?

NEVER!

Quit picking on the defenseless, good-faith UCA boys.

[Winehole23]

Managers at major banks ignored widespread errors in the foreclosure (http://topics.nytimes.com/top/reference/timestopics/subjects/f/foreclosures/index.html?inline=nyt-classifier) process, in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections, according to a wide-ranging review by federal investigators. http://www.nytimes.com/2012/03/13/business/federal-report-cites-bank-officials-in-foreclosure-surge.html

[Winehole23]

JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say.


The process flaws sparked a regulatory probe by the Office of the Comptroller of the Currency and forced the bank to stop suing delinquent borrowers altogether last year (http://www.americanbanker.com/issues/177_7/jpmorgan-chase-consumer-debt-collection-1045606-1.html).


The bank's errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say.


For the banking industry at large, the situation at Chase highlights the risk (http://www.americanbanker.com/issues/177_20/robosigning-credit-card-suits-1046175-1.html) that shoddy back-office procedures and flawed legal work extends well beyond mortgage servicing.
http://www.americanbanker.com/issues/177_49/chase-credit-cards-collections-occ-probe-linda-almonte-1047437-1.html

[ElNono]

So what are we looking at? $20 million fine and they're off the hook?

[coyotes_geek]

No worries. Uncle Sam got their $25 billion settlement so we can forget about this and move on.

[Winehole23]

olly olly oxen free

[Wild Cobra]

olly olly oxen free
Free Oxen...

Where can I get mine?

[Winehole23]

Last fall, some of the bank's biggest creditors and counterparties started to get nervous about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered, complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses. a long article, but good background on BofA.


Read more: http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314#ixzz1pAV5CPfZ

[Winehole23]

Guilford County (NC) Register of Deeds Jeff Thigpen sues MERS:


Here’s the complaint (http://static1.firedoglake.com/37/files/2012/03/Guilford-Complaint.pdf), and there’s additional information at this mini-site (http://www.restorepublicrecords.com/). A couple things are interesting about the suit. First of all, Thigpen is getting assistance from Talcott Franklin, the law firm which has been rounding up investors to pursue repurchase cases against the banks. So he’s accessing a great deal of knowledge there. Second, among the penalties sought in the suit, Thigpen wants a special master to oversee an audit of mortgage documents at his office and to correct them.


The suit dates the recording of land titles at a public office in North Carolina all the way back to 1664. So we’re talking about banks overturning over 300 years of precedent in the furtherance of avoiding recording fees by creating their own database, which they summarily screwed up. Here’s a list of all the problems with maintaining an inaccurate registry, from the complaint:

a. Without available, orderly, and accurate records, landowners can lose their property as a result of illegal foreclosures.
b. Without available, orderly, and accurate records, landowners can be deprived of the ability to discover and remedy title defects.
c. Without available, orderly, and accurate records, landowners can be deprived of the ability to buy and sell property.
d. Without available, orderly, and accurate records, mortgage holders’ interests in property can be jeopardized.
e. Without available, orderly, and accurate records, potential purchasers cannot obtain financing to purchase property and/or risk loss of any property purchased.

So this is about more than just vengeance or justice, it’s about fixing a broken property system in the United States that puts the entire economy at risk. And the MERS system, which is inherently unreliable and which rests on novel and in many cases unproven legal theories, has broken that system, make no mistake.
Thigpen puts the evidence in his office to good use here, and he seeks not just a payout but a remedy. He says in the suit that he cannot perform his duties as register of deeds under the current circumstances. Furthermore, “The cost to Guilford County to identify impaired chains of title and repair those impaired chains of title – even if it were possible without the Defendants’ cooperation – would vastly exceed the budget for the Register of Deeds.” Basically, he wants the banks to create and pay for a Special Master to look through every document in his office, and cure all defects. There would be other damages incurred as well, but that’s his main goal.
http://news.firedoglake.com/2012/03/14/register-of-deeds-jeff-thigpen-sues-mers-banks-wants-them-to-fix-their-mess/

[boutons_deux]

Not a direct quote, but clearly indicates how 0.1%er Issa and Repugs criminalize borrowers (Human-Americans) while protecting the guilty financial sector (Corporate-Americans).

Rep. Issa Confronted By Protesters At Foreclosure Hearing, Blames Bank Fraud On Homeowners

DarrellIssa also just said that robosigning happened as a result of a swamped agency and was the fault of people who stopped paying.

Issa’s thoughts on foreclosure fraud, unfortunately, aren’t new. Before the GOP took control of the House in 2011, Issa promised not to investigate the fraudulent acts committed by Wall Street banks, instead vowing to focus his attention on home loans made to poor people.

http://thinkprogress.org/economy/2012/03/19/447565/issa-blames-bank-fraud-homeowners/

[boutons_deux]

Wall Street Sees Big Profits In Renting Out Foreclosed Homes

a growing list of big and small investors who see fat profits to be made in renting out foreclosed homes, especially now the U.S. government is moving ahead with a trial project to sell big pools of single-family homes that Fannie Mae currently owns in some of the hardest-hit housing markets.

Investors seeking higher yields are drawn to foreclosures because the rental market is red hot. But the heated competition for foreclosed homes is reminiscent of the frothy expectations that seem to accompany each new Wall Street investing craze.

Even proponents of buying foreclosed homes are advising caution about the kind of returns that investors can expect to reap and the potential negative headlines that can come with being a landlord.

Critics, meanwhile, contend the federal government is fostering a transfer of wealth of sorts by selling big pools of foreclosed homes to big fund investors and high-net-worth individuals. There's also concern that some of the players who helped create the housing crisis will now benefit by buying foreclosed homes at a steep discount.

Between them, Fannie and Freddie Mac own more than 200,000 foreclosed homes. The nation's banks own more than 600,000 single-family homes, according to RealtyTrac, a housing tracking service.

http://www.huffingtonpost.com/2012/03/20/wall-street-foreclosed-homes_n_1367962.html?view=print

=============

After the lenders/banks' lending fraud and predations and gambling and selling toxic crap, they now get to profit by renting the real estate they got for next to nothing.

"why do you envy rich people's hard-earned wealth?" - WC

[GSH]

Foreclosuregate Fallout: How Bad Can It Get For Wall Street?

URL to article: http://blogs.alternet.org/speakeasy/2010/10/20/foreclosuregate-fallout-how-bad-can-it-get-for-wall-street/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=alternet

Foreclosure fraud is ruffling a lot of feathers on Wall Street, and while the full scope of losses remains unclear, even major banks are now acknowledging that this is a multi-billion-dollar disaster, not just a set of minor paperwork headaches.


============

Holy shit.


The source for almost all of your dumb shit is Alternet blogs. You and the other wingnuts are never tolerant of other people quoting sources like that.

This article was by Zach Thomas
http://blogs.alternet.org/speakeasy/wp-content/avatars/64489.jpg

I bet Zach is a fucking expert on financial systems.

Hold yourself to the same standard as you do everyone else, you damn loon.

[Winehole23]

Have you read through the thread yet? There's a bit more to it than boutons and Alternet, if you care to read and respond. A variety of sources are cited...

[Winehole23]

cmon.

FT and American Banker, ok? please read something.

[Winehole23]

UrWveHnMYno

[Winehole23]

When Lehman Brothers (http://topics.nytimes.com/top/news/business/companies/lehman_brothers_holdings_inc/index.html?inline=nyt-org) collapsed at the height of the financial crisis, JPMorgan Chase (http://dealbook.on.nytimes.com/public/overview?symbol=JPM&inline=nyt-org) was at the center of the storm. The bank was a major lender to the firm, which filed the biggest bankruptcy in United States history.


Now, more than three years later, regulators have penalized JPMorgan for actions tied to Lehman’s demise.


The Commodity Futures Trading Commission (http://topics.nytimes.com/top/reference/timestopics/organizations/c/commodity_futures_trading_commission/index.html?inline=nyt-org) filed a civil case against JPMorgan on Wednesday, the first federal enforcement case to stem from Lehman’s downfall. The bank settled the Lehman matter and agreed to pay a fine of approximately $20 million.



The Lehman action stems from the questionable treatment of customer money — an issue that has been at the forefront of the recent outcry over MF Global. JPMorgan was also intimately involved in the final days of that brokerage firm.
The trading commission accused JPMorgan of overextending credit to Lehman for roughly two years leading up to its bankruptcy in 2008.


JPMorgan extended the credit using an inaccurate evaluation of Lehman’s worth, improperly counting Lehman’s customer money as belonging to the firm. Under federal law, firms are not allowed to use customer money to secure or extend credit.


The arrangement worked well for both parties. Lehman wanted a larger loan, and suggested counting money from the customer account to justify it. JPMorgan complied, counting the money as part of Lehman’s coffers.


“The laws applying to customer segregated accounts impose critical restrictions on how financial institutions can treat customer funds, and prohibit these institutions from standing in the way of immediate withdrawal,” David Meister, the agency’s enforcement director, said in a statement. “As should be crystal clear, these laws must be strictly observed at all times, whether the markets are calm or in crisis.”
It is unclear whether JPMorgan knew the money belonged to clients. But in the view of regulators, it should have — the customer funds were kept at a JPMorgan account. The funds belonged to investors trading in the futures market.
http://dealbook.nytimes.com/2012/04/04/regulators-expected-to-penalize-jpmorgan-over-lehman-collapse/?src=recg

[Winehole23]

A federal judge rejected Bank of New York Mellon (http://newsandinsight.thomsonreuters.com/Legal/SearchResults.aspx?folder_id=0&search_text=bny+mellon) Corp's bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp.


U.S. District Judge William Pauley (http://newsandinsight.thomsonreuters.com/Legal/SearchResults.aspx?folder_id=0&search_text=william+pauley) in Manhattan said on Tuesday that bondholders who invested in 26 trusts alleged to have contained risky mortgage loans from the former Countrywide Financial Corp may pursue claims against Bank of New York Mellon. He dismissed a variety of other claims.


The decision relates to a lawsuit challenging Bank of New York Mellon's performance of its day-to-day obligations as a trustee, which includes ensuring that underlying home loans are properly documented and that bondholders' rights are protected.


Beth Kaswan, a lawyer for four pension funds in Chicago, Michigan and Pennsylvania that brought the case, said the decision leaves intact claims over securities backed by more than $30 billion of loans, and which have suffered more than $9 billion of losses or delinquencies.


She said she believes the decision is the first to let investors in mortgage-backed securities pursue claims against a trustee under the 1939 federal Trust Indenture Act.


"The decision is a watershed," Kaswan said.
http://newsandinsight.thomsonreuters.com/Legal/News/2012/04_-_April/Bank_of_NY_Mellon_must_face_lawsuit_on_Countrywide/

[Winehole23]

http://www.americanbanker.com/issues/177_52/jpmorgan-chase-credit-card-collections-1047573-1.html

http://www.americanbanker.com/issues/177_62/bofa-credit-cards-debt-collections-delinquent-robosigning-1047991-1.html

http://www.americanbanker.com/issues/177_62/bofa-credit-cards-collections-debts-faulty-records-1047992-1.html?zkPrintable=1&nopagination=1

[boutons_deux]

Judge Rules Wells Fargo Engages in “Reprehensible,” Systemic Accounting Abuses on Mortgages, Hit with $3.1 Million Punitive Damages for One Loan

In an April 2008 ruling, Elizabeth Magner, a U.S. bankruptcy judge in New Orleans, rejected the two charges [for broker price opinions charged when the parish in which the home was located was evacuated thanks to Hurricane Katrina] as invalid. She also disallowed 43 home inspections, 39 late charges, and thousands of dollars in legal fees charged to the Stewarts’ account.

Almost every disallowed fee was imposed while the Stewarts were making regular monthly payments on their home…

Magner determined that Wells Fargo had been “duplicitous and misleading” and ordered the bank to pay $27,000 in damages and attorneys’ fees. She also took the unusual step of requiring the servicer to audit about 400 home loan files in cases in the Eastern District of Louisiana.

Wells fought successfully to keep the results of the audit under seal, and last summer a federal appeals court overturned the part of Magner’s ruling that required the audit. But two people familiar with the results told iWatch News that Wells Fargo’s audit had turned up accounting errors in nearly every loan file it reviewed.

http://www.nakedcapitalism.com/2012/04/judge-rules-wells-fargo-engages-in-reprehensible-systemic-accounting-abuses-on-mortgages-hit-with-3-1-million-punitive-damages-for-one-loan.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29&utm_content=Google+Reader

[Winehole23]

federal judge who has fiercely criticized how big banks service home loans is fed up with Wells Fargo.

In a scathing opinion (http://www.scribd.com/fullscreen/88494700) issued last week, Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, characterized as "highly reprehensible" Wells Fargo's behavior over more than five years of litigation with a single homeowner and ordered the bank to pay the New Orleans man a whopping $3.1 million in punitive damages, one of the biggest fines ever for mortgage servicing misconduct.

"Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed," Magner writes. "But perhaps more disturbing is Wells Fargo's refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods."
http://www.huffingtonpost.com/2012/04/09/elizabeth-magner-new-orleans-wells-fargo_n_1412412.html

[boutons_deux]

NY equities boss pleads guilty in $66 million mortgage fraud case

The president of a New York brokerage firm pleaded guilty on Monday to conspiracy in a $66 million mortgage fraud scheme -- the latest victory in U.S. President Barack Obama's campaign against financial fraud.

Gerard Canino, President of First Class Equities, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud in a New York federal court, said the U.S. Attorney's Office. The charge carries a maximum penalty of 30 years prison.

"As the president and owner of First Class Equities, Gerard Canino should have promoted responsible homeownership and protected the integrity of the mortgage finance industry," Manhattan U.S. Attorney Preet Bharara said in a statement.

"Instead, he used his firm to commit a massive mortgage fraud scheme that left scores of foreclosed properties in its wake. With today's plea, Canino now stands convicted for his role in this brazen scheme."

Canino's lawyer, Stuart Kaplan, described his client as "contrite and forthright in accepting his responsibility."

The U.S. Attorney's Office said Canino and his firm recruited "straw buyers" - people who posed as home buyers to purchase distressed properties but who had no intention of paying the mortgages.

http://www.reuters.com/article/2012/04/10/us-canino-guilty-plea-idUSBRE83901T20120410?feedType=RSS&feedName=domesticNews

====

Just a rogue, the entire financial sector is otherwise a paragon of truth and honesty.

[boutons_deux]

Long article, but the list of crimes is longer and longer. And health problems (car accident, not smoking or drinking) drained her finances.

The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home

The story of how she ended up in a tent is the story of how America ended up in a foreclosure crisis that has not ended, that still drags down the economy and threatens to force millions of families from their homes. Already, banks have foreclosed on more than 4 million homes since the crisis began in 2007. With almost 6 million loans still in danger of foreclosure, 2012 could very well be the worst year yet. Ramos' story is remarkable not because it's unique but because it isn't.

Her story doesn't fit any of the conventional narratives. Ramos is not a helpless victim. She made mistakes. But she didn't take out her mortgages to splurge on luxuries or build a new wing for her house. She took out her first mortgage to live the free-market dream of starting her own business. She took out later mortgages to cope with injuries sustained in a car accident.

her downfall was abetted by a mortgage industry so profit-driven and disconnected from homeowners that the common interests once linking lender and borrower have been severed. The lending arms of the nation's largest financial institutions helped plunge the country into crisis through their abuses and blunders, and they responded to that crisis with still more abuses and blunders — this time in how they handled people facing foreclosure. For subprime borrowers like Ramos, it has been as hard to work their way out of trouble as it was easy for them to get the loans that started their downfall. The millions of prime borrowers who thought they were doing everything right, only to be caught in a historic wave of unemployment, have been forced to endure a similar gauntlet of delays, errors and traps.

The industry developed tactics of dubious legality — not just robo-signing, which most Americans have heard of by now, but an array of business practices, some dating to the 1990s, that were designed to skirt the law and fatten profits. The federal and state governments largely tolerated these practices until they pushed Ramos into a tent and all of us into the Great Recession.

http://www.propublica.org/article/the-great-american-foreclosure-story-the-struggle-for-justice-and-a-place-t/single

[boutons_deux]

We can look at the foreclosure crisis as the pre-emininent law enforcement crisis of our time: Elite impunity for crimes committed and still being committed by lenders and servicers (“banksters”) on a massive scale. We can also look the foreclosure crsis as an issue of jurisprudence, where a revolutionary oligarchy seeks to change the nature of law itself.

http://www.nakedcapitalism.com/2012/04/code-is-law-literally.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29&utm_content=Google+Reader

[boutons_deux]

Lenders Again Dealing Credit to Risky Clients


But as financial institutions recover from the losses on loans made to troubled borrowers, some of the largest lenders to the less than creditworthy, including Capital One and GM Financial, are trying to woo them back, while HSBC and JPMorgan Chase are among those tiptoeing again into subprime lending.


Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax's credit trends report released in March. These borrowers accounted for 23 percent of new auto loans in the fourth quarter of 2011, up from 17 percent in the same period of 2009, Experian, a credit scoring firm, said.


Consumer advocates and lawyers worry that the financial institutions are again preying on the most vulnerable and least financially sophisticated borrowers, who are often willing to take out credit at any cost.


"These people are addicted to credit, and banks are pushing it," said Charles Juntikka, a bankruptcy lawyer in Manhattan.


The banks, for their part, are looking to make up the billions in fee income wiped out by regulations enacted after the financial crisis by focusing on two parts of their business - the high and the low ends - industry consultants say. Subprime borrowers typically pay high interest rates, up to 29 percent, and often rack up fees for late payments.


Some former banking regulators said they worried that this kind of lending, even in its early stages, signaled a potentially dangerous return to the same risky lending that helped fuel the credit crisis.


"It's clear that we are returning to business as usual," said Mark T. Williams, a former Federal Reserve bank examiner.

http://mobile.nytimes.com/article?a=937292&f=19

[Winehole23]

We can look at the foreclosure crisis as the pre-emininent law enforcement crisis of our time: Elite impunity for crimes committed and still being committed by lenders and servicers (“banksters”) on a massive scale. We can also look the foreclosure crsis as an issue of jurisprudence, where a revolutionary oligarchy seeks to change the nature of law itself.

http://www.nakedcapitalism.com/2012/04/code-is-law-literally.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29&utm_content=Google+Readergood read, thanks for posting.

[boutons_deux]

How A Goldman Sachs Mortgage Servicer Foreclosed On Homeowners After Losing Their Documents In India

Adding to the list of horrors, ProPublica found that Litton Loan Servicing, which was owned by Goldman Sachs at the time, denied many troubled homeowners mortgage modifications after sending their paperwork to India and losing it:

When homeowners faxed their documents, they didn’t go to Litton, [former employee Chris Wyatt] says. They went to India, where a low-cost company scanned and filed the documents — but often misfiled or lost them. Wyatt says Litton routinely denied modifications because homeowners had not sent their documents when, in fact, they had.

In a process internally referred to as a “denial sweep,” Litton’s computers would automatically generate denial letters for every homeowner who, according to Litton’s records, hadn’t sent their documents. But untold numbers of those documents had been lost on another continent. Wyatt complained about the practice in multiple meetings with senior management, he says, but managers were chiefly worried about reducing the overwhelming backlog.

http://thinkprogress.org/economy/2012/04/11/462407/goldman-sachs-mortgage-india/

=======

A bunch of fucking elite robbers.

[Winehole23]

The Florida Supreme Court is set to hear oral arguments Thursday in a lawsuit that could undo hundreds of thousands of foreclosures and open up banks to severe financial liabilities in the state where they face the bulk of their foreclosure-fraud litigation.


The court is deciding whether banks who used fraudulent documents to file foreclosure lawsuits can dismiss the cases and refile them later with different paperwork.


The decision, which may take up to eight months to render, could affect hundreds of thousands of homeowners in Florida, and could also influence judges in the other 26 states that require lawsuits in foreclosures.


Of all the foreclosure filings in those states, sixty three percent, a total of 138,288, are concentrated in five states, according to RealtyTrac, an online foreclosure marketplace. Of those, nearly half are in Florida. In Congressional testimony last year, Bank of America (BAC.N (http://www.reuters.com/finance/stocks/overview?symbol=BAC.N)), the U.S.'s largest mortgage servicer, said that 70 percent of its foreclosure-related lawsuits were in Florida.


The case at issue, known as Roman Pino v. Bank of New York Mellon, stems from the so-called robo-signing scandal that emerged in 2010 when it was revealed that banks and their law firms had hired low-wage workers to sign legal documents without checking their accuracy as is required by law.


"This was a case of an intentionally fraudulent document fabricated to use in a court proceeding," says former U.S. Attorney Kendall Coffey, author of the book Foreclosures in Florida.


If the Supreme Court rules against the banks, "a broad universe of mortgages could be rendered unenforceable," Coffey says. "The cost to the financial industry is difficult to estimate, but it could be substantial."
http://www.reuters.com/article/2012/05/10/us-pino-foreclosure-idUSBRE84902920120510

[Winehole23]

Wells Fargo (http://www.latimes.com/topic/economy-business-finance/financial-business-services/wells-fargo-%26-co.-ORCRP016609.topic) & Co. and a former vice president have agreed to pay more than $6.5 million to settle federal accusations that they peddled tricky mortgage-related investments without understanding the complexities of the financial products or disclosing the risks to investors.
The Securities and Exchange Commission (http://www.latimes.com/topic/economy-business-finance/market-exchange/securities/u.s.-securities-exchange-commission-ORGOV000050.topic) said the improper sales were made in 2007 by Wells Fargo Brokerage Services in Minneapolis, now known as Wells Fargo Securities, and specifically by Shawn McMurtry, the vice president who recommended and sold some of the products.


The SEC said Tuesday that the bank and McMurtry settled administrative proceedings without admitting or denying the findings.



The SEC said Wells Fargo sold asset-backed commercial paper structured with risky mortgage bonds and collateralized debt obligations to several “generally conservative” customers including municipalities and nonprofits. It said customers lost money after three of the investments defaulted.


Instead of determining the true nature of the products and explaining them to the customers, Wells Fargo’s representatives “relied almost exclusively upon their credit ratings,” the SEC said in announcing its allegations Tuesday.
“Municipalities and other nonprofit institutions were harmed because Wells Fargo abdicated its fundamental responsibility as a broker to have a reasonable basis for its investment recommendations to customers,” said Elaine C. Greenberg, head of an SEC municipal securities and public pensions unit.


The case is relatively small. Last month, Wells Fargo, again without admitting guilt, agreed to pay $175 million to settle Justice Department allegations that it discriminated against minority borrowers.
http://www.latimes.com/business/money/fi-mo-sec-wells-fargo-20120814,0,6077633.story

[boutons_deux]

http://www.latimes.com/business/money/fi-mo-sec-wells-fargo-20120814,0,6077633.story

As always, as with STandard Charter's fine, WF very certainly make a lot more from selling this crap than $5.6M, which is just a cost of doing shitty business.

And how much did their buyers lose? WF should be forced to make up any buyers' losses.

[Winehole23]

g5uMtZgL1As

[Winehole23]

As always, as with STandard Charter's fine, WF very certainly make a lot more from selling this crap than $5.6M, which is just a cost of doing shitty business.sure. if the roles were reversed, and people got $100 fines for stealing $100,000 from the bank, you'd see a whole lot more bank robberies.

[Winehole23]

FDIC Sues Banks for $2.1 Billion





AUSTIN (CN) - The FDIC, as receiver for Guaranty Bank, demands more than $2.1 billion from major banks that underwrote and sold securities backed by residential mortgages.

The Federal Deposit Insurance Corp. claims the banks pushed and sold the securities with false statements about the quality of the underlying mortgages.

The FDIC demands $900.6 million from these (http://www.cnssecuritieslaw.com/)defendants (http://www.courthousenews.com/2012/08/21/MortMelt.pdf), which charged Guaranty Bank $1.8 billion for eight certificates: Ally Securities; Goldman, Sachs & Co.; Deutsche Bank Securities; J.P. Morgan Securities; Structured Asset Mortgage Investments II; and The Bear Stearns Cos.

In a second complaint, the FDIC demands $677.4 million from these defendants (http://www.courthousenews.com/2012/08/21/MortMelt2.pdf), which charged Guaranty Bank $2.1 billion for 20 certificates: J.P. Morgan Securities fka Bear, Stearns & Co.; Merrill Lynch, Pierce, Fenner & Smith; RBS Securities; WaMu Asset Acceptance Corp.; and WaMu Capital Corp.

In the third complaint, the FDIC demands $559.7 million from these defendants (http://www.courthousenews.com/2012/08/21/MortMelt3.pdf), which charged Guaranty Bank $1.5 billion for eight certificates: Countrywide Securities Corp.; CWALT, Inc.; Countrywide Financial Corp.; Bank of America Corp.; Deutsche Bank Securities; and Goldman, Sachs & Co.
All the lawsuits are in Travis County Court.http://www.courthousenews.com/2012/08/21/49463.htm

[Winehole23]

Two landmark developments on Aug. 16 give momentum to the growing interest of cities and counties in addressing the mortgage crisis using eminent domain:


The Washington State Supreme Court held in Bain v. MERS, et al. (http://www.courts.wa.gov/opinions/index.cfm?fa=opinions.showOpinion&filename=862061MAJ), that an electronic database called Mortgage Electronic Registration Systems (MERS) is not a "beneficiary" entitled to foreclose under a deed of trust; and
San Bernardino County, Calif., passed a resolution (http://www.nationalmortgagenews.com/dailybriefing/san-bernardino-eminent-domain-plans-1031849-1.html) to consider plans to use eminent domain to address the glut of underwater borrowers by purchasing and refinancing their loans.

MERS is the electronic smokescreen that allowed banks to build their securitization Ponzi scheme without worrying about details like ownership and chain of title. According to property law attorney Neil Garfield (http://livinglies.wordpress.com/2012/08/20/should-bankers-go-to-jail/), properties were sold to multiple investors or conveyed to empty trusts, subprime securities were endorsed as triple A, and banks earned up to 40 times what they could earn on a paying loan, using credit default swaps in which they bet the loan would go into default. As the dust settles from collapse of the scheme, homeowners are left with underwater mortgages with no legitimate owners to negotiate with. The solution now being considered is for municipalities to simply take ownership of the mortgages through eminent domain. This would allow them to clear title and start fresh, along with some other lucrative dividends.
http://www.huffingtonpost.com/ellen-brown/gamechange-bain-vs-mers_b_1820591.html

[boutons_deux]

Citigroup in $590 Million Settlement of Subprime Lawsuit

Citigroup said on Wednesday that it had agreed to pay $590 million to settle a class action lawsuit brought by shareholders who contended that they had been misled about the bank's exposure to subprime mortgage debt on the eve of the financial crisis.

The shareholder lawsuit, originally filed in November 2007, alleged that former officers and directors of Citigroup had "concealed the company's failure to write down impaired securities containing subprime debt" at a time when the collapse in the mortgage market made it apparent that banks including Citi would be adversely impacted. In late 2007, Citigroup wrote down billions of dollars on collateralized debt obligations tied to subprime debt, and reported a fourth-quarter loss of $9.83 billion that year.

For Citigroup, as well as other Wall Street firms, the business of slicing apart and packaging mortgages and other loans into complex securities had been a lucrative and fast-growing business before the financial crisis. The bank underwrote some $70 billion in C.D.O.'s from 2004 to 2008.

http://mobile.nytimes.com/2012/08/29/blogs/citigroup-in-590-million-settlement-of-subprime-lawsuit.xml?f=19

criminal fraud, a handslap fine that nowhere approaches the proceeds from the fraud, nobody to jail, the lawyers eat a lot of the fine, defrauded shareholders get almost nothing.

[Wild Cobra]

So the shareholders will be taking more money... Interesting lawsuit!

[Winehole23]

ex FDIC chief Sheila Bair whacks the HAMP program in her new book and on HuffPo:


Former bank regulator Sheila Bair cringed when President Barack Obama promised at an Arizona high school gymnasium in 2009 that his administration could save millions of homes from foreclosure.

"If lenders and home buyers work together, and the lender agrees to offer rates that the borrower can afford, then we'll make up part of the gap between what the old payments were and what the new payments will be," Obama said (http://www.whitehouse.gov/the-press-office/remarks-president-mortgage-crisis), explaining the program with Bair at his side. "And this will enable as many as 3 to 4 million homeowners to modify the terms of their mortgages to avoid foreclosure."


In her new book, "Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself (http://www.amazon.com/Bull-Horns-Fighting-Street-Itself/dp/1451672489)," Bair recounts how her own housing proposals were passed over in favor of a much weaker program, which she knew would never save 4 million homes. Bair served as chairwoman of the Federal Deposit Insurance Corporation until July 2011.
"At the Phoenix announcement, the president was masterful in announcing the program, though I cringed as he threw out what I considered to be wildly inflated numbers on the programs' impact," Bair wrote. "Even with our own, more aggressive proposal, we had estimated the number of successful modifications at 2.1 million tops."


The plan, known officially as the Home Affordable Modification Program, offers struggling homeowners reduced monthly payments through a standardized modification process. The program won't reach its goal of 3 to 4 million restructured loans, but it recently achieved a sadder milestone: 1 million failed modifications (http://www.huffingtonpost.com/2012/09/13/obama-housing-hamp_n_1881972.html). Fewer than 900,000 homeowners are making modified payments, which are typically $500 lower than before the modification.


The huge number of loans that needed to be reworked, combined with burdensome documentation requirements and a lackluster effort on the part of banks' mortgage servicing divisions, guaranteed the program was "doomed to failure," according to Bair.


"What's more, it cheated borrowers," she wrote. "Because Treasury wanted to demonstrate quickly that huge numbers of borrowers were being modified, it let borrowers enter into 'trial modifications' whereby they would start making reduced payments pending completion of all of their paperwork. But many of the borrowers could not provide all of the extensive documentation required by the program, so they would be put into foreclosure even though they had been making timely payments for months!"


Bair's book describes Obama as engaged and knowledgable about housing recovery efforts, but undermined by his aides, particularly Treasury Secretary Tim Geither and former economic adviser Larry Summers.


"HAMP was a program designed to look good in a press release, not to fix the housing market," Bair wrote. "Larry and Tim didn't seem to care about the political beating the president took on the hundreds of billions of dollars thrown at the big-bank bailouts and AIG bonuses, but when it came to home owners, it was a very different store. I don't think helping home owners was ever a priority for them."


Bair's book echoes the criticism in Neil Barofsky's "Bailout," (http://www.huffingtonpost.com/2012/07/25/neil-barofsky-bailout_n_1702183.html) another recent insider account of the Obama administration's housing failures.
http://www.huffingtonpost.com/2012/09/25/sheila-bair-book_n_1912699.html

[TeyshaBlue]

Fuck you, Wells Fargo.


Feds hit Wells Fargo with mortgage-fraud suit

http://www.latimes.com/business/money/la-fi-mo-federal-prosecutor-files-mortgagefraud-suit-against-wells-fargo-20121009,0,353496.story

[Winehole23]

wrongly certified loans? you'd think banks would look after their nut a little better.

[Winehole23]

oh wait: in our capitalistic, peerlessly free market system, who pays for the losses?

[Winehole23]

excuse me, paid for the losses.

[Winehole23]

banks held a gun to their own heads. Bush, Obama and the US Congress took the gun away and emptied the clip in the US taxpayer.

[Winehole23]

instead of letting them fall on their faces, as they rightfully should have in the free enterprise scenario.

[boutons_deux]

wrongly certified loans? you'd think banks would look after their nut a little better.

not if they can pocket the mortgage-initiation fees and dump the mortgages on investors.

key regulation change: mortgage initiators must hold/service the mortgage to maturity (THEN they will qualify the borrower thoroughly)

[Wild Cobra]

not if they can pocket the mortgage-initiation fees and dump the mortgages on investors.

key regulation change: mortgage initiators must hold/service the mortgage to maturity (THEN they will qualify the borrower thoroughly)
Not very often that I agree with you... You have a great idea. No bundling and selling of loans. Keep the loan makers responsible.

[boutons_deux]

But, don't be too hard the banks.

The Repugs have assured us for years that F&F, CRA, ACORN bullied the pitiful banks into crime, fraud, and theft.