looks like another big fine for BofA.
the pattern is clear: they'll admit no wrongdoing, pay a billion to settle, and promise to do better next time.
SEC Will Get Tougher On Wrongdoing At Big Banks
In a break from past practice, the Securities and Exchange Commission (SEC) will begin seeking more admissions of wrongdoing when it settles enforcement cases with banks, Chairman Mary Jo White announced. Agency staff was alerted to the decision in a letter sent on June 17.
The change won’t apply to all cases, but will depend on “how much harm has been done to investors, how egregious is the fraud,” White said at a Wall Street Journal event on Tuesday, Bloomberg reports
http://thinkprogress.org/economy/201...-at-big-banks/
"harm has been done to investors"
only sympathy for harm to capitalists, NONE for robbed municiplalities, or homeowners who got "harmed" by 4M fraudulent foreclosures.
well, no ing , I'm so surprised
Monitor Finds Lenders Failing Terms of Settlement
The nation’s five biggest mortgage lenders have likely already satisfied their financial obligations under last year’s $25 billion settlement over mortgage abuses, helping hundreds of thousands of families keep their homes. But four of the five have yet to meet the settlement’s second goal: ending the maze of frustrations that borrowers must navigate in order to modify their loans, according to a report Wednesday by the settlement’s independent monitor.
Four of the banks failed to meet at least one of the 29 loan-servicing criteria they agreed to meet, like a requirement that borrowers be notified of any do ents missing from their applications in a timely manner. The settlement requires that borrowers be notified within five days and given 30 days to supply the missing paperwork.
“I think what you see is there’s still a communication problem,” said Joseph A. Smith Jr., the monitor. “If there’s a unifying feature, it’s that the servicers who failed these things are not yet communicating effectively.” The banks report their own performance on the 29 criteria, and their findings are then tested in a random sampling by outside groups.
Citibank failed three metrics, two of which involve notifying borrowers of missing do ents in a timely fashion and one that requires a letter containing accurate information be sent to a homeowner before foreclosure.
Bank of America failed two metrics, one regarding missing do ents and the other regarding the pre-foreclosure letter. Wells Fargo also flunked on the missing do ents.
JPMorgan Chase failed to adhere to the prescribed timeline for reviewing loan modification requests and notifying customers of its decision. It also failed to remove home insurance policies, known as forced-place insurance, within two weeks of a homeowner’s submitting proof that he or she had insurance.
The fifth lender, Ally Financial, whose mortgage servicing is now handled by other companies, was not found to have failed on any of the metrics.
http://mobile.nytimes.com/2013/06/20...?from=homepage
and the punishment will be ???
6 Unbelievable Ways the Big Banks Are Scamming You
It is going on five years since the financial crash and three years since President Obama signed the meager Dodd–Frank Wall Street Reform and Consumer Protection Act, and the big banks are still scamming and conning and ripping off their customers. What a huge surprise.
After the financial crash, we heard about a laundry list of abuses and frauds that ranged from small things, like hidden fees, to pushing minorities into subprime loans and then switching them into more expensive mortgages at signing time, to huge things like selling trillions of dollars in complicated CDO schemes and making bets on derivatives of derivatives without having the reserves to pay off what they owed when the bets went bad.
Of course, no one at the top was prosecuted and the banks were allowed to settle a host of charges (which meant that their shareholders, not the executives who made the decisions, paid the fines). The bad behavior gave these giants a compe ive advantage, driving out what good companies there were. So the costly and destructive bad behavior, schemes, cons and scams continue.
1. Falsifying Paperwork, Blitzing, Lying About Payments to Force Homeowners Into Foreclosure
This week, ProPublica [3] released a report detailing the shocking ways that Bank of America has been pushing homeowners into foreclosure. Employees lied about do entation and falsified paperwork to force families out of their homes when these customers thought they were getting a loan modification under the government’s Home Affordable Modification Program (HAMP). To make matters worse, the bank gave bonuses to employees who were able to reach monthly quotas of people they forced into foreclosure.
According to a lawsuit against Bank of America, the bank used “blitzing” twice a month to deny HAMP applications even when the homeowner had fully complied with the program’s requirements; it gave employees $500 bonuses each month they forced 10 or more homeowners into foreclosure; it intentionally ignored applications for 30 days, then declared them late and forced homeowners to reapply; it closed applications even when they knew the homeowner had met all criteria; and it canceled loan modifications because of “late payments” when the bank’s records shows that payments had been made on time.
Of course, as long as the government refuses to prosecute banks and bankers for violating laws, and instead negotiating “settlements” that require bank shareholders to pay fines, bankers will see no reason to stop this kind of activity.
2. Bank Protection “Service” Puts Consumers at “Greater Risk Of Harm”
Last week a report [4] from the new Consumer Financial Protection Bureau (CFPB) found that the big banks are still scamming their customers with ridiculous fees that are hugely profitable for the big banks.
Three years ago the government required banks to ask their customers if it is okay (this is called “opt-in”) before they charge them for “overdraft protection” service. CFRB has been studying how this is working out, and its report shows that customers who do not opt-in to this heavily marketed “protection” service pay much, much less in fees than those who do. In other words, agreeing to use the “protection” actually puts you at a much greater risk of incurring expenses than those who are not “protected.”
According to a McClatchy News report [5] on a call with CFPB director Richard Cordray to discuss the report, Cordray said, "What is marketed as overdraft protection can, in some instances, put consumers at greater risk of harm.”
How much risk? People who are “heavy overdrafters” but still opt out of this service save on average more than $900 a year. But it isn’t just heavy overdrafters who are saving. According to the CFPB report “… the reduction in fees for those who did not opt in was $347 greater, on average, than for those who did opt in.” People who opt in are also more likely to lose their bank accounts, with the bank “involuntarily” closing it.
Banks have made $32 billion from these fees. So maybe this isn’t about providing a “protection” to consumers at all. As NPR puts it [6], "Overdraft and non-sufficient funds fees accounted for 61 percent of total consumer deposit account service charges in 2011 among the banks in the CFPB report."
3. Transaction Ordering
Not only do customers who opt-in pay more for this “protection service,” but the banks are still scamming them by causing the overdrafts that generate these fees. The CFPB report says that some banks still use “transaction ordering” to cheat customers out of additional fees. These banks post checks or debit transactions from large to small to trigger these fees. In other words if you write several small checks (or make debit card transactions) and then a big one that overdraws your account, they credit the large one first so each of the smaller transactions causes its own fee to be charged, even though those transactions occurred before the account ran out of money.
From the report, “The earlier in a sequence that an account becomes negative, the more overdraft or NSF transactions may occur.”
4. Forced Arbitration
Another big-bank scam on consumers is “forced arbitration” clauses in bank account, credit card, mortgage and other financial-service agreements. Forced arbitration clauses – also called mandatory arbitration or binding arbitration – require you to give up your legal right to take a big bank to court if it cheats or harms you. And if you don’t agree (which requires reading the entire agreement) you can’t get the account.
They way this works is that instead of being able to pursue your legal rights, you have to take your complaint to an arbitrator, and then must accept the arbitrator’s decision. The catch is that the bank gets to pick the arbitrator, and the arbitrators naturally know they’ll never work in this town again if they ever rule against the banks. So there is an inherent conflict of interest working in favor of these companies.
How is that conflict of interest working out for us? A 2007 Public Citizen report revealed that arbitrators working for the National Arbitration Forum (NAF) had ruled against consumers 94 percent of the time.
In another blow to the big banks, the CFPB is beginning to take steps to reign in forced arbitration clauses in consumer financial contracts.
The five-year-old Dodd-Frank Wall Street Reform and Consumer Protection Act authorizes the CFPB and the Securities and Exchange Commission to regulate mandatory arbitration. The SEC is resisting implementing their part of this law, but the CFPB is conducting a survey to determine consumer awareness of forced arbitration clauses in credit card agreements. On its blog [7], the CFPB said the study will “explore consumer awareness of dispute resolution terms in credit card agreements. The survey will gather information about consumers’ perceptions, preferences, and assumptions related to arbitration proceedings.”
5. Marketing Refinancing That Costs People
Thom Hartmann has exposed [8] yet another banker scheme. This time banks are marketing a mortgage refinancing that promises annual savings of more than $4,000. But the scheme really just adds more than $37,000 to the cost of a loan.
Basically, the mailer focuses on lowering monthly mortgage payments, while neglecting to mention that the borrower would end up paying a higher overall interest rate, and would be adding 10 more years to the overall length of their loan. Hartmann writes [8],
Back in November of 2012 [9], the Consumer Financial Protection Bureau sent warning letters to around a dozen of America’s largest mortgage lenders and brokers, advising them to “clean up” potentially misleading advertisements, especially those targeting veterans and older Americans.
At the time of the CFPB’s announcement, CFPB director Richard Cordray said that, “Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives.”
And, as we also know, deceptive mortgage advertisements like this can cause consumers to bite off more than they can chew, ultimately leading to a nationwide financial meltdown.
6. Banks Trying To Kill the CFPB
Over the years, scam after scam is exposed, and nothing has been done about it. But there is a new cop on the beat, the Consumer Financial Protection Bureau. The CFPB’s job is to police the big banks, and protect financial consumers. Of course the big banks are trying to head this agency off at the pass.
The Republican Party and its conservative infrastructure have basically been contracted by Wall Street’s big banks to obstruct and even kill this agency. Senate Republicans have been blocking the confirmation and are still trying to obstruct the nominee to head up the agency. Republicans have been filibustering the nomination of Richard Cordray to be its director and even vowing to filibuster to keep any nominee from being confirmed to head the agency. President Obama finally made a recess appointment [10] of Cordray in January 2012. But this recess appointment runs out at the end of the year with no end to Republican obstruction in sight.
Republicans are also trying to defund [11] the agency. Republicans and the (billionaire, Wall Street, oil and tobacco-financed) conservative movement have also launched a propaganda campaign against the agency. Recently, at the Senate Republican Policy Committee website, "CFPB: Unaccountable and Unrestrained," claims, “A recent action by the CFPB to monitor consumer credit cards and the spending habits of millions of Americans is raising new concerns in a government suffering from a trust deficit.” In an example of how the right’s echo machine works, the Heritage Foundation echoes this attack, alleging that CFPB gathering data for reports like this one is an example of government “surveillance” on consumers, “amassing an Orwell-worthy database on all manner of spending, including … overdrafts …”
http://www.alternet.org/corporate-ac...cam?paging=off
Lawsuit Reveals Wall Street Banks Lied Because They Couldn’t Prove Ownership
The unsealing of a lawsuit has let a major cat out of the bag vis-à-vis the housing crisis. Many wondered why the banks were engaging in fraudclosure or the creation of fraudulent do ents to foreclose on homeowners. There were various speculations but thanks to FDL alum David Dayen one of the theories just got a lot more weight – the banks made up do ents because they could not establish legitimate ownership.
If you know about foreclosure fraud, the mass fabrication of mortgage do ents in state courts by banks attempting to foreclose on homeowners, you may have one nagging question: Why did banks have to resort to this illegal scheme? Was it just cheaper to mock up the do ents than to provide the real ones? Did banks figure they simply had enough power over regulators, politicians and the courts to get away with it? (They were probably right about that one.)So much for property rights. Was not the entire point of free market capitalism to establish clear lines of ownership? In other words, if a person claimed to own something, then that person should be able go to court and prove it.
A newly unsealed lawsuit, which banks settled in 2012 for $95 million, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake do ents because they could not legally establish true ownership of the loans when trying to foreclose.
Otherwise the entire system doesn’t work, right?
It is an amazing and tragic admission of the asymmetries of power in America that Wall Street has been able to snatch millions of homes from middle class and poor Americans despite not being able to establish legitimate ownership.
The system is against them.
Obama’s plan is to run the exact same program again and hope for different results. It would be insane if he actually cared about fixing the housing market, but the reality is the Obama Administration has always seen its real cons uents as the banksters not the public at large, which is an unsurprising result of stacking the government with Wall Street bootlickers.
Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.
That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake do ents. The very same banks that created this criminal enterprise and legal quagmire would be in control again.
The truth is, this has nothing to do with the law. Wall Street is well above it. This is a struggle for power and whether Wall Street will continue to call the shots while suffocating the country into debt slavery. Power is a zero sum game, for the public to win the banks must lose.
http://news.firedoglake.com/2013/08/...ove-ownership/
you guys do know when you sign that slave contract away to the bank, if the banks do get into a "going concern" position to be trading insolvent/bankrupt, they can do "call-ups" of outstanding mortgages right? yet you never hear these ers calling up their shareholders for capital injection.....
there'd be a revolt if that happened
as we saw in Greece, tactics that were approved/recommended in Europe and USA for their banks, banks in trouble can increase their capital simply by confiscating/stealing from deposit accounts.
The Real Foreclosure Scandal: Why Have Virtually No Lawyers Been Disbarred?
Colorado’s two biggest foreclosure mills are under investigation the state attorney general. The Denver Post summarized the complaint:
Because the firms for years controlled the bulk of the foreclosure work in Colorado, they could profit handsomely and easily on a state law requiring legal notices to be posted on homeowners’ properties by steering that work to companies they owned or had a heavy interest in.etc etc
Starting in 2009, Aronowitz and Castle created or bought into process-service companies that would handle their workload just as the legislature was to pass a law requiring the first of what would be a pair of legal-notice postings in a foreclosure.
The law firms allegedly leveraged their stranglehold on the foreclosure market — estimates are that they control about 90 percent of the cases filed in Colorado — and conspired to fix the price to post those notices at $125, an amount five times more than what other companies charged for the same service, investigators said in court papers that included e-mail exchanges between the two firms.
Then, when their plan proved so successful — one of the posting companies made more than $2 million in the first year — at least one of the law firms worked tirelessly to persuade legislators to change state laws in a way that doubled their profits overnight by requiring a second notice, investigators said do ents indicate.
The legislation requiring the postings, investigators say, was offered under the guise that consumers were getting better disclosure. But it was the law firms’ principals who ultimately profited, earning nearly $20 million in revenues in the next four years just for having the notices posted.
Here is a typical report (from the Palm Beach Post) from one of the ground zeros of foreclosure fraud, Florida, in October 2012, a full two years after the robosigning scandal broke:
Florida’s attorney general has closed a high-profile investigation into alleged wrongdoing by the state’s largest foreclosure law firms with no findings..
A February Florida Supreme Court decision that upheld a ban on the state from investigating the firms under the Florida Deceptive and Unfair Trade Practices Act was the real decider, attorney general communications director Jennifer Meale said Friday…
The Florida Bar has maintained it only has the power to investigate individual attorneys. As of mid-August, 149 cases of attorney-related foreclosure fraud had been investigated by the Florida Bar with no disciplinary actions taken. There were 171 cases pending at that time.
Translation: The state AG wanted to go after the foreclosure mills. The state bar association barred that action and has proceeded to clear the attorneys. If in a state like Florida they’ve looked at 149 cases and found nothing wrong, they are going to find nothing wrong.
And why does this occur? State bar associations, once you pass the bar exam, are not professional organizations. They are social clubs. The large, high billing firms contribute to the bar association and in many cases have firm partners involved in various bar committees. Think someone in the bar is going to act against a colleague that he knows socially and who gives his club a lot of money? As candid lawyers who will tell you, the lawyers who get sanctioned are small fry, usually sole prac ioners. By contrast, the foreclosure mills, which had such insane leverage ratios that those alone would show they were not maintaining work standards (one attorney to 40 to as many as 100 paralegals) were hugely profitable machines. It’s almost a given that they had the survival skills to make sure they were generous with the state bar association so as to deter any hard looks at what they were doing.
http://www.nakedcapitalism.com/2013/...disbarred.html
The Looming Burden For Underwater Homeowners That No One Is Talking About
Since the start of our housing crisis, struggling homeowners have had few places to turn for relief. Now, thanks to settlements between the federal government and banks and mortgage servicers, some borrowers will be able to get relief from their massive debt and unaffordable mortgage payments. But if Congress fails to act by the end of this year, many struggling homeowners who get this relief will face a new problem: a huge tax bill.
At issue is whether underwater homeowners — those who owe more on their mortgage than their home is worth — should be taxed on mortgage debt that their lenders agree to forgive. Since the passage of the ‘Mortgage Debt Forgiveness Relief Act’ in 2007, homeowners haven’t been taxed on this debt. But starting January 1, forgiven debt will again become taxable, imposing huge penalties. For example, an underwater homeowner who earns $40,000 a year and is able to receive $100,000 in debt relief would see her taxes balloon to nearly three-quarters of her income.
Both short sales, where underwater homeowners are allowed to sell their homes for less than they owe on their mortgages, and principal reductions, where a lender agrees to reduce the amount of money a homeowner owes on a mortgage, will be rendered essentially useless if forgiven debt is taxed. As a result, underwater homeowners have even fewer options to escape their debt, communities will suffer from more foreclosures, and banks and investors will lose access to tools that limit their losses on mortgages.
Additional urgency comes from the pending settlement over mortgage practices between JP Morgan and the Justice Department, which is rumored to contain $4 billion in homeowner relief. But if Congress fails to exempt this relief from taxation, much of it will be of little help to homeowners.
http://thinkprogress.org/economy/201...wners-talking/
I expect House Repugs will block this, too. Why not? it's ALL the mother ers do.
http://www.chicagotribune.com/busine...,5110794.storyThe U.S. government urged that Bank of America Corp pay $863.6 million in damages after a federal jury found it liable for fraud over defective mortgages sold by its Countrywide unit.
In a filing late Friday in the U.S. District Court in Manhattan, the government also asked for penalties against Rebecca Mairone, a former midlevel executive at the bank's Countrywide unit who the jury also found liable, "commensurate with her ability to pay."
The government said the penalties were necessary to punish the bank and Mairone "and to send a clear and unambiguous message that mortgage fraud for profit will not be tolerated."
Bank of America and Mairone were each found liable for defrauding government-controlled mortgage companies Fannie Mae and Freddie Mac through the sale of shoddy loans purchased from Countrywide in 2007 and 2008.
The case centered on a mortgage lending process at Countrywide, which Bank of America bought in July 2008, known as the "High Speed Swim Lane," or alternatively "HSSL" or "Hustle."
The government said Countrywide's program emphasized and rewarded employees for the quan y rather than the quality of loans produced, and eliminated checkpoints designed to ensure that loans were sound.
L.A. sues Wells Fargo and Citigroup, alleging predatory lending
The city of Los Angeles accused banking giants Wells Fargo & Co. and Citigroup Inc. of a “continuous pattern and practice” of mortgage discrimination that led to a wave of foreclosures, reduced property tax revenue and increased costs for city services.
In twin lawsuits filed in U.S. District Court, the city alleged that both banks engaged in predatory lending practices and redlining that saddled minorities with loans they couldn’t afford and resulted in a disproportionately high number of foreclosures in their neighborhoods compared with white neighborhoods.
“Today we begin to address the devastating consequences of the foreclosure crisis in America's second-largest city,” Los Angeles City Atty. Mike Feuer said late Thursday in announcing the actions.
The suits, he said, send “the firm message that we will use every tool at our disposal to fight for all Los Angeles taxpayers and neighborhoods."
Both banks released statements calling the suits “baseless” and “without merit.” Wells Fargo, the nation’s biggest mortgage lender, said it was proud of its record “as a fair and responsible lender.” Citi said its lending standards are “fair to all” and its lending criteria are “blind to race, ethnicity, gender and any other prohibited basis.”
The suits cited reports from two advocacy groups for low-income and minority neighborhoods that claimed the mortgage crisis resulted in more than 200,000 foreclosures in Los Angeles from 2008 through 2012 and, in turn, in depressed property values, leading to an estimated loss of $481 million in tax revenue for the city.
In addition, the local government costs for safety inspections, police and fire calls, trash removal and property maintenance of all foreclosed L.A. houses has hit $1.2 billion, according to the California Reinvestment Coalition and the Alliance of Californians for Community Empowerment.
The suits, which do not specify the amount of damages sought, alleged that the banks’ predatory lending and redlining started in at least 2004 and still continues.
Los Angeles is seeking damages based on the reduced property tax revenue of foreclosed properties caused by the alleged discriminatory lending and for the increased costs for city services on those properties.
http://touch.latimes.com/#section/5/.../p2p-78451161/
predatory lending is the only reason the banks, stakeholders and Investment Property investors continue to let the engine running cause they are the only ones benefiting from all this activity, govt wont let it fail or intervene to stop such measures, cause too much is already invested into it....but fck the govt why should they be concern about it when they are not obligated to bail them out if hits the fan....
Judge Jed S. Rakoff in NY Review of Books: http://www.nybooks.com/articles/arch...-prosecutions/
related:
http://www.spurstalk.com/forums/showthread.php?t=161185
http://www.spurstalk.com/forums/showthread.php?t=135008
http://www.spurstalk.com/forums/showthread.php?t=132807
http://www.spurstalk.com/forums/show...=1#post5467724
Last edited by Winehole23; 12-17-2013 at 12:05 PM.
HELOCS originating in 2004 reset next year. The peak years for HELOCs were 2006-7, 40% of all HELOCs originated in California.
http://advisorperspectives.com/dshor...LOC-Resets.php
http://dealbook.nytimes.com/2014/01/...ge-suits/?_r=0Wall Street could pay nearly $50 billion to buy peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry’s potential legal exposure.
Bracing for a potential reckoning, the banks and their outside lawyers are quietly using JPMorgan Chase’s record $13 billion mortgage settlement in November to do the math and determine just how much each bank might have to pay to move beyond the torrent of government mortgage litigation that has dogged them since the financial crisis. Such calculations, people briefed on the matter said, have gained particular urgency among the banks’ board members.
If the settlements materialize, they could yield, according to the analysis, $15 billion in relief for consumers — a mixture of cash payments and other assistance, like reductions in the size of homeowners’ loan payments. A payment of $50 billion, made up of a string of separate deals, would amount to roughly half the total annual profit of large American banks in 2012. The $50 billion figure does not include JPMorgan’s $13 billion payout, which means the ultimate industry tab could exceed $60 billion, according to the analysis.
Elizabeth Warren Introduces Bill To Expose ‘Sweetheart Deals’ For Corporations
Senator Elizabeth Warren (D-MA) rose to the floor of the Senate on Thursday morning to introduce the Truth in Settlements Act, which is co-sponsored by Senator Tom Coburn (R-OK).
“Several years ago the government announced a $385 million settlement with Fresenius Medical Care for allegedly defrauding Medicare and other health programs for years,” Warren said.
“When the agreement was originally announced, the Justice Department touted the sticker price as the agency’s largest civil recovery to date in a health care fraud case. But the DOJ didn’t say a word about the tax treatment. The agency’s failure to even consider that issue was a very costly mistake. By the time the company finished claiming all its tax deductions from the settlement, it ended up paying $100 million less than originally advertised. In other words, the taxpayers picked up more than a quarter of the tab.”
The senator also compared a settlement last year between Wells Fargo and the Federal Housing Finance agency for $335 million in fraudulent sales to Fannie Mae and Freddie Mac, which was about 6 percent of what JPMorgan paid to the same agency for a similar claim.
What was the difference in the two settlements?
“Well, we’ll never know because the JPMorgan settlement is public. But the much smaller Wells Fargo settlement is confidential.”
The bill implements several requirements on settlements made in disputes that are not being litigated, including a requirement that the government offer a rationale whenever an agreement is kept confidential.
http://www.nationalmemo.com/watch-el...-corporations/
CFPB: mortgage reinsurance kickbacks:
http://www.consumerfinance.gov/newsr...nce-kickbacks/Enforcement Action
Today’s Notice alleges that PHH used mortgage reinsurance arrangements to solicit and collect illegal kickback payments and unearned fees – through its affiliates Atrium Insurance Corporation and Atrium Reinsurance Corporation – in exchange for the referral of private mortgage insurance business. The Bureau believes that from the start of the arrangements, and continuing into at least 2009, PHH manipulated its allocation of mortgage insurance business to maximize kickback reinsurance payments for itself. PHH Corporation and its affiliates are specifically accused of:
- Kickbacks: Over the approximately 15-year scheme, the CFPB alleges that PHH set up a system whereby it received as much as 40 percent of the premiums that consumers paid to mortgage insurers, collecting hundreds of millions of dollars in kickbacks;
- Overcharging Loans: In some cases, PHH charged more money for loans to consumers who did not buy mortgage insurance from one of its kickback partners. In general, they charged these consumers additional percentage points on their loans; and
- Creating Higher-Priced Insurance: PHH pressured mortgage insurers to “purchase” its reinsurance with the understanding or agreement that the insurers would then receive borrower referrals from PHH. PHH continued to steer business to its mortgage insurance partners even when it knew the prices its partners charged were higher than compe ors’ prices.
A Notice of Charges initiates proceedings in an administrative forum, and is similar to a complaint filed in federal court. This case will be tried by an Administrative Law Judge from the Bureau’s Office of Administrative Adjudication, an independent adjudicatory office within the Bureau. The Administrative Law Judge will hold hearings and make a recommended decision regarding the charges, which may be appealed to the Director of the CFPB for a final decision.
Here We Go Again!
Home equity credit lines see a resurgence
One of the mortgage products that contributed to the housing crash is booming again: New home equity credit line borrowings soared 42% in the final three months of 2013 and were up sharply for the entire year, to $111 billion.
But does this point to a return to the "my house is an ATM" mentality that characterized excessive home equity borrowing from 2004 through 2007, just before the crash? Should consumers — and the banks doling out the cash — be cautious about this trend?
Researchers at Experian Information Solutions estimate that originations of home equity lines of credit — HELOCs, in mortgage industry shorthand — rose 58% in the final quarter of last year in the Western states, 38% in the Northeast and 36% in the Midwest.
The average line of credit for new borrowers with "super-prime" VantageScores (781 to 850) was $120,000. VantageScores are one of the two main types of risk-evaluation scores used by lenders. More ominously, new equity credit lines extended to owners with "deep subprime" scores (300 to 499) increased faster than in previous years and averaged more than $60,000, roughly triple the amounts in late 2010. On the other hand, according to researchers, serious delinquencies in outstanding HELOCs continued to be
low, generally well under 1%.
What's behind the equity credit line eruption? A record-fast rebound in owners' equity holdings tied to rising home prices is one key. Between the third quarter of 2012 and the same period last year, Americans' real estate equity expanded by $2.2 trillion, according to the Federal Reserve. That growth is offering owners more options to tap their real estate wealth to fund home renovations, tuition payments, auto purchases and a variety of other consumer expenditures.
Banks are also pushing equity line products. Mike Kinane, senior vice president of TD Bank, said that home equity lines are providing a money-saving alternative to refinancing in a rising interest rate environment. With rates that are currently well below those quoted for fixed-rate 30-year mortgages, tapping "home equity looks attractive" to growing numbers of owners. TD Bank's equity line rates go as low as 2.75% (prime bank rate minus half a percentage point) for qualified applicants.
Lenders I interviewed for this column, however, insisted that the rapid rise in new equity lines is different this time around, under much tighter controls. Cindy Balser, senior vice president of consumer credit products for Key Bank in Cleveland, says underwriting in 2014 is more intensive than it was a decade ago. Not only are credit limits more restrained — generally held to 80% of the home value, counting both the first and second mortgages against the property — but banks like hers require full appraisals or property condition reports by licensed appraisers to supplement electronically derived valuations.
But even with tighter controls, bankers and lending industry analysts acknowledge, there are potential downsides. Compe ion is encouraging some lenders to push their limits for combined first and second mortgage debt to 90% of home value or higher. That's risky for them and for borrowers who could find themselves underwater in the event of another economic downturn.
Also, warns Amy Crews Cutts, chief economist for Equifax, today's enticing interest rates are likely to increase. Since equity credit lines typically carry floating rates, borrowers could eventually find themselves paying much more every month than they ever anticipated.
Here's what else to watch for if you're thinking of jumping on the equity line bandwagon:
•"Teaser" rates. These short-term discounts on new credit lines may beguile you, but they are simply borrower bait. Focus on the index your credit line rate will be based on and the size of the "margin" tacked on by the bank. Run scenarios of what you might be paying if the index increases.
•Option to lock. Look for credit lines that come with an option to switch to a fixed rate if you choose. If your variable rate starts to take off sharply in future years, this will be a way to lock in your rate before things spiral out of control.
•Read the fine print. Credit lines can be complicated — your maximum draw can be limited or the entire line frozen under certain conditions. Your early payments may be interest-only, but they'll switch to full amortization at some point. You should understand all the features of your credit line before signing up.
http://touch.latimes.com/#section/17.../p2p-79468304/
http://www.washingtonsblog.com/2014/...age-fraud.htmlGovernment Admits It Is Going Easy On Fraudsters
The Inspector General of the Department of Justice just issued a report slamming DOJ’s prosecution of mortgage fraud.
Initially, the report found that – despite talking a good game about going after mortgage fraud – the Department of Justice and its subsidiary, the FBI, placed a very low priority on mortgage fraud:
DOJ and its components have repeatedly stated publicly that mortgage fraud is a high priority and during this audit we found some examples of DOJ-led efforts that supported those claims. Two such examples are the Criminal Division’s leadership of its mortgage fraud working group and the FBI and USAOs’ participation on more than 90 local task forces and working groups. However, we also determined during this audit that DOJ did not uniformly ensure that mortgage fraud was prioritized at a level commensurate with its public statements. For example, the Federal Bureau of Investigation (FBI) Criminal Investigative Division ranked mortgage fraud as the lowest ranked criminal threat in its lowest crime category. Additionally, we found mortgage fraud to be a low priority, or not listed as a priority, for the FBI Field Offices we visited, including Baltimore, Los Angeles, Miami, and New York.In addition, the Inspector General found that funds earmarked for mortgage fraud went to other activities:
We also found that while the FBI received $196 million in appropriated funding to investigate mortgage fraud activities from fiscal years 2009 through 2011, in FY 2011 the number of FBI agents investigating mortgage fraud as well as the number of pending investigations decreased.The report slams the Department of Justice for wildly inflating the number of prosecutions and the amount of taxpayer losses involved:
During this press conference, the Attorney General announced that the initiative resulted in 530 criminal defendants being charged, including 172 executives, in 285 criminal indictments or informations filed in federal courts throughout the United States during the previous 12 months. The Attorney General also announced that 110 federal civil cases were filed against over 150 defendants for losses totaling at least $37 million, and involving more than 15,000 victims. According to statements made at the press conference, these cases involved more than 73,000 homeowner victims and total losses estimated at more than $1 billion.
Shortly after this press conference, we requested do entation that supported the statistics presented. In November 2012, in response to our request, DOJ officials informed us that shortly after the press conference concluded they became concerned with the accuracy of the statistics. Based on a review of the case list that was the basis for the figures, the then-Executive Director of the FFETF told us that numerous significant errors and inaccuracies existed with the information. For example, multiple cases were included in the reported statistics that were not distressed homeowner-related fraud. Also, a significant number of the included cases were brought prior to the FY 2012 timeframe.
Over the following months, we repeatedly asked the Department about its efforts to correct the statistics. We learned that, on August 9, 2013, the FBI provided a memorandum to the FFETF concluding that several of the statistics announced during the October 2012 press conference were substantially overstated. Specifically, the number of criminal defendants charged as part of the initiative was 107, not 530 as originally reported; and the total estimated losses associated with true Distressed Homeowners cases were $95 million, 91 percent less than the $1 billion reported at the October 2012 press conference. The Department’s October 9, 2012, press release and the press conference transcript of the Attorney General’s remarks, both available on the Department’s website, now include disclosures citing the inaccuracy of the originally reported statistics, and the language in each has revised wording and statistics based on the FBI’s August 2013 memorandum.Despite being aware of the serious flaws in these statistics since at least November 2012, we found that the Department continued to cite them in mortgage fraud press releases that it issued in the ensuing 10 months. We believe the Department should not have continued to issue press releases with these statistics once it became aware of the serious flaws.Here’s the conclusion of the report:
We also found that neither DOJ nor the FFETF had an established methodology for obtaining and verifying the criminal mortgage fraud statistics announced during the press conference on October 9, 2012. We found this process to be disturbing, and it led the Department to report inaccurate information to the public.
According to DOJ officials, the data collected and publicly announced for an earlier FFETF mortgage fraud initiative – Operation Stolen Dreams – also may have contained similar errors.According to these officials, a similar collection methodology was employed for the statistics publicly reported by the Department for this initiative.
The FBI did not rank mortgage fraud among its highest ranked priority white collar crimes. We further found that, despite receiving significant additional funding from Congress to pursue mortgage fraud cases, the FBI in adding new staff did not always use these new positions to exclusively investigate mortgage fraud. Moreover, when we attempted to assess the effectiveness of the Department’s efforts in pursuing mortgage fraud cases, we found that DOJ could not provide readily verifiable data related to its criminal and civil enforcement efforts. The DOJ’s release of significantly flawed information at a highly publicized press conference in October 2012 regarding the purported success of the FFETF’s and the DOJ’s recent mortgage fraud initiative reflects the lack of accurate data maintained by the Department regarding its mortgage fraud efforts, as well as the Department’s serious failure to adequately vet information that it was presenting to the public. Only days after the press conference the Department had serious concerns over the accuracy of the reported statistics, yet it was not until August 2013 when the Department informed the public that the October 2012 reported statistics were indeed flawed. Moreover, during those 10 months, the Department continued to issue press releases publicizing statistics it knew were seriously flawed. We believe the Department should have been more forthright at a much earlier date about this flawed information.
by contrast, there were tens of thousands of criminal referrals and ~ 1000 felony convictions in the S&L scandal in the 1990s.
http://nypost.com/2014/03/12/wells-f...iling-charges/Wells Fargo, the nation’s biggest mortgage servicer, appears to have set up detailed internal procedures to fabricate foreclosure papers on demand, according to allegations in papers filed Tuesday in a New York federal court.
In a filing in New York’s Southern District in White Plains for a local homeowner in bankruptcy, attorney Linda Tirelli described a 150-page Wells Fargo Foreclosure Attorney Procedures Manual created November 9, 2011 and updated February 24, 2012. According to court papers, the Manual details “a procedure for processing [mortgage] notes without endorsements and obtaining endorsements and allonges.”
Those are the technical terms for the paperwork proving that the company that’s foreclosing owns the loan, and therefore has the right to kick a family out of its home. Wells Fargo services roughly 9 million home loans, according to Inside Mortgage Finance.
A Wells Fargo spokesman denied that the manual could be used to order improper do ents. “No note is endorsed without the proper authority,” he said. “Wells Fargo’s foreclosure processes—today and back in 2012—are legal [and] appropriate.”
Attorneys, forensic accountants and consumer advocates have long suspected that banks were systematically creating improper do ents to prove ownership of loans. Foreclosure defense lawyers use the term ‘ta-da’ endorsement to describe situations in which they say a do ent appears, as if by magic, in the bank’s possession as needed in a foreclosure case—even though the proper endorsement was not included in the original foreclosure filing. It might sound like a technicality, but correct proof of ownership lies at the heart of the foreclosure crisis for securitized loans, which were sold by the lender that originally issued the mortgage. To legally transfer a securitized loan, the endorsements and allonges have to be created in a very specific way and within a specific time frame, usually 90 days after a residential mortgage trust closes. For many loans in foreclosure now, which were originated years ago and then sold, it’s way too late to correct incomplete do ents, experts said.
If the allegations in Tirelli’s court filing are true, this manual represents the first time ‘ta-da’ endorsements are “being described and admitted to be a procedure” at a major bank, as Tirelli claimed to The Post.
Matt Taibbi previews his new book, "The Divide: American Injustice in the Age of the Wealth Gap," on Democracy Now.
The interview is long, but gives a good overview of the Too Big To Fail doctrine, the financial bailout and the impunity of great wealth.
http://www.alternet.org/books/matt-t...age=1#bookmark
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