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Proposed California Bill Would Aid Short-Sellers 5-2-12

A new proposed California Bill, if passed, would help homeowners negotiate short sales and avoid foreclosure.  The bill, AB 1745, is sponsored by Norma Torres (D-Pomona).  It would make it illegal for a lender to initiate a foreclosure sale after issuing approval for a short sale.  It would also require lenders to provide three days written notice if they back out of a short sale agreement:

    “This bill would prohibit a mortgagee, trustee, beneficiary, or authorized agent from recording a notice of sale pursuant to the above provisions after providing written approval of a short sale, as defined. The bill would also authorize a mortgagee, trustee, beneficiary, or authorized agent to withdraw an approval of a short sale if an underlying condition upon which approval was initially granted has changed. The bill would also require a written notice to be provided to a short sale seller not less than 3 days prior to the withdrawal of approval that includes an explanation of the change  of condition that caused the withdrawal.”
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http://www.totalmortgage.com/blog/mortgage-rates/proposed-california-bill-would-aid-short-sellers/16782

Disabled Woman Arrested Outside Wells Fargo Executive’s Home While Protesting Her Foreclosure 5-1-12

Protesters gathered last week outside the California home of Wells Fargo Chief Financial Officer Tim Sloan, where one homeowner was arrested while trying to deliver her mortgage payment directly to Sloan.

Ana Casas Wilson, a California homeowner who has cerebral palsy that forces her to use a motorized wheel chair, waited on Sloan’s front porch so she could hand him a payment on her foreclosed home. Casas Wilson has lived in her home for 27 years, but fell behind on her payments during a hospital stay. Wells Fargo, she said, has been unwilling to negotiate a modification, even though she is again able to make regular payments. After police allowed her to remain on Sloan’s porch for 15 minutes, she was arrested when she refused to leave, the Los Angeles Times reports:

    Just before 8 p.m., about 90 minutes into the demonstration, police formed a line around the home, declared the assembly illegal and ordered the group to move 75 feet up the street.
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http://thinkprogress.org/economy/2012/05/01/474327/disabled-woman-arrested-outside-wells-fargo-executives-home-while-protesting-her-foreclosure/

State Attorney General Updates House Panel On Foreclosure Crisis Investigation 4-26-12

State Attorney General Eric Schneiderman gave Congress an update on his investigation into the foreclosure crisis on Thursday.

He testified before the House of Representatives’ Progressive Caucus about holding wrongdoers in the housing crisis accountable.

Schneiderman is part of a task force of attorneys general from across the country created by President Barack Obama to investigate the causes of the mortgage meltdown that helped lead to the recession.

He told the committee the task force is not opposed to pursuing criminal prosecutions against those believed to have contributed to the mortgage crisis.

Schneiderman also said he expects to see civil settlements against some banks, which could benefit financially-troubled homeowners.

Earlier this year, a $26 billion settlement was reached against five of the nation’s largest banks.
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http://www.ny1.com/content/news_beats/political_news/160185/state-attorney-general-updates-house-panel-on-foreclosure-crisis-investigation

Attorney General Martha Coakley unveils foreclosure assistance program in Dorchester 4-26-12

Foreclosures have been a constant worry for many who have found themselves unable to make mortgage payments because of the economic downturn or job loss.

But Attorney General Martha Coakley hopes her new “HomeCorps” program, unveiled Wednesday, will help alleviate some of the burden on homeowners.

Coakley’s new program will make not only make the process of refinancing and finding resources easier for residents, but will also provide them with a one-stop resource for everything they need to know about foreclosure and how they can fight it and refinance. According to the AG’s office, more than five-million people across the country have lost their homes to foreclosure, including 45,000 in Massachusetts.

“This comprehensive HomeCorps program will directly assist Massachusetts homeowners with avoiding unnecessary foreclosures and helping to prevent this crisis from deepening further,” Coakley said. “Our office worked hard to ensure the best possible outcome for Massachusetts borrowers from this national settlement. These new programs will now allow us to further assist distressed borrowers and stabilize communities deeply impacted by the foreclosure crisis.”

Coakley, along with Mayor Thomas M. Menino, unveiled the program Wednesday afternoon on Fuller Street in Dorchester, at the home of a resident who almost lost everything when she was unable to make the necessary payments on her loans and her bank was unwilling to refinance her rate.

“It’s not that [home loans] are confusing, but at the time my lender was not willing to help me,” said Jeanette McDaniel, the Fuller Street resident who almost lost her home of 12 years. “I didn’t know what to do, I felt helpless. I went to a lawyer and thought they could help and when that failed I almost gave up.”
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http://www.boston.com/yourtown/news/dorchester/2012/04/ag_coakley_unveils_new_foreclo.html

Hud’s Donovan Says GSE Reform Plan Unlikely in Next Few Weeks 4-26-12

President Barack Obama’s administration doesn’t have a specific timetable for completing a proposal for winding down Fannie Mae and Freddie Mac and bringing private capital back into the housing market, Housing and Urban Development Secretary Shaun Donovan said today.

“We have continued to work on refining potential proposals for the GSEs,” Donovan told lawmakers at a Senate Banking Committee hearing in Washington. “We’ve been encouraged to see bipartisan legislative proposals.”

The administration has made “significant” strides toward bringing private capital back into the housing market without action from Congress, Donovan said.

$3 million awarded for foreclosure prevention legal services 4-26-12

NEW YORK – The Attorney General’s office has awarded $3 million in foreclosure prevention services to aid New Yorkers struggling through the foreclosure crisis. In January, Attorney General Eric Schneiderman first issued a Request for Applications (RFA) seeking bids from non-profit legal services and legal aid organizations to provide direct legal services to homeowners in foreclosure or at imminent risk of foreclosure. 31 organizations across the state were awarded grants from the Attorney General to help homeowners.

Today’s announcement comes only weeks after Schneiderman designated a separate $15 million of the $132 million he secured from the national mortgage servicing settlement to be used to extend funding for foreclosure prevention and other related services. Up to $9 million of that allocation will be used to support the state’s Foreclosure Prevention Services Program, which was set to expire on April 1, and $6 million will support housing and community renewal activities statewide through not-for-profit community-based housing organizations.

“As our state faces tight budget times, we must be creative and aggressive in our efforts to support working families who are struggling to stay in their homes,” said Schneiderman. “Funding legal services is essential to bringing relief for the homeowners and communities that have been devastated by the crash of the housing market, and these grants will provide thousands of New Yorkers with the legal expertise they desperately need to defend their rights in court. As we continue to investigate the mortgage crisis that has impacted communities in every corner of this state, this effort will ensure that justice and accountability prevail at every step of the way.”
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http://www.empirestatenews.net/News/20120426-6.html

New York, Delaware Seek to Intervene in Countrywide Accord 4-24-12

The New York and Delaware attorneys general urged a judge to approve their participation in litigation over Bank of America Corp (BAC).’s $8.5 billion settlement with mortgage-bond investors.

New York Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden have criticized Bank of America’s proposed settlement and asked Justice Barbara Kapnick of New York State Supreme Court in Manhattan today to approve their requests to intervene in the case.

“This is a massive waiver of liability for Bank of America and Countrywide,” Steven Wu, a lawyer with the New York attorney general’s office, told Kapnick.

Kapnick said she wouldn’t rule today on the states’ requests. The judge denied a motion by some investors to prevent the settlement from moving forward as an Article 77 proceeding, which is used in New York to resolves issues related to trusts. The investors argued the case was too large and complex to proceed as an Article 77.
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http://www.businessweek.com/news/2012-04-24/new-york-delaware-seek-to-intervene-in-countrywide-accord

Nichols Kaster, PLLP Files Nationwide Class Action Against Bank of America for Allegedly Misrepresenting that Flood Insurance Was Required for Borrowers' Housing Cooperative Units 4-24-12

The lawsuit alleges that Bank of America then force-placed flood insurance coverage on the Lemmers' cooperative unit even though no flood insurance was required in the first place, and accepted a commission for purchasing this unnecessary insurance at the Lemmers' expense.
 2012, Plaintiffs Pamela and Mark Lemmer filed a class action lawsuit against Bank of America, N.A. in United States District Court in the Western District of North Carolina.

According to the Complaint, Bank of America falsely represented to the Lemmers that flood insurance was required for their cooperative unit by their mortgage and/or federal law, even though their mortgage agreement does not contain a flood insurance requirement and federal law does not require flood insurance for cooperative units. The lawsuit alleges that Bank of America then force-placed flood insurance coverage on the Lemmers' cooperative unit even though no flood insurance was required in the first place, and accepted a commission for purchasing this unnecessary insurance at the Lemmers' expense. "Not only did Bank of America illegally buy the insurance, it took a commission for doing so," said Plaintiffs' attorney Kai Richte
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http://www.marketwatch.com/story/nichols-kaster-pllp-files-nationwide-class-action-against-bank-of-america-for-allegedly-misrepresenting-that-flood-insurance-was-required-for-borrowers-housing-cooperative-units-2012-04-24

Judge denies AIG motion in BofA $8.5 billion settlement 4-24-12

A New York judge on Tuesday rejected an effort by AIG Inc (AIG.N) and other objectors to Bank of America Corp's (BAC.N) proposed $8.5 billion mortgage bond settlement to convert the case to a proceeding that may have widened its scope.

New York state Supreme Court Justice Barbara Kapnick, who must decide whether to approve the settlement, denied the motion by AIG and other groups of investors to turn the limited proceeding known as an Article 77 into a broader inquiry known as a plenary action.

Kapnick said at a hearing on Tuesday that she could accomplish what was necessary under the Article 77.

"I really think I have a lot of discretion," she said.

An Article 77 is a special proceeding, limited in scope, that generally is used in run-of-the-mill trust matters. Objectors to the settlement wanted to transform the case into a plenary action for a full hearing.

The settlement would resolve claims from investors in mortgage bonds issued by Countrywide Financial Corp, which was purchased in 2008 by Bank of America.

BlackRock Inc (BLK.N), MetLife Inc (MET.N) and Allianz SE's (ALVG.DE) Pacific Investment Management Co are among 22 institutional investors who agreed to the accord. Other investors have complained the payout is too low.

Kathy Patrick, an attorney for the institutional investors, viewed the judge's decision as a positive step.
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www.reuters.com/article/2012/04/24/us-bankof

DeMarco Says Principal Writedowns May Save FHFA $1.7 Billion 4-10-12

Fannie Mae and Freddie Mac could save $1.7 billion if they forgave principal on some troubled mortgages, the companies’ regulator said today in Washington.

The Federal Housing Finance Agency may make a decision “in the next few weeks” about whether to change its policy barring the two taxpayer-owned companies from performing such loan modifications, Edward J. DeMarco, the agency’s acting director, said in a speech at the Brookings Institution. DeMarco said he remains concerned that debt writedowns could be an incentive to default for some so-called underwater homeowners, who owe more than their properties are worth, offsetting any cost savings.
“Will some percentage of borrowers who are current on their loans be encouraged to either claim a hardship or actually go delinquent to capture the benefits of principal reduction?” DeMarco said.

The FHFA, which began overseeing Fannie Mae and Freddie Mac when they were taken into U.S. conservatorship in 2008, has come under pressure from the Obama administration and consumer advocates to cut principal for underwater borrowers.

DeMarco has barred the companies from reducing principal on the seriously delinquent loans they own or guarantee on the grounds that it would hurt their bottom line.
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http://www.bloomberg.com/news/2012-04-10/demarco-expected-to-release-new-mortgage-forgiveness-analysis.html

Foreclosed Homes in Latino, Black Neighborhoods Neglected, Complaint Says 4-10-12

RICHMOND, CA - APRIL 15: Windows and doors of a foreclosed home are covered with plywood April 15, 2010 in Richmond, California. (2010 Getty Images)

Washington – The nation’s largest mortgage lender took better care of foreclosed homes in white areas than in Latino and black neighborhoods, a new complaint alleges.

The National Fair Housing Alliance on Tuesday filed a discrimination complaint against San Francisco-based Wells Fargo and Co. and Wells Fargo Bank claiming they failed to maintain and market foreclosed properties in black and Hispanic neighborhoods. The complaint was filed with the U.S. Department of Housing and Urban Development.

The federal Fair Housing Act requires banks, investors, servicers and other parties to maintain and market homes without regard to race or ethnicity.

Wells Fargo declined to comment, saying officials at the bank have yet to see the complaint.

Read more: http://latino.foxnews.com/latino/news/2012/04/10/foreclosed-homes-in-latino-black-neighborhoods-neglected-complaint-says/#ixzz1rk1CknTj

MetLife Can’t Escape Home-Loan Risk in Banking Exit: Mortgages 4-10-12

MetLife Inc., the life insurer that’s eliminating most of the 4,300 jobs at its mortgage unit and selling deposits to reduce federal oversight, is finding it harder to escape risk from home loans.

The loan-servicing operation is bracing itself for fines from the Federal Reserve tied to foreclosure practices and may face penalties from other regulators, according to the New York- based insurer’s annual report. Fitch Ratings said last month that MetLife used dubious appraisals for mortgages that were packaged into a bond sale, the type of underwriting flaw that investors may cite to demand a company repurchase the debt.
Chief Executive Officer Steven Kandarian is seeking to exit what the company called a “small, little bank” after the unit subjected the insurer to oversight from federal regulators who twice rejected his plan for a dividend increase. MetLife continues to bear repurchase risk tied to about $60 billion in mortgages issued starting in 2008, even as Kandarian focuses on expanding life insurance sales in Asia and Latin America.

Insurers “tend to be conservative and they don’t like unknowns and I don’t blame them,” said Terry Wakefield, a mortgage industry consultant in Mequon, Wisconsin, who helped start a home lending unit for a Prudential Financial Inc. predecessor. “MetLife found themselves in a position that they never anticipated when they got into the business.”
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http://www.bloomberg.com/news/2012-04-11/metlife-can-t-escape-home-loan-risk-in-banking-exit-mortgages.html

Abigail Field: Hiding the Enforcement Fraud at the Heart of the Mortgage Settlement 4-10-12

By Abigail Caplovitz Field, a freelance writer and attorney who blogs at Reality Check

Update: When reading about how “our” government sold us the servicing standards as the big prize in the deal (along with the $25 billion that isn’t) even as they agreed the standards wouldn’t be meaningfully implemented or enforced, remember that the Consumer Financial Protection Bureau will be rulemaking on servicing during the settlement’s duration, with its rules set to take effect in 2013 and 2014, well before the 2015 expiration date of the deal. So the “standards” in this deal are even more useless than they otherwise appear.

On Thursday, April 5th U.S. District Court Judge Rosemary M. Collyer announced she had decided to sign off on the “$25 billion” Mortgage Settlement. By “announced”, I mean she signed the consent orders all our major law enforcers and the biggest bankers had agreed to, and entered them into the record. Judge Collyer didn’t actually say anything about the deal. She didn’t let anyone else say anything, either: she didn’t hold a public hearing on the deal.
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http://www.nakedcapitalism.com/2012/04/abigail-field-2.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Lawmakers Say GSEs' REO Rental Initiative Isn't for California 4-10-12

Nineteen members of California’s congressional delegation want to keep Fannie Mae’s and Freddie Mac’s “for rent” signs outside their state’s borders.

Led by Congressman Gary Miller (R-Brea), the group sent a letter to Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA), petitioning him to exclude homes in California from the pilot program of the REO Initiative, which aims to sell off REOs owned by the GSEs and HUD in bulk to institutional investors who will turn the properties into rental homes.

According to the California congressmen, the impact of the program would only serve to further depress California’s housing market, in addition to raising costs for taxpayers.

Of the 2,490 Fannie Mae-owned REOs up for sale as part of the pilot, more than 600 are located in Los Angeles and Riverside counties, according to the California Association of Realtors (C.A.R.).

C.A.R. issued a statement applauding the state lawmakers for voicing their opposition to the REO-to-rental push. The

state Realtor group said it doesn’t believe the California market will see any benefits from the pilot program because housing inventory throughout the state is “extremely low and demand is high.”

Homebuyers in most of California’s markets are experiencing multiple offers, including for distressed and foreclosed properties. According to C.A.R. data, sales of bank-owned homes are closing in an average of less than 60 days – and often above the list price – without government intervention.

“We commend the California congressional delegation’s letter to Mr. DeMarco,” said LeFrancis Arnold, C.A.R. president. “They clearly understand that this program may be a viable solution in states where there is a large inventory of unsold foreclosures. However, carrying out this plan in California would potentially further delay a housing recovery and, ultimately, result in greater losses for the taxpayer.”

The 19 California lawmakers also played on DeMarco’s own sense of responsibility to upholding the GSEs’ conservatorship and safeguarding their financial state.

“We are concerned that including California counties in this initiative is in direct conflict with your duty as conservator to preserve and conserve the company’s assets,” their letter stated.

According to the state lawmakers, in California, there is “no question” that disposing of foreclosed properties through bulk sales will yield a lower return for the GSEs, and ultimately taxpayers, than traditional disposition methods.

“This means that such a program will increase losses to the taxpayer and GSEs,” the letter concludes.

San Francisco Board of Supervisors unanimously passes foreclosure moratorium resolution 4-10-12

San Francisco – Supervisor John Avalos’ resolution calling for a suspension of foreclosure activities in the City and County of San Francisco passed in an 11-0 vote at the Board of Supervisors. This resolution signals the City’s resolve to protect homeowners from unfair and unlawful actions by banks, trustees and mortgage companies until protections at the state and federal level are in place.

“The foreclosure crisis has already devastated so many lives. This resolution is an important step to support solutions to prevent millions of Americans from losing their homes. And, while we are eager to see state and federal reforms enacted to provide much needed reprieve, we must do what we can TODAY to stop preventable foreclosures,” said Supervisor Avalos, who represents District 11, one of San Francisco’s areas hardest hit by foreclosures.

“Every day, families, seniors and children wake up with the fear of losing their homes through foreclosures. I look forward to working with Mayor Ed Lee to use the full weight of the City in urging banks, especially our City banking partners, Wells Fargo, Bank of America and Union Bank, to stop foreclosure activities until currently proposed state and federal measures to protect homeowner and tenant rights are in full effect,” added Avalos.

In a recent decision by the Louisiana Bankruptcy Court, Judge Elizabeth Magner chastised Wells Fargo by ordering the bank to pay a New Orleans man $3.1 million in punitive damages after five years of litigation over allegations of mortgage-servicing misconduct. As she explained in her decision, “Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed. But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors.
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http://sfbayview.com/2012/san-francisco-board-of-supervisors-unanimously-passes-foreclosure-moratorium-resolution/

The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home 4-10-12

Sheila Ramos' grandsons, 10 and 13, started crying. They wanted to know where the house was. There wasn't one. There was only a tent.

They had flown from Florida, after Ramos had fallen hopelessly behind on the mortgage for her three-bedroom home, to this family-owned patch of rural land on Hawaii's Big Island. There, on a July night in 2009, they pitched a tent and, with no electricity, started a new life.

If Ramos were in her 20s, living off the land might be a marvelous adventure. Hawaii is beautiful, and the weather is mild. In the nearly three years since she moved here, her family has built a semi-permanent tent encampment, and they now have electricity. But it's not how this 58-year-old grandmother, who has custody of her three grandchildren, imagined spending her retirement after working for more than 30 years — nine running her own businesses. She regularly scours the local dump and recycling center for items she can salvage.

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.

Every step of the way, from her first subprime loan to foreclosure, 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.
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http://www.propublica.org/article/the-great-american-foreclosure-story-the-struggle-for-justice-and-a-place-t

Wells Fargo Slapped With $3.1 Million Fine For 'Reprehensible' Handling Of One Mortgage 4-9-12

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

In a scathing opinion 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."

The opinion reflects Magner's disgust with tactics that Wells Fargo used to fight the case -- and perhaps frustration with an appeals court ruling in a separate, but similar case, that overturned her order that would have forced Wells Fargo to audit and provide a full accounting for more than 400 home loans in her jurisdiction.

As The Huffington Post previously reported in a story co-published with The Center for Public Integrity, sources familiar with the preliminary findings said that the bank made costly accounting errors in the administration of practically all of those loans.
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http://www.huffingtonpost.com/2012/04/09/elizabeth-magner-new-orleans-wells-fargo_n_1412412.html

JPMorgan Awards CEO Jamie Dimon $23 Million Pay Package 4-4-12

JPMorgan Chase & Co. (JPM), the largest and most profitable U.S. bank, gave Chairman and Chief Executive Officer Jamie Dimon $23 million in pay and bonuses for 2011, about the same as the previous year.

Dimon’s base salary was raised to $1.5 million beginning in March 2011 from $1 million and he received $17 million in restricted stock and options for his performance in 2011, down from $17.4 million the previous year, the New York-based company said today in a proxy statement. His cash bonus was $4.5 million, down from $5 million in 2010, the bank said.
JPMorgan capped its second straight year of record profit in 2011 with $19 billion in net income. The European sovereign- debt crisis, mortgage losses and litigation weighed on the company’s shares, which slumped 22 percent for the year -- beating the 25 percent drop by the 24-company KBW Bank Index.

Dimon, 56, received restricted shares valued at $12 million, according to the proxy. He also received options valued at $5 million, based on the company’s calculations.
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http://www.bloomberg.com/news/2012-04-04/jpmorgan-awards-ceo-jamie-dimon-23-million-pay-package.html

Fed Calls Out Saxon Mortgage Over Foreclosure Violations 4-3-12

The Federal Reserve Board (FRB) has announced a consent order against Morgan Stanley to address a pattern of misconduct and negligence in residential mortgage loan servicing and foreclosure processing at its subsidiary, Saxon Mortgage Services Inc. Morgan Stanley sold a substantial portion of the assets of Saxon to Ocwen Financial Corporation on April 2, 2012, and has taken other actions to cease to conduct residential mortgage servicing. Prior to the completion of these actions, Saxon was the 34th largest mortgage servicer in the nation.

The consent order requires Morgan Stanley to retain an independent consultant to review foreclosure proceedings initiated by Saxon that were pending at any time in 2009 or 2010. The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process. The foreclosure review will be conducted in a manner consistent with the reviews currently underway at several large mortgage servicers that consented to enforcement actions brought by the banking agencies last year.

If Morgan Stanley re-enters the mortgage servicing business while the consent order is in effect, it will be required to implement enhanced corporate governance, risk management, compliance, borrower communication, servicing, and foreclosure practices comparable to what the mortgage servicers subject to the 2011 enforcement actions were required to implement.

As noted in the announcements relating to the 2011 enforcement actions, the Federal Reserve believes monetary sanctions are appropriate and plans to announce monetary penalties in these cases. The monetary penalties against Morgan Stanley will be in addition to the corrective actions that Morgan Stanley will be taking pursuant to the consent order action. Morgan Stanley has acknowledged that it will be responsible for satisfying any civil money penalty that the FRB's Board of Governors could have assessed against Saxon for its conduct.

Deutsche Bank to settle MBS suit for $32.5 million 3-26-12

NEW YORK (Reuters) - Deutsche Bank AG has agreed to pay $32.5 million to investors who said they were misled about the quality of mortgage loans sold to them as highly rated securities right before the U.S. housing market imploded, court papers show.

Preliminary settlement papers were filed on Monday in the federal court in Central Islip, New York, on behalf of investors who brought the 2008 lawsuit, including lead plaintiff Massachusetts Bricklayers and Masons Trust Funds. The settlement must still be approved by U.S. District Judge Leonard Wexler.

The proposed settlement "is not only fair, reasonable and adequate, but represents an outstanding recovery," the filing said.

Renee Calabro, a Deutsche Bank spokeswoman, said, "We are pleased to have resolved this matter."

The settlement is among a handful with major banks to resolve claims that investors were misled into buying mortgage-backed securities that were much riskier than they had appeared.

It would resolve claims that Deutsche Bank made material misstatements and omissions in 2006 offering documents regarding the underwriting and appraisal practices of the mortgage loans bundled into securities contained in two trusts.

According to the investors, the offering documents understated the risk that the loans could default, while Deutsche Bank used credit-default swaps to profit as the securities lost value.
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http://www.baltimoresun.com/business/sns-rt-us-deutschebank-mbs-settlementbre82p119-20120326,0,1161062.story

Fannie Mae, Freddie Mac Resistance To Principal Reduction Costs Taxpayers 3-26-12

SPRINGFIELD, Mass. -- After two years of bewildering futility, John and Linda DeCaro thought they had finally found a way to hang on to their home.

They could no longer afford their mortgage payments and had slipped into delinquency. They could not refinance to take advantage of low-interest rates because they were among the nearly 11 million American homeowners who are "underwater," meaning that they owed the bank more than their house was worth. Bank of America had already initiated foreclosure proceedings.

Then in the spring of 2011, a nonprofit lender, Boston Community Capital, presented a potential fix, one it has used to aid some 200 underwater borrowers in Massachusetts over the last two years. The bank would buy the DeCaros' home at market value -- about $87,000, which was barely half of their mortgage balance -- and then sell it back to them for a little more, providing a manageable loan. Bank of America affirmed the sale price as fair value.

But one powerful obstacle stood in their way: Freddie Mac, the government-controlled mortgage giant, owned the DeCaros' loan. Freddie has a policy of refusing to approve so-called short sales -- those where the purchase price is lower than the mortgage balance -- unless the buyer signs a legal document promising not to resell the property to the original homeowner. The document bars the buyer from even renting the home to the initial owner.
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http://www.huffingtonpost.com/2012/03/26/fannie-mae-freddie-mac-principal-reduction_n_1376092.html?ref=daily-brief?utm_source=DailyBrief&utm_campaign=032612&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief

Local court may decide if lenders avoided the law 3-26-12

A Le Mars home buyer signs many papers to finance a real estate purchase with a lender.
Some of the paperwork involves money paid to record the change in ownership and mortgage in the office of Jolynn Goodchild, Plymouth County Recorder.

Darin Raymond, Plymouth County attorney, claims there's been an intentional effort since 1998 by some national businesses to avoid filing/recording the paperwork and paying the fees.

A specific dollar amount for damages is not requested in the court case. The petition states Plymouth County and the other Iowa counties were denied millions of dollars in recording fees.

The legal action is based on claims that the assignment and transfers of mortgages were not recorded, said Raymond.

"Sometimes these mortgages were packaged and then bought and sold multiple times before something is filed," Raymond said of preliminary material in the case.

The claims are outlined in a 39-page legal action on behalf of Plymouth County and all other counties in Iowa.

There is a request that the businesses named in the legal action stop their practices involving recording documents, Raymond said.

"The statute (state law) was intended for transparency," he said. "You knew who owned what and they were an identifiable individual or corporation for our land title records."

Stopping the practice of the lenders is the most important thing to accomplish, Raymond said.
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http://www.lemarssentinel.com/story/1829827.html

Feds say Wells Fargo won’t turn over documents 3-25-12

SAN FRANCISCO — Federal securities regulators are asking a federal court to order Wells Fargo & Co. to turn over documents in an investigation of the bank’s sale of $60 billion in mortgage-backed securities.

The Securities and Exchange Commission said in a statement Friday that Wells Fargo agreed to produce the documents under subpoenas dating to September of 2011, but the bank has failed to hand over much of the requested material.

The agency has asked U.S. District Court in San Francisco to order the nation’s largest mortgage lender to turn over the paperwork. The SEC is investigating possible fraud in the bank’s sale of securities that were made up of multiple mortgage loans between September 2006 and early 2008.
Wells Fargo called the SEC’s action "inappropriate and unwarranted." Spokeswoman Mary Eshet said Saturday in an e-mailed statement the bank will vigorously defend itself in court. The bank has cooperated with the SEC, and the agency violated an understanding that both sides had about the remaining documents, the statement said.

The SEC said it is investigating whether the San Francisco-based Wells Fargo "made material misrepresentations or omitted material facts" in securitizing the loans. The company would perform a due diligence review of a sample of the loans within the securities and would drop loans that didn’t meet its underwriting standards, the SEC said. But the agency said it doesn’t appear that Wells Fargo took steps to drop bad loans from the rest of the securities.
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http://www.bostonherald.com/business/real_estate/view.bg?articleid=1061119896&srvc=business&position=recent

Bank of America Tests Rental Program as Alternative to Foreclosure 3-22-12

Bank of America said Thursday that it would offer a small number of customers facing foreclosure the option to remain in their homes and rent the property instead. The program highlights how investors are increasingly interested in becoming landlords on troubled properties.

Under the terms of the pilot program, which will be offered initially to about 1,000 consumers only in New York, Nevada and Arizona, homeowners will give up the title to their property in exchange for bank forgiveness of their mortgage debt. They would then be able to rent the property for up to three years.

The rent payments would be less than the monthly mortgage payment and be set at or below market rates, according to bank officials.
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http://dealbook.nytimes.com/2012/03/22/bank-of-america-tests-rental-program-as-alternative-to-foreclosure/

Foreclosure lawsuit to get another chance 3-18-12

Michael Boyter walked out of San Francisco's federal courthouse Friday encouraged that a judge had left the door open for him to continue a legal battle against the foreclosure of his Bethel Island home.

"I have a chance to keep fighting," he said in a heavy downpour. "Not only for me, but for the thousands of other families who are out here in the rain like this and are hurting."

U.S. District Court Judge Susan Illston dismissed his case - but gave him leave to amend it, basically encouraging him to gather more evidence and case law and refile.

"I'm struggling with the consequences if there were irregularities in the (foreclosure) transaction," the judge said in court.

Illston, known for her thorough research, said her ruling would lay out the points Boyter needs to better substantiate in a new filing.

"I'll put in the cases I've been reading," said the judge, who has presided over such high-profile cases as the BALCO sports-doping trial and Barry Bonds perjury trial.

Boyter's case may be less splashy, but it deals with concerns shared by many thousands of borrowers who lost their homes.

His lawsuit focuses on the types of paperwork problems uncovered in the nationwide robosigning scandal and in a February audit of San Francisco foreclosures that revealed numerous procedural missteps.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/17/BUMD1NGUO6.DTL#ixzz1pUaAiGxv

Is it important who forecloses? 3-18-12

Does slipshod paperwork provide legal grounds to overturn a foreclosure?

In Massachusetts, courts have said "yes" in two landmark cases upheld last year by the state's highest tribunal, the Supreme Judicial Court. Judges in other states have ruled likewise.

But California courts have consistently refused to void foreclosures even when banks botched the process.

Now a case argued in an appeals court in San Francisco last week might get the California Supreme Court to weigh in. The case hinges on a single word in a civil statute written over a century ago.

If the court does follow Massachusetts' lead - and that's a big "if" - it could open the door to thousands of Californians who believe that their homes were illegally repossessed by parties with no right to do so.

Who owns the note?
Why does it matter who forecloses?

After all, banks argue, if homeowners clearly can't make mortgage payments, they will lose the house no matter who owns the note.

But lawyers said it is crucial to avoid turning property rights into the Wild West - and to help some borrowers hang onto their houses.

"It's important to the legal system that only the right parties can throw you out of your house, especially in states like California and Massachusetts where there is no judicial foreclosure," said Elizabeth Renuart, an assistant professor of law at Albany (N.Y.) Law School. "If homeowners who are in default know who owns their loan, they may be able to work out a loan modification with that lender so they can ... stay in the house."

The robosigning scandal and February's audit of San Francisco foreclosures by Assessor-Recorder Phil Ting bolstered arguments that resale of mortgages on Wall Street clouds the chain of title so no one can tell who really owns them, and that banks recklessly churned out foreclosure documents without verifying them. Many homeowners also assert that foreclosures by the Mortgage Electronic Registration System - the massive database banks use for rapid-fire buying and selling of mortgages - should be invalidated because MERS doesn't record loan transfers.

Similar arguments convinced Massachusetts judges that lenders must prove they own the mortgage before they can foreclose, and that buyers cannot purchase improperly foreclosed properties and then try to clear the title. Those were the rulings in U.S. Bank vs. Ibanez and Bevilacqua vs. Rodriquez, the two cases upheld by the commonwealth's high court last year.

Otherwise, any fraudster could record a deed to the Brooklyn Bridge, file a suit to clear title, "hope that the true owners ignored the suit or ... could not be readily located and (would thus) be defaulted," and get a court judgment saying they own the bridge, wrote a judge in the Massachusetts lower court decision.

"They basically said the emperor has no clothes, and if the emperor has no clothes, it cannot foreclose," said Renuart, who wrote a paper called "The Ibanez Time Bomb," looking at how that decision might apply in other states that, like Massachusetts, conduct foreclosures without court intervention. California is such a state.

A third case, Eaton vs. Fannie Mae, which the high court may rule on any day, looks at whether lenders must own both the note and the mortgage (the document that pledges real estate to secure that loan).

Massachusetts saw a slow-down in foreclosures during most of 2011 as banks fixed their paperwork - but for the past few months, foreclosures there have resumed at high rates, according to the Warren Group, a data service.

'Not receptive'
California courts have taken an opposite tack.

"Judges here will say somebody's owed a debt and this is the only creditor in this room asking to foreclose on the property, and we'll give it to them," said attorney Tiffany Norman of TRN Law Associates, a San Francisco firm specializing in wrongful-foreclosure cases.

Kent Qian, staff attorney with the National Housing Law Project in San Francisco, said such cases often get thrown out before they even get a hearing.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/17/BUN01NKC57.DTL#ixzz1pUCQCK5y

Attorney General Kamala D. Harris Appoints Independent Monitor to Protect Interests of Homeowners in $18 Billion California Commitment 3-16-12

SACRAMENTO --- Attorney General Kamala D. Harris today announced the appointment of Professor Katherine Porter of the University of California, Irvine School of Law as the California monitor of the commitment by the nation's five largest banks to perform as much as $18 billion worth of homeowner and borrower benefits in the state. Attorney General Harris' decision to appoint a California monitor was made independent of the national settlement, and Professor Porter's role is focused exclusively on ensuring compliance in California.

This California commitment is part of a national federal-state mortgage settlement penalizing robo-signing and other servicing and foreclosure misconduct that is currently pending approval in a federal court in Washington, D.C. Upon approval of the settlement, California's monitor will assist the Attorney General's office in holding the banks accountable for their commitments to the state and ensuring that the promised benefits are delivered to homeowners in full and on time.

"Hundreds of thousands of California homeowners will benefit from the commitments of up to $18 billion extracted from mortgage lenders. We must enforce full and timely compliance with these commitments, and the appointment of Professor Porter as our California monitor is central to that enforcement," said Attorney General Harris. "Professor Porter's wealth of experience and knowledge will protect the interests of homeowners and ensure the settling banks deliver on their promises," Attorney General Harris continued.

"I will work hard to make sure banks hold up their promises to change troubling practices so that families and communities across California see the benefits of the settlement," said Professor Porter. "Part of repairing the damage of the mortgage crisis is restoring public confidence that our largest financial institutions will treat consumers fairly and follow the law."

Katherine Porter is a Professor at University of California, Irvine School of Law. She specializes in commercial and consumer law, including mortgage foreclosures and bankruptcy, and just released a book, Broke: How Debt Bankrupts the Middle Class. In 2007, Porter authored an empirical study that offered some of the first systemic evidence of the problems in mortgage servicing that harmed homeowners. She has worked with other government entities, including the Federal Trade Commission and the Consumer Financial Protection Bureau, on issues relating to mortgage servicing.

Upon approval of the settlement, Professor Porter will verify the extent and timeliness of lenders meeting their obligations to California homeowners. Using information obtained by the national monitor of the mortgage settlement, former North Carolina Commissioner of Banks Joseph Smith, Professor Porter will review lender filings, homeowner reports and complaints, and other compliance documents to ensure that benefits committed by the banks are performed and result in meaningful relief to California borrowers. She will regularly report the results of her findings to the Attorney General's Office.

The appointment of Professor Porter as the state's monitor is one of a series of enforcement mechanisms to ensure transparent compliance with the national settlement and the separate California agreement. Bank of America, Wells Fargo, and JP Morgan Chase will face significant financial penalties if they do not meet their guarantee of a minimum of $12 billion in principal reductions and short sales for homeowners within the state. Unlike the larger national agreement, which is only enforceable in a federal court in Washington, D.C., the agreement reached with California empowers Attorney General Harris to enforce the penalty provisions in California state court.

California secured the estimated $18 billion in borrower benefits and relief as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the relief to California was estimated at $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, on stronger enforcement provisions, and that California and other states preserve key investigations into mortgage misconduct.

California's separate commitment also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California's hardest-hit counties and that the principal reductions in these and other California communities will occur within the first year of the settlement. Professor Porter will ensure that both the California-specific and national settlements are properly implemented in the state.

"The California commitment provides a path for thousands of struggling homeowners in California to retain their homes, while preserving our ability to investigate banker crime and predatory lending," added Attorney General Harris. "This is one important stride in our ongoing efforts to address the mortgage and foreclosure crisis that has devastated too many California communities."

Attorney General Harris earlier this month joined Assembly Speaker John A. Pérez, Senate President pro Tem Darrell Steinberg and other state legislators to unveil the California Homeowner Bill of Rights, designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state's urgent mortgage and foreclosure crisis. The legislation would make permanent and available to everyone the interim reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and restrict the unfair and inherently deceptive system of dual-track foreclosures. State legislators authoring key components of the Homeowner Bill of Rights include Assembly members Wilmer Carter, Mike Davis, Mike Eng, Mike Feuer, Holly Mitchell, Nancy Skinner, Senate President pro Tem Darrell Steinberg, and Senators Mark DeSaulnier, Loni Hancock, Mark Leno, and Fran Pavley.

Attorney General Harris also continues her work to have the Federal Housing Finance Agency authorize Fannie Mae and Freddie Mac - holders or guarantors of over 60 per cent of California mortgages - to participate in targeted programs of principal reduction that will benefit struggling homeowners, stabilize the country's housing market, and benefit taxpayers.

The state's Mortgage Fraud Strike Force continues its work to crack down on all forms of mortgage misconduct. Earlier this month, three prominent attorneys were arrested and are accused of running a loan modification scam.

A photo of Professor Porter is attached to the electronic version of this release at http://oag.ca.gov/

Yet Another Reason to Hate the Mortgage Settlement: The Release is Botched 3-17-12

Do you remember the brouhaha before the mortgage settlement was announced about the release? Recall, sports fans, as we stressed often, that this was a cash for release deal. The only motivating factor for the banks was the scope of the release. The Administration and attorneys general kept claiming the release was narrow, even as both the messaging (unintentionally) and snippets of disclosure suggested otherwise.
Remember that the Administration also trumpeted that enforcement would be tough, even as Abigail Field has shown that idea to be a joke. For instance, the servicing standards allow for the astonishing concept of an acceptable error rate. Banks aren’t permitted to make errors with your checking account and ding you an accidental $10,000 and get away with it. But with people’s most important asset, their homes, servicers are allowed a certain level of reportable errors, and many of them can be serious as far as borrowers are concerned. This is one example from her post:
Let’s return to page E-1-6, and look at the second metric, which applies to everyone with a mortgage: “Adherence to customer payment processing.” According to Column C, it’s not reportable error for the B.O.Bs to tell their computers that you paid less than you did, if “Amounts [are] understated by the greater $50.00 or 3% of the scheduled payment.”
Since most people don’t pay more than what they owe each month, posting less than you paid would seem to make you delinquent when you’re not. How can that be ok? What are the consequences? The servicing standards say the banks have to take your payment if you’re within $50, (See page A-5 at 3.a) but if your mortgage payment is $2000/month, 3% is $60. What if you start facing fees? What if you were trying to bring your account current and the bank screws up the data entry and starts foreclosing? Why isn’t that potentially devastating error reportable?
And again, it gets worse because of Column D. Again, reportable error has to happen 5% of the time to matter. There’s more than 50 million mortgages in the country. 5% of 50 million is 2.5 million. In a single year the banks can tell their computers that 2.5 million people paid so much less than they in fact paid that it’s reportable error, and still the bankers won’t get in trouble.
Most plainly, the bankers can tell 2.5 million people:
“Hey, you didn’t make your payment this month, your check’s short and we’re putting it in the no man’s land of a “suspense account” triggering delinquency and fees, even though you really did pay in full and have the canceled check to prove it. And guess what? No one but you cares; law enforcement won’t even consider dinging us for it.
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http://www.nakedcapitalism.com/2012/03/yet-another-reason-to-hate-the-mortgage-settlement-the-release-is-botched.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Ruling Gives Edge to U.S. in Its Appeal of Citi Case 3-15-12

Fred R. Conrad/The New York Times
Judge Jed S. Rakoff of Federal District Court in Manhattan.WASHINGTON — A federal appeals court dealt a stinging rebuke on Thursday to Judge Jed S. Rakoff of the Federal District Court in New York, who last year rejected a Securities and Exchange Commission fraud settlement with Citigroup because the deal had allowed the company to avoid admitting any wrongdoing.

The Court of Appeals for the Second Circuit in New York, in a mostly procedural decision, ruled that the S.E.C. was likely to succeed in a full-blown appeal of Judge Rakoff’s rejection of the commission’s proposed $285 million settlement with Citigroup. The case centered on the bank’s structuring and sale of mortgage-related investments prior to the financial crisis.

Judge Rakoff has been critical of the S.E.C. in other decisions and has held up other tentative settlements that the S.E.C. had reached in recent years, including one with Bank of America over bonuses paid at its Merrill Lynch unit.

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http://dealbook.nytimes.com/2012/03/15/s-e-c-appears-poised-to-win-appeal-in-citi-settlement-deal/

Four Whistleblowers Who Sounded the Alarm on Banks’ Mortgage Shenanigans 3-15-12

Buried in the sweeping mortgage settlement [1] with banks, for which final documents were filed this week, are five whistleblower cases [2] that shed light on the litany of foreclosure abuses by the banks.

According to one suit, Bank of America allegedly passed bad loans on to the Federal Housing Administration. According to another, the bank allegedly denied qualified homeowners access to HAMP, the government's loan modification program.

The suits were all settled as part of the overall $25 billion mortgage deal. They were filed under the False Claims Act, which provides incentives for whistleblowers to come forward in cases in which someone has defrauded the government. Whistleblowers can net up to 25 percent of the total settlement from False Claims suits, and in some of these cases, the reward is in the millions.

Details are available for four of the cases; documents in a fifth, against JPMorgan Chase, have not yet been filed in Massachusetts. While the cases were settled as part of the overarching agreement, they still have to be accepted by the courts in which they were originally filed. In reaching the settlements, none of the banks admits or denies the lawsuits' allegations.

We've laid out the details of each case.

Countrywide Defrauded the FHA

Kyle Lagow worked at LandSafe, a contractor of Countrywide, which Bank of America bought in 2008. He brought a suit in 2009 alleging [3] that the company systematically undermined the appraisal process for home loans in order to approve as many as possible:
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http://www.propublica.org/article/four-whistleblowers-who-sounded-the-alarm-on-banks-mortgage-shenanigans

FHFA Criticized for Arguments Used Against Principal Reduction 3-15-12

The FHFA’s decision to not allow for principal reductions on Fannie Mae and Freddie Mac loans due to taxpayer costs and other issues came under sharp criticism during a Senate subcommittee hearing Thursday.

John DiIorio, CEO of 1st Alliance Lending, a mortgage origination firm, argued in support of principal reduction, even when analyzing the benefits from a bottom-line perspective, not simply as a form of aid.

“Again, let me emphasize – these investors and mortgage holders that we work with agree to principal reduction in these situations voluntarily,” said Dilorio in his written testimony. “Moreover, they make the decision to do principal reduction not out of a sense of charity, but because they believe it is in their best financial interest to do so. They are sophisticated, and are doing these transactions to maximize asset value.”

Dilorio also called principal reduction the best economic option for the holder of the mortgage when done correctly and in a targeted manner.

Laurie Goodman, senior managing director of Amherst Securities, said there were a number of flaws in an FHFA study used to defend the decision to not apply principal forgiveness, and discussed three major criticisms and “technical flaws.”

For one, Goodman said the study was based on a hypothetical model rather than actual HAMP results.

As one of the technical flaws, Goodman said in her testimony that “the results were done on a portfolio level, not an individual loan level. Thus, the FHFA did not consider the possibility of following a forgiveness strategy for some borrowers and a forbearance strategy for others.”

Goodman also pointed that the FHFA did not differentiate between loans with mortgage insurance versus loans without it, and further explained that, “when there is mortgage insurance, it is generally not NPV-positive to the GSEs to do principal forgiveness – forbearance creates the preferred outcome, as the MI does not cover the forgiven amount.”

The study Goodman referred to was used by Edward DeMarco, FHFA acting director, to respond to a request from the House Committee on Oversight and Government Affairs on whether principal forgiveness on GSE loans would be in the interest of taxpayers.

“I would suggest that they if they have doubts about the value of principal reduction, they need not commit wholesale to principal reductions, but could start by dipping their feet into the water on a pilot or limited basis, to test out how and whether principal reduction is effective,” said Dilorio.

Mark Calabria, director of financial regulation studies at the Cato Institute, shared a different opinion on principal reduction, and cited industry facts from Fitch Ratings to support his opinions.

“The vast majority of underwater borrowers are current on their mortgages,” said Calabria. “Even the majority of deeply underwater borrowers are current. For prime borrowers with loan-to-values over 125 percent, over 75 percent are current. Over half of deeply underwater subprime borrowers are current.”

Calabria also pointed that GSE loans display a smaller percentage, just 9.9 percent of underwater loans, compared to private label securities, with 35.5 percent of loans underwater.

Citing a CoreLogic report which stated 22.8 percent of all residential properties with a mortgage are in negative equity, Calabria explained that the situation is concentrated in five states: Nevada, Arizona, Florida, Michigan, and Georgia, with those states having an average negative share of 44.3 percent, compared to 15.3 percent for the remaining states.

“Any taxpayer efforts to reduce negative equity would largely be a transfer from the majority of states to a very small number,” said Calabria.

In response to criticism FHFA has been receiving, Calabria said Acting FHFA Director DeMarco should be commended.

“Given FHFA’s estimate that a broad based program of principal reduction would cost almost $100 billion, the argument that an unelected, unappointed, acting agency head should, in the absence of statutory authority, spend $100 billion on taxpayer money is simply inconsistent with our system of government,” said Calabria, who also stressed that $180 billion in taxpayer dollars has been used to rescue the GSEs.

The moral hazard issue was also addressed during the hearing, which is the fear that offering incentives such as principal reduction will lead to borrowers purposely defaulting to reap benefits.

“We understand that the primary issue in the mind of the FHFA is that more than 90 percent of GSE loans are current,” said Goodman, who offered two solutions.

“The first solution is to require that the borrower be delinquent as of a certain date, so performing borrowers do not intentionally go delinquent in order to get the principal reduction,” said Goodman. “The other choice is to establish a series of frictions so that only those borrowers who need the principal reduction take advantage of the program. This could involve the inclusion of a shared appreciation feature or other frictions to default.”

Goodman’s example and explanation for a generally negative NPV when applying principal forgiveness for loans with mortgage insurance

- Assume a borrower has a $100,000 loan, on a house worth $75,000, and the GSEs have mortgage insurance from a mortgage insurer, which covers any loss down to $70,000.

- The borrower defaults, and the GSE offers the borrower $20,000 of principal reduction, which reduces the loan balance to $80,000, and gives the loan a 75% chance of eventual success. If the loan does not re-default (there’s a 75percent chance of that happening), the GSE ends up losing the $20,000 principal amount they gave up.

- But if the loan re-defaults and the house then sells for $70,000 (25 percent chance), the mortgage insurance pays $10,000 to the GSE for the lost principal, in which case the GSE still loses $20,000.

- But if principal is forborne, and the borrower defaults, the mortgage insurer would cover the loss.

Occupy Wall Streets launches FightBAC Campaign to Foreclose on Bank of America 3-15-12

FOR IMMEDIATE RELEASE: March 15, 2012
Contact: press@occupywallst.org, 347 292 1444
For this action only: fightbac@riseup.net, 646.387.6797

OWS launches FightBAC campaign to say, “Hey BofA, we’re moving in.”

New York–Today, we will move our money, put our bodies on the line and bring Bank of America’s (BAC) crimes to light; we are ready to FightBAC. Starting today and continuing on the 15th of every month, Americans will “foreclose” on branches across the country–from Long Beach, CA to Phoenix, AZ all the way to Sarasota, FL (for a full list of actions see http://fthebanks.org/bank-actions/action-map)–and take back what is rightfully ours: our homes. People will bring chairs, beds, potted plants, and other symbols of their Bank of America-funded broken homes into bank branches. The youtube of the first FightBAC action has 55k views in just over 24 hours bit.ly/livingrooming

When: Thursday, March 15, 3pm
Where: Gathering at Pumphouse Park, located behind 4 World Financial Center (followed by a march)

A group of Occupiers have taken up the charge and launched FightBAC, to do something about Bank of Americas crimes and its threat to the economy. Today they kick off a research/public education/direct action campaign in order to expose an accounting of Bank of America’s assets, and push that the corrupt, government-funded institution be broken up into smaller, more accountable, more transparent banks.

“Like Wall Street, Bank of America servers the 1%, and is a ubiquitous part of an unaccountable financial system that puts profits above people. Its criminal greed has it poised on the brink of a Lehman-like melt down. We need to stop it before its crashes the entire global economy. We must break up this bank and demand justice for its crimes” said Mcnair Scott an organizer with the FightBAC campaign.
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http://press.nycga.net/2012/03/15/fightbac/

Bank of America Declares Living Customer Dead for Three Years 3-14-12

Arthur Livingston, 39, maybe "alive" in the "technical" tense. He is "breathing" and his "biological heart" is "beating." But he's not alive in a much more important sense: his bank has declared him dead. Since May 2009.

In the future (now), all life-related processes will be handled directly by the financial institution to which you have pledged the most significant portion of your estate. When you die, your bank will alert the credits rating agencies that you are no longer a participant in the life economy:
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http://gawker.com/5893265/bank-of-america-declares-living-customer-dead-for-three-years

Bank Of America: Too Crooked To Fail 3-14-12

The bank has defrauded everyone from investors and insurers to homeowners and the unemployed.
So why does the government keep bailing it out?
At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

Read more: http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314#ixzz1pEDcPIV4

SEC Charges Three Former Mortgage Executives 3-14-12

The Securities and Exchange Commission (SEC) charged three former senior executives of Thornburg Mortgage on Tuesday for hiding the company’s true financial state in an annual report. The plan backfired and caused a 90 percent value loss for the company in two weeks.

The SEC alleges Thornburg’s chief executive officer Larry Goldstone, chief financial officer Clarence Simmons, and chief accounting officer Jane Starrett overstated the company’s income by more than $400 million and falsely recorded a profit for the 2007 fourth quarter at the start of the financial crises.

Thornburg was facing liquidity issues and was unable to make payments on time for substantial margin calls it received from its lenders in the weeks leading up to the filing of its annual report on Feb. 28, 2008.

According to the SEC’s complaint, Thornburg was violating lending agreements by failing to make on-time payments while executives were trying to cover up the severity of their liquidity crisis to investors and Thornburg’s auditor.

For example, in an e-mail from Starrett to Goldstone and Simmons, she said, “We have purposefully not told [our auditor] about the margins calls.”

Goldstone, Simmons, and Starrett scrambled to make the final payment on Thornburg’s margin calls approximately 12 hours before filing the annual report. As Goldstone had earlier stated to Simmons and Starrett in an e-mail, “We don’t want to disclose our current circumstance until it is resolved.” The intention was “to keep the current situation quiet while we deal with it.”

When Thornburg began to fall behind on the new margin calls, it was forced to disclose its problems in 8-K filings with the SEC. By the time the company filed an amended annual report on March 11, its stock price fell by more than 90 percent. The company, which was once considered the second-largest independent mortgage company next to Countrywide, filed for bankruptcy on May 1, 2009.

Thornburg’s lending business focused on jumbo and super-jumbo ARMSs; the company also purchased and held ARM securities and securitized ARM loans. In order to finance its mortgage business and investment activities, the company relied on constant access to financing, which included borrowing money from various lenders.

The SEC’s complaint charges the three former executives with violations of antifraud, deceit of auditors, reporting, record keeping, and internal controls provisions of the federal securities laws. The complaint seeks officer and director bars, disgorgement, and financial penalties.

Banks to pay $25 million to NY state over mortgage system 3-14-12

NEW YORK (Reuters) - Five major U.S. banks have agreed to pay $25 million to New York State over their use of an electronic mortgage database that the state said resulted in deceptive and illegal practices that led to more than 13,000 foreclosures.

JPMorgan Chase & Co, Bank of America Corp and Wells Fargo & Co each agreed to pay $5.9 million in order to partially settle a lawsuit over their use of the Mortgage Electronic Registration System (MERS),

Two other banks, Citigroup Inc and Ally Financial, also agreed to pay $5.9 million and $1.25 million respectively although they were not named in the February 3 lawsuit.

It was not immediately clear why Citi and Ally opted to participate in the settlement, although they are in the process of settling other similar claims.

All five banks in February reached a settlement with 49 states and federal agencies to pay $25 billion to resolve government lawsuits over faulty foreclosures and the handling of requests for loan modification.

In the New York settlement in February, none of the banks admitted nor denied the MERS allegations, the agreement said, a copy of which was obtained by Reuters on Tuesday.

MERS is an electronic database created in the mid-1990s for tracking mortgage ownership. New York State Attorney General Eric Schneiderman said in his lawsuit that the system was plagued by inaccuracies.

In exchange for the $25 million, New York State has agreed to drop some specific MERS claims. The state will use the money to address housing issues, such as mortgage defaults and foreclosures and further investigation and prosecutions.
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http://news.yahoo.com/banks-pay-25-million-ny-state-over-mortgage-050724137.html

Rage grows over mortgage deal 3-13-12

NEW YORK (CNNMoney) -- As more details emerge about the massive $26 billion foreclosure settlement between the five biggest mortgage lenders and the states' attorneys general, a growing number of borrowers are realizing that the deal will do little, if anything, to help them out.

Proponents of the settlement deal tout that roughly 1 million homeowners who owe more on their homes than their homes are worth are expected to have their mortgage balances lowered through principal reductions and another 750,000 would be able to refinance into loans with lower interest rates.
However, that's only a fraction of the 11 million homeowners who are currently underwater on their homes, according to CoreLogic. And it's also a mere sliver of the 3.5 million people who lost their homes to foreclosure over the past four years.

"The impact [of this settlement] will be small," said Mark Zandi, chief economist for Moody's Analytics. "It's not a home run; it's a single."

Principal reductions will also only apply to certain borrowers who have mortgages still held by the five major lenders: Bank of America (BAC, Fortune 500), CitiBank (C, Fortune 500), Wells Fargo (WFC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500) and Ally Financial.

Borrowers who have a mortgage held by Fannie Mae (FNMA, Fortune 500) or Freddie Mac (FRE) -- roughly half the market -- are out of luck. Loans insured by the Federal Housing Administration are also ineligible.
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http://money.cnn.com/2012/03/13/real_estate/mortgage-settlement/

UPDATE: NC County Sues Banks And MERS Over Robo-Signing 3-13-12

-NC's Guilford County sues banks, mortgage registry over fraudulent records

--County official cites 4,519 documents signed in robo-signer fashion

--Lawsuit comes a day after state AGs forge $25 billion foreclosure settlement

(Adds comment from MERS in the seventh and eighth paragraphs)

NEW YORK (Dow Jones)--A North Carolina county Tuesday sued four of the nation's largest banks and a private mortgage registration system over forged and falsified loan documents state officials said have hurt property values and upended their own efforts at tracking records.

The lawsuit filed in a North Carolina court for Guilford County Register of Deeds Jeff Thigpen, names ...
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http://www.blueridgenow.com/article/20120314/APN/1203140906

HUD Releases Myths and Facts on Historic Mortgage Servicing Settlement 3-12-12

(Source: HUD) – On February 9, the Department of Justice, the U.S. Department of Housing and Urban Development, other federal agencies, and 49 state attorneys general announced the largest federal and state settlement agreement in history with the five major mortgage servicers for their mortgage servicing practices. This $25 billion agreement is the most significant action to hold the banks accountable since the housing crisis began and represents an important step in helping the housing market to recover, while strengthening the overall economy.

The agreement has the potential to help nearly two million American homeowners through a variety of means, including loss mitigation tools such as principal reduction and refinancing of loans for borrowers who owe more on their house than it is worth (“underwater” homeowners), payments of billions of dollars to federal and state parties, and payments directly to individuals who lost their homes to foreclosure and meet certain other criteria. States are using their settlement funds for a variety of purposes, including housing counseling, consumer education, borrower hotlines, and other vital actions.

This large and complex settlement has generated misunderstandings, rumors and even some falsehoods. This post helps set the record straight.

Myth: The American taxpayers will subsidize the settlement.

Fact: There is a mistaken notion that there is a taxpayer subsidy because modifications performed under the Treasury’s Home Affordable Modification Program (HAMP) are not excluded from the settlement. In reality there is no such subsidy. Servicers cannot use HAMP incentives (or any other government subsidies) to meet their obligations under the settlement, plain and simple. Here are the facts:

HAMP pays incentives to encourage mortgage modifications. While those incentives occasionally include payments for reducing principal, most HAMP modifications do not include principal reduction.

The settlement does not give any credit for these HAMP modifications—those that involve payment reduction through a decrease in interest rate or an extension of the term, but no principal reduction. Of the almost 1 million permanent HAMP modifications done to date, the vast majority—more than 95 percent—fall into this category. Again, servicers do not receive any credit under the settlement for these modifications.
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http://www.loansafe.org/hud-releases-myths-and-facts-on-historic-mortgage-servicing-settlement

After More Than a Month, $25B Settlement Filed in Court 3-12-12

The $25 billion mortgage servicing settlement agreement was filed in federal court Monday, announced the Justice Department, HUD, and 49 state attorneys general.

State and federal officials and five of the largest servicers – Bank of America, J.P. Morgan Chase, Wells Fargo, Citigroup, and Ally Financial – settled on February 9, outlining an agreement to address faulty practices in the mortgage industry and to deal with issues regarding wrongful foreclosures.

Oklahoma was the only state to opt out of the agreement, with the state’s Attorney General Scott Pruitt deciding to seek out a separate settlement leading to $18.6 million.

Now, there are court documents to provide the details of the servicers’ financial obligations under the agreement, which include $20 billion in consumer relief, and new servicing standards that will change foreclosure practices for mortgage companies.

The $20 billion in relief will help homeowners through principal reduction and refinancing for underwater homes, principal forbearance for unemployed borrowers, short sales assistance, and additional benefits for service members. An additional $5 bill will go to government officials.

With new servicing standards are new policies for foreclosure prevention. For example, servicers will no longer able to foreclose on a borrower being considered for a loan modification, and servicers are required to have a single point of contact for borrowers.

The settlement also establishes a third-party monitor to oversee implementation of the servicing standards, and if violations are found, the servicer can be penalized up to $1 million per violation or up to $5 million for certain repeat violations.

After federal authorities led investigations on servicing practices, issues were found such as lost paperwork, robo-signing, and unfair fees.
While the settlement has been hailed as a significant landmark agreement that will help millions of homeowners, critics question the real impact considering the settlement does not include Fannie Mae and Freddie Mac, which are said to control more than half of all mortgages in the U.S.

BofA to slash mortgage balances by $100,000 or more 3-9-12

NEW YORK (CNNMoney) -- Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers.

As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an average of $100,000 or more, according to bank spokesman Rick Simon.
Those principal reductions are much deeper than the ones originally announced as part of the robo-signing settlement deal.

When the settlement was first announced, the average principal reduction was expected to reduce mortgage balances by an average of about $20,000. Among the five biggest lenders, the reductions are expected to help roughly 1 million homeowners who owe more on their homes than they are worth.

Multi-million dollar foreclosures
The other four banks, JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial, are expected to reduce qualified borrowers' principal to between 115% and 125% of the value of their homes. Bank of America, meanwhile, is aiming to reduce the amount owed on a home to 100% match the current market value.
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http://money.cnn.com/2012/03/09/real_estate/mortgage-settlement/index.htm

Coming to a Bankster's Mansion Driveway Near You: Occupy Our Homes 3-9-12

An interview with Amy Schur of the Alliance of Californians for Community Empowerment.

As one of the more promising offshoots of the Occupy movement, Occupy Our Homes - the grassroots effort to prevent evictions and foreclosures - has continued to organize throughout the winter. With millions of Americans underwater on their home loans or otherwise facing distress about their mortgages, the issue has the power to give the Occupy movement's concerns concrete resonance for millions of people.

At the same time, organizers must make difficult strategic decisions about how to best take on the foreclosure crisis and how to scale up activism in order to make a national impact.

In the first installment of this two-part series, I spoke with Steve Meacham, organizing coordinator at City Life/Vida Urbana in Boston, about how grassroots anti-eviction and anti-foreclosure efforts are gaining steam in New England.

For this installment, I spoke with a West Coast activist who is both a leader in anti-foreclosure activism in Los Angeles and a participant in national coalitions organizing around this issue. Amy Schur is executive director of the Alliance of Californians for Community Empowerment (ACCE). ACCE is one of the most prominent post-ACORN community organizations in the country that is fighting state-level budget cuts and defending homeowners at risk of foreclosure.

Since ACCE's organizing around housing issues pre-dates the Occupy movement, I started by asking Schur how the influx of new energy since Occupy's inception last fall has affected her group's work.
rest here
http://www.truth-out.org/coming-banksters-mansion-driveway-near-you-occupy-our-homes/1331137950

Pasadena pursues charges against foreclosed mom 3-7-12

PASADENA - The city of Pasadena on Wednesday refused to drop its misdemeanor trespassing charges against Rose Gudiel and eight other protesters who demonstrated against foreclosures in the lobby of OneWest Bank.
Gudiel is due in court today to set a preliminary hearing date in the trespassing case.

The October protest, in which Gudiel and her 63-year-old mother were arrested by Pasadena Police, was likely the tipping point in Fannie Mae's decision to reverse the foreclosure of Gudiel's home and call off certain eviction.

Lawyers for the demonstrators contend Pasadena City Attorney Michele Beal Bagneris intends to make an example of protesters.

"(Bagneris) wants to have something holding over their heads, so that they won't make trouble in Pasadena for at least a year," said Karen Suri, part of the team of attorneys representing the protesters.

Bagneris said Wednesday that while she personally remains "sensitive to the fact that civil disobedience advances and perhaps changes a society" her office has a responsibility to maintain order.

"We have laws and we are supposed to follow the laws," Bagneris said. "We are to enforce them based on the facts."

On Wednesday, Gudiel said she planned to fight the criminal charges as vigorously as she battled the bank. "When the bank tried to take my house and refused to even talk to me, I took a stand to show how unfairly they treat homeowners like me," Gudiel said in a statement. "Now I'm being treated like a criminal for trying to save my home."

The October arrests came after about 70 protesters took over the bank's lobby for about 90 minutes; Pasadena Police declared the assembly unlawful.

Gudiel refused to leave.

She had been fighting Pasadena bank OneWest and Fannie Mae for several months to keep her Bassett home of six years.

Gudiel and eight others were summarily arrested and taken away in a police van before being cited and released. Hours after the incident Gudiel received a call from bank officials, who agreed to refinance her mortgage.

Read more: http://www.pasadenastarnews.com/news/ci_20124822/pasadena-pursues-charges-against-foreclosed-mom#ixzz1oa7p1XGG

Whistleblower says BofA defrauded HAMP 3-7-12

Reuters) - Bank of America NA prevented homeowners from receiving mortgage-loan modifications under a federal program in order to avoid millions of dollars in losses while benefitting from financial incentives for participating in the program, according to a complaint unsealed in federal court Wednesday.

The suit is the second whistleblower complaint unsealed so far with apparent ties to the $1 billion False Claims Act settlement announced by Bank of America and the U.S. Attorney's Office for the Eastern District of New York on February 9.

The Bank of America settlement is also part of the sweeping $25 billion agreement reached between state and federal authorities.

Final settlement documents have yet to be filed in the BoA settlement, which the U.S. Attorney's Office said was the largest ever False Claims Act payout related to mortgage fraud.

The settlement resolved claims that Bank of America's Countywide Financial subsidiaries defrauded the Federal Housing Administration by inflating appraisals used for government-insured home loans, as well as claims involving the Home Affordable Modification Program, a federal program to help American homeowners facing foreclosure.

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http://www.reuters.com/article/2012/03/08/bank-of-america-whistleblower-idUSL2E8E804820120308

Attorney General Kamala D. Harris Warns Homeowners to Beware of Mortgage Settlement Scams 3-6-12

SAN FRANCISCO -- Attorney General Kamala D. Harris today, as part of National Consumer Protection Week, warned California homeowners to beware of phone solicitations from scam artists claiming to provide assistance related to the recent national mortgage settlement.

Under California law, it is illegal to charge an up-front fee for loan modification services. Third parties that claim to offer homeowners access to funds under the national mortgage settlement are likely running a scam. Homeowners receiving such solicitations should not provide any personal or financial information and should report the solicitation to the California Department of Justice ( http://ag.ca.gov/contact/complaint_form.php?cmplt=CL).

Californians seeking relief under the state's recent $18 billion mortgage settlement are advised to heed the following tips to avoid falling prey to scams that often arise around high profile settlements:

- Be skeptical of third party phone solicitations. Only your bank/loan servicer can assist you with regard to the recent national mortgage settlement.
- Do not give your personal financial information to a solicitor such as your bank account number, social security number or even the name of your loan servicer. Your bank will already have this information.
- Never pay an up-front fee for mortgage-related services. It is against California law and should be reported to the California Department of Justice.
- Call your bank to see if you qualify for relief under the settlement.

For free, trustworthy advice:

- Call a HUD approved counselor - (888) 995-4673
- Call Keep Your Home CA - (888) 954-5337

If you think you may be eligible for relief under the national mortgage settlement, call your bank directly:

Bank of America/Countrywide - (877) 488-7814
JPMorgan Chase/Washington Mutual - (866) 372-6901
GMAC Mortgage/Ally Financial - (800) 766-4622
Citibank/CitiMortgage - (866) 272-4749
Wells Fargo/Wachovia - (800) 288-3212

For additional information regarding the mortgage settlement, please visit: http://oag.ca.gov/nationalmortgagesettlement and our frequently asked questions page: http://oag.ca.gov/nationalmortgagesettlement/faqs

Foreclosed homeowners challenge banks to prove they still hold their notes 3-4-12

When several major U.S. banks agreed last month to pay $25 billion to settle charges of foreclosure fraud — including allegations workers faked signatures, backdated records and "re-created" missing documents — it offered some measure of resolution for millions who lost their homes in the housing bust.

But the settlement reached by 49 attorneys general and Wells Fargo, Bank of America, Ally Financial (formerly GMAC), Citigroup, and JP Morgan Chase doesn't end the trouble for those banks. With the banks' records in such disarray, some foreclosed homeowners are fighting back by making a simple demand: Prove you own my mortgage.

Increasingly, courts are taking the homeowners' side. At least five times since 2010, Wisconsin Court of Appeals panels have upheld challenges by debtors demanding to see the legal paperwork tracking their loans, and lenders were unable to do it.

"The negative perception seems to be 'You're trying to get a free house,'" said Tom Wuensch of Onalaska, who has staved off foreclosure for four years by challenging the efforts by a series of lenders to seize his home. "Really what this is about is, we shouldn't be letting banks take free houses. We bailed them out once already."

Homeowners facing foreclosure told the State Journal they have encountered documents that appear to transfer their mortgages to the banks that sued them months or even years after the foreclosure lawsuits were filed. They have discovered signatures from known "robo-signers" — often low-paid workers at signature mills who signed off on foreclosure documents without verifying them — and records they say fail to tie the bank to their mortgage.

"Fraud is an everyday occurrence in foreclosures," said Madison attorney Reed Peterson, who has represented about 80 homeowners facing foreclosure.

But many irregularities are never uncovered. The vast majority of foreclosed homeowners in Wisconsin don't contest the banks' actions, walking away from their homes, uprooting their families and leaving their credit in tatters.

The banks involved in the national settlement have admitted no wrongdoing.

Show me the documents In 2009, Jason Abbott was diagnosed with colon cancer. The treatments left him exhausted and distracted, forcing him to leave his job as a legal assistant.

He had to decide: Pay for food and medical care, or pay his $1,200-a-month mortgage.

Selling the house wasn't an option. After the real-estate market collapsed, the value of the three-bedroom Verona townhouse Abbott bought in 2008 for $165,000 now is a little more than $100,000 — less than what he owes the bank.

Like many others, Abbott blamed the boom and bust of the nation's housing market on risky behavior by banks, which lent money to unqualified buyers, artificially driving up home prices to unsustainable levels and leading to a massive wave of foreclosures.

In September 2010, he stopped sending in his mortgage payments. In January 2011, Wells Fargo sued for foreclosure.

Abbott, who knows a bit about the law, decided to fight the lawsuit in Dane County Circuit Court. He charged his loan was no longer owned by Wells Fargo but by the Federal Home Loan Mortgage Corp., known as Freddie Mac, the congressionally chartered company that buys mortgages from lenders.

"I said, 'Show me a document that shows Freddie Mac, Wells Fargo, Jayson Abbott and 1117 Enterprise Drive,' " said Abbott, who hired Peterson to help him battle the lender. "They said, 'We don't have that.' "

What Wells Fargo did produce, he charged in court filings, were documents he said raise doubt about whether the bank is entitled to collect the debt he owes.

Wells Fargo spokesman Jim Hines disputed Abbott's allegations, calling them "baseless."

"At all times during the course of this litigation, Wells Fargo has remained holder of the note and record title holder of the mortgage," Hines said. "All documentation pertaining to Mr. Abbott's foreclosure proceedings was handled appropriately."

Study: Fraud rampant

But a California study released last month found 99 percent of 382 randomly sampled foreclosures in San Francisco County between January 2009 and October 2011 had "irregularities," including 84 percent with "suspicious activities indicative of potential fraud."



Read more: http://host.madison.com/wsj/news/local/crime_and_courts/foreclosed-homeowners-challenge-banks-to-prove-they-still-hold-their/article_98e90670-64d3-11e1-b12d-001871e3ce6c.html#ixzz1oBpYRMjb

New York continues assault on MERS 3-1-12

New York government officials are continuing their assault against foreclosure actions where Mortgage Electronic Registration Systems, Inc. (“MERS”) was the assignee of the mortgage, and challenges to foreclosures involving MERS are increasingly gaining traction in New York courts. Recently, the New York State Attorney General filed a complaint against MERS and several banks alleging fraud and deception in foreclosure proceedings. People v. JPMorgan Chase Bank N.A., No. 2012/2768 (N.Y. Sup. Ct. Feb. 3, 2012). In addition, three New York trial courts have decided motions involving standing and other issues in such actions. CIT Group/Consumer Fin., Inc. v. Platt, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); U.S. Bank N.A. v. Bressler, 33 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2011); Bank of New York Mellon v. Martinez, 33 Misc. 3d 1215(A) (N.Y. Sup. Ct. 2011). Two courts ruled against the foreclosing banks, finding they did not have standing to foreclose where MERS assigned a mortgage without express authority to do so or sufficient documentation evidencing that the note was also transferred. Although the third court dismissed a lack of standing defense, it did so solely for procedural reasons.

The MERS System

MERS was created in the 1990s by the mortgage industry as a private computerized database where lenders could record and track mortgage loans. MERS is typically noted in county land records as the “mortgagee of record” and/or a “nominee” of the owner of the mortgage note, which assists lenders in streamlining the mortgage assignment process. This system allowed lenders to assign and transfer loans rapidly and facilitated mass securitization of mortgage loans. Currently, over 70 million mortgage loans have been registered on the MERS system.

New York Attorney General’s Action

On February 3, 2012, the New York State Attorney General brought an action against JPMorgan Chase, Bank of America, MERS and others alleging fraud, illegal acts, and deceptive acts and practices in violation of the New York Executive Law and General Business Law. The complaint explains that New York has a public recording system where a lender traditionally recorded mortgage interests in the local county clerk’s office. With the onset of bundling mortgages into mortgage-backed securities in the 1990s, however, the mortgage industry created MERS to decrease the cost and time of using the traditional public recording system. The complaint alleges that MERS has few or no employees and it delegates its authority to “certifying officers,” who in actuality are employees of MERS members, including defendants. These certifying officers then executed mortgage assignments and foreclosure paperwork in MERS’ name. In many New York foreclosure proceedings certifying officers have signed sworn statements on behalf of MERS, but also executed documents on behalf of their employers, leading to widespread confusion.

As a result of those practices, the Attorney General complaint alleges that the defendant banks have fraudulently brought foreclosure actions in MERS’ name and that “MERS assignments have numerous defects.” In fact, “MERS often lacked standing to foreclose” because it often did not hold the promissory note and misrepresented to courts and homeowners that it owned the note. In addition, many foreclosure actions were initiated before an assignment was executed and thus plaintiffs in such actions plainly misrepresented their right to foreclose. Accordingly, the complaint seeks to enjoin the defendants from filing foreclosure proceedings in MERS’ name, executing deceptive mortgage assignments or mortgage-related documents without personal knowledge, failing to disclose to homeowners MERS’ role and failing to maintain an accurate MERS database. The complaint also requests that defendants disgorge all profits obtained by, and pay all damages caused by, these fraudulent and deceptive practices.

Wells Fargo Lays Out Mathematics of the Robo-Signing Settlement 3-1-12

The first details on how mortgage servicers must fulfill their end of the $25 billion federal-state settlement can be found within the 233 pages of Wells Fargo’s 2011 annual report filed with the Securities and Exchange Commission (SEC) this week.
As expected, first-lien principal reductions carry the most weight in terms of credit towards each servicer’s financial obligation under the agreement. Forgiveness of past due payments for unemployed homeowners garner dollar-for-dollar credit, as do costs associated with demolishing vacant, foreclosed properties.

So far, officials have released only a summary of the terms agreed to by U.S. government agencies, 49 state attorneys general, and the nation’s five largest mortgage servicers. The settlement itself has not yet been filed with the courts and that has roused questions from both the skeptics and the supporters.

“To date, Congress and the public have been given only the broad outlines of the terms of the settlement,” Sen. Richard Shelby (R-Alabama), ranking member of the Senate Banking Committee said at a hearing this week. “As a result, there are many unanswered questions about how the settlement was reached and how it will operate.”

Wells Fargo is the first to offer some clarity in a regulatory filing with the SEC. The company explains that each servicer’s monetary obligation under the settlement – for Wells, it’s $5.3 billion – is broken down in three components: Consumer Relief Program, Refinance Program, and Foreclosure Assistance Payment.

The Foreclosure Assistance Payment – which is $1 billion for Wells – is a direct outlay to the federal government and participating states for them to use as they see fit to tackle
the problems brought on by foreclosures. To fulfill what’s owed under the Consumer Relief Program – a $3.4 billion commitment from Wells – and the Refinance Program – totaling $900 million for Wells’ part – servicers receive credit for their loss mitigation efforts, the amount of which is determined by the nature of the modification or other form of relief provided to the borrower.

For example, first-lien principal forgiveness on mortgages with a loan-to-value (LTV) ratio of 175 percent or less equates to a credit of 100 percent for every dollar forgiven. This type of mortgage relief must make up at least 30 percent of all Consumer Relief Program credits.

First-lien principal forgiveness for LTV greater than 175 percent, on the other hand, constitutes just 50 percent credit for the amount forgiven over 175 percent LTV.

Second-lien principal forgiveness is a whole different ballgame, with credit dependent on how delinquent the borrower is. Ninety percent credit is given for loans that are 90 days or less delinquent, 50 percent for 91-179 days delinquent, and just 10 percent for loans that are 180 days or more past due.

Credit for short sale deficiency waivers on first- and second-lien mortgages range from 20 percent to 100 percent, depending on whether the servicer, investor, or both incur the loss.

Forgiveness of payment arrearages for unemployed borrowers receives 100 percent credit.

For servicers’ anti-blight actions, principal forgiveness associated with properties where foreclosure is not pursued gets 50 percent credit, while cash costs paid by the servicer for demolition and REO donations to nonprofit organizations receive 100 percent credit.

Under the Refinance Program, credit is calculated as the difference between the pre-existing interest rate and the new interest rate multiplied by the unpaid principal balance times a multiplier ranging from 5 to 8, depending on the loan term.

Wells Fargo says it began receiving credits toward satisfying its financial obligation on March 1. Additional credit will also be factored in for certain actions taken within 12 months of the start date.

Wells Fargo’s tutorial on the mathematics of the settlement starts on page 74 of its 2011 annual report (page 50 of the electronic PDF document).

Attorney General Kamala D. Harris Joins Legislative Leaders to Unveil California Homeowner Bill of Rights 2=29-12

SACRAMENTO - Attorney General Kamala D. Harris today announced the California Homeowner Bill of Rights designed to protect homeowners from unfair practices by banks and mortgage companies and to help consumers and communities cope with the state's urgent mortgage and foreclosure crisis.

Joined by Senate President pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez, Attorney General Harris announced her sponsorship of six bills designed to guarantee:
- Basic standards of fairness in the mortgage process, including an end to dual-track foreclosures
- Transparency in the mortgage process, including a single point of contact for homeowners
- Community tools to prevent blight after banks foreclose upon homes
- Tenant protections after foreclosures
- Enhanced law enforcement to defend homeowner rights - paid for by fees imposed on banks
- A special grand jury to investigate financial and foreclosure crime

"California communities and families are being devastated by the mortgage and foreclosure crisis. We must ensure the deceptive practices that caused it never happen again," said Attorney General Harris. "The California Homeowner Bill of Rights will provide basic fairness and transparency for homeowners, and improve the mortgage process for everyone."

The legislation builds on the California commitment announced by Attorney General Harris earlier this month, which is expected to result in $18 billion of benefits for California homeowners. That agreement included reforms for mortgages owned by the five banks that were signing parties. The California Homeowner Bill of Rights will strengthen those protections, make them permanent, and apply them to all mortgages in the state.

"When I secured the California commitment, I made clear it was only one of many steps I am taking to comprehensively address the mortgage and foreclosure crisis," Attorney General Harris continued. "I want to thank Senate President pro Tem Steinberg, Assembly Speaker Pérez and all the other lawmakers who are supporting this urgent package of legislation for homeowners."

"I want to congratulate the Attorney General on the victory she won on behalf of the people of California," said Speaker John A. Pérez. "Our state has suffered greatly as the result of bad actors in the banking and financial industries, and this settlement holds them accountable as we continue the difficult work of recovering the housing market and stemming the tide of foreclosures, evictions and auctions."

"Millions of Californians have already lost their homes to foreclosure and the mortgage crisis is far from over," said Senate President pro Tem Darrell Steinberg. "This landmark settlement negotiated by Attorney General Harris helps thousands of Californians but thousands more need the same help. We need to put these protections into law so that more people can save their homes."


CALIFORNIA HOMEOWNER BILL OF RIGHTS LEGISLATIVE PACKAGE

If passed, the following bills would:

ASSEMBLY BILL 1602 / SENATE BILL 1470- THE FORECLOSURE REDUCTION ACT OF 2012

Authors: Assemblymen Mike Eng and Mike Feuer; Senators Mark Leno, Fran Pavley, and Senate President pro Tem Darrell Steinberg
-Require creditors to provide documentation to a borrower that establishes the creditor's right to foreclose on real property prior to recording a notice of default.
-Require creditors to provide documentary evidence of ownership, the chain of title to real property, and the right to foreclose, at the time of the filing of a notice of default.
-Prohibit creditors from recording a notice of default when a timely-filed application for a loan modification or other loss mitigation measure is pending.
-Prohibit creditors from recording a notice of sale when a timely-filed application for a loan modification or other loss mitigation measure is pending.
-Prohibit creditors from recording a notice of sale while a borrower is in compliance with the terms of a trial loan modification or after another loss mitigation measure has been approved.
-Require creditors to disclose why an application for a loan modification or other loss mitigation measure has been denied.
-Require that notices of foreclosure sales be personally served, including notices of foreclosure sale postponement.
-Provide homeowners with a private right of action in instances in which the requirements set forth in the legislation are not followed

ASSEMBLY BILL 2425 / SENATE BILL 1471 - DUE PROCESS REFORM LEGISLATION

Authors: Assemblywoman Holly Mitchell; Senators Mark DeSaulnier and Fran Pavley
-Require creditors to provide a single point of contact to borrowers in the foreclosure process who will be responsible for providing accurate account and other information related to the foreclosure process and loss mitigation efforts.
-Require creditors to provide a dedicated electronic mail address, facsimile number and mailing address for borrowers to submit information requested as part of a loan modification, short sale or other loss mitigation option.
-Authorize borrowers to challenge the unlawful commencement of a foreclosure process in court.
-Impose a $10,000 civil penalty on the recordation or filing of "robosigned" documents, defined as documents that contain information that was not verified for accuracy by the person or persons signing or swearing to the accuracy of the document or statement.
-Require that certain documents be recorded in a county recorder's office.

ASSEMBLY BILL 2314 / SENATE BILL 1472 - BLIGHT PREVENTION LEGISLATION

Authors: Assemblywoman Wilmer Carter; Senator Fran Pavley
-Prevent blight enforcement actions from being taken against new purchasers of blighted property for 60 days, provided that repairs are being made to the property.
-Require banks that release liens on foreclosed property to inform local code enforcement agencies of the release so that demolition of blighted property can proceed.
-Increase fines against owners of blighted property from $1,000 per day to $5,000 per day, and allow the imposition of the costs of a receivership over blighted property to be imposed directly against the owner of blighted property.

ASSEMBLY BILL 2610/ SENATE BILL 1473 - TENANT PROTECTION LEGISLATION

Authors: Assemblywoman Nancy Skinner; Senator Loni Hancock
-Require purchasers of foreclosed homes to honor the terms of existing leases and give tenants at least 90 days notice before commencing eviction proceedings.

ASSEMBLY BILL 1950 - ENHANCEMENT OF ATTORNEY GENERAL ENFORCEMENT

Author: Assemblyman Mike Davis
-Impose a new $25 fee to be paid by servicers upon the recording of a notice of default. The fee would be deposited into a real estate fraud prosecution trust fund that would support the Attorney General's efforts to deter, investigate and prosecute real estate fraud crimes, including the work of the Mortgage Fraud Strike Force.
-Extend the statute of limitations from one year to four years from the date of discovery for violations of law commonly occurring in connection with foreclosure-related scams, including acting as a real-estate agent without a license and charging up-front fees for loan modification services.

SENATE BILL 1474 / ASSEMBLY BILL 1763 - ATTORNEY GENERAL SPECIAL GRAND JURY

Authors: Assemblyman Mike Davis; Senator Loni Hancock
-Authorize the Attorney General to impanel a special grand jury for the purposes of investigating and indicting multi-jurisdictional financial crimes against the state.
# # #

You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://ag.ca.gov/newsalerts/release.php?id=2641

County may sue to recover lost filing fees 2-29-12

RICHMOND — Madison Fiscal Court decided Tuesday to be part of a potential class-action lawsuit against Mortgage Electronic Registration Systems (MERS).

MERS is billed by its website as a program that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked.

“Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans,” the website reads.

MERS was created as a way to bypass spending time and money required to record these documents with the respective county office, according to Madison County Clerk Kenny Barger.

He referred to MERS as “a shell.”

“It has no employees,” he said.

Because of MERS, Madison County has missed out on $598,533 in estimated recording fees and the state has lost approximately $32 million, Barger said.

The reason Kentucky is at the forefront of this potential class-action lawsuit is because of state law which requires these mortgages to be filed in a county recording office, he said.

“The big banks put this together,” said Madison County Judge/Executive Kent Clark. “There’s no president. There’s no vice president. It’s an electronic monitoring system they use, and it gets them away from filing fees on all these old mortgages and repossessions.”

MERS was created for two reasons, Barger said.

“Money and speed,” he said. “To be required to transfer something in this courthouse, it takes time. You have to mail it in, it has to be recorded and mailed back. They have people overseas with lots of cash saying, ‘Sell me these mortgages.’”

rest here
http://richmondregister.com/localnews/x2054918708/County-may-sue-to-recover-lost-filing-fees

California AG Requests "Good-Faith Pause" on GSE Foreclosures 2-28-12

Insistent that principal reductions are the best line of defense in loss mitigation, California Attorney General Kamala Harris is calling on Fannie Mae and Freddie Mac to halt foreclosures in her state while the Federal Housing Finance Agency (FHFA) considers whether principal reductions are an appropriate strategy for the GSEs.

In a recent letter to FHFA Acting Director Edward DeMarco, Harris requested a “good-faith pause on foreclosure sales in California” while the FHFA continues to investigate the pros and cons of principal reductions.

California has been particularly hard hit by the housing crisis. About a half million homes in California have been foreclosed, and another half million are either in foreclosure or on the brink of foreclosure, according to Harris.

While the recent national settlement secured $12 billion for principal reductions and short sales, this will not help the 60 percent of California homeowners whose mortgages are owned by Fannie Mae or Freddie Mac.

DeMarco has expressed hesitation toward principal reductions and consistently insisted that he does not have the power to demand the GSEs employ the strategy.

However, he did recently share FHFA’s analysis of the method, which did not determine that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure.” DeMarco maintained that forbearance ensures better returns for investors.

Harris urges DeMarco to pursue further analysis and in the meantime to suspend foreclosures in California so GSE borrowers “will have an opportunity to reduce the principal on their homes should your analysis find – as I believe it must – that principal reductions by those enterprises are in the best interest of homeowners and taxpayers,” according to her letter.

HUD Secretary Questioned on Number of Improper Foreclosures 2-28-12

During a Senate subcommittee hearing, HUD Secretary Shaun Donovan was prodded with questions on investigation results regarding how many and what percentage of people actually suffered from wrongful foreclosures.

As far as actual numbers, Donovan said there very few folks who actually lost their homes, but emphasized that what the organization did find were very significant and very pervasive errors that have real impacts on families.

Donovan explained that there is no precise way to measure exact harm and said that one piece of the investigation was improper foreclosures, and the organization was looking more broadly at servicing problems and found error rates as high as 60 percent in servicing FHA loans with certain institutions.

Donovan said there were many, many harms done, which were uncovered by the investigation that led to the $25 billion settlement between 49 states and five mortgage servicers.

“When HUD initiated a large-scale review of the FHA’s largest servicers in the summer of 2010, we found that families who should not have gotten into trouble – and who should have been able to get some help early on that was both good for them and good for the lender – didn’t get that help – help that in many cases banks were legally obligated to provide,” said Donovan in his written testimony.

Through the settlement, $1.5 billion was set aside for the Borrower Payment Fund, which offers relief for those who were foreclosed upon on or after January 1, 2008 or suffered from servicer misconduct. The payout for borrowers who suffered is expected to be about $2,000, but Donovan explained that it is not necessarily for those who actually got foreclosed on, which is why the payout is as low as it is.

“These $2,000 payments will be made to families who suffered from these kinds of errors– where borrowers were charged fees that they shouldn’t have been or had dropped calls or lost paperwork when they sought help with their mortgages,” said Donavan in the testimony.

For those who were actually wrongfully foreclosed on and lost their homes, compensation can be much greater.

“First, if a borrower can document that they were improperly foreclosed on, they can receive every cent of the compensation they are entitled to through a process established by federal banking regulators,” said Donovan in the testimony. “The agreement also preserves the right of homeowners to take their servicer to court. Indeed, if banks or other financial institutions broke the law or treated the families they served unfairly, they should pay the price – and with this settlement they wil

Yet Another Mortgage Scam: Homeowners Not Getting Cancelled Notes After Foreclosures, Hit by Later Claims 2-28-12

As we’ve discussed the “where’s the note?” problem of mortgage securitizations, some readers who are old enough to have sold a home more than once have said that while they’d gotten a cancelled mortgage note back on their first sale, on a more recent one, they hadn’t. They were concerned, and as this post will show, they are right to be.

By way of background, the popular press has done the public a disservice by talking about “mortgages”. A “mortgage” consists of two instruments: a promissory note, which is a IOU, and a lien against the property, which is referred to as a mortgage (in non-judicial foreclosure states, they are typically called a deed of trust and confer somewhat different rights, but we’ll put that aside for purposes of this discussion).

What appears to be happening on all too often in Florida is that when borrowers signed warranty deeds in lieu of foreclosure when they can no longer keep these homes, they often get only a satisfaction of mortgage, not a cancelled note. This is not what is supposed to happen. When a borrower deeds his property to the bank, the objective of the exercise is to cancel the debt. If the note has not been extinguished, it is referred to as a “zombie note”. As the Fort Myers News-Press reported last year:
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http://www.nakedcapitalism.com/2012/02/yet-another-mortgage-scam-homeowners-not-getting-cancelled-notes-after-foreclosures-hit-by-later-claims.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Lawsuit, new local movement fight foreclosure practices 2-28-12

A Madisonville couple that has spent the past decade fighting against predatory Big Bank lenders that tipped them into bankruptcy and foreclosure might see their case go before the U.S. Supreme Court.

Ten years ago, Demetrious Smith hoped to buy a building and work as a landlord after non-work-related injury ended his 13-year career with General Electric, but getting financed on the strength of his monthly $1,182 disability check seemed unlikely. Then a postcard arrived in his family’s mailbox from a company called National Mortgage Funding, which promised home financing for anyone.

Smith, now 57, arranged an appointment and swiftly got financed for a $109,000 mortgage through ABN AMRO Mortgage Group Inc., for the home he still lives in with his wife Amy, 53.

He was staggered to find out it was so easy. “On Social Security income?” he says. “I thought: This is a blessing.”

Over the next year the same broker persuaded him to buy three rental homes through other banks, with mortgages ranging from $80,000 to $128,000.

Demetrious was able to keep up with all of the payments for a few months, but in July 2003 he received a huge utility bill, lost a tenant and could no longer make his mortgage payments. The Smiths filed for bankrupt
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http://www.citybeat.com/cincinnati/article-25003-unoccupied.html

NBC12 Investigates: Mortgage Mix-up 2-28-12

PETERSBURG, VA (WWBT) - -

The great recession is hitting home for Claireather Mason. Her mortgage company may be trying to take it.

"This is the only home I've ever known. I've raised my children here," she said.

The long time Petersburg resident says her troubles with her lender started last June. She paid her mortgage. She even has a statement from her lender showing it received the payment and processed it, but then she got this letter in the mail: telling her "We have not received your payment." "You are in default."

RACHEL: "So you pay a payment in June? And then they send you a notice saying you didn't pay?"
MASON: "Right!"

"I also have my money order receipt. I have the receipt that was sent to me from your office and they still insist that my mortgage is not paid," Mason added.
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http://www.nbc12.com/story/17039474/nbc12-investigates-mortgage-mix-up



Occupiers foreclose on Wells Fargo’s CEO John Stumpf, auction off his home 2-26-12
The Occupy movement protested outside the San Francisco home of Wells Fargo CEO John Stumpf yesterday, in an attempt to stop bank foreclosures on people who can’t make their mortgage payments. The protesters held up oversize Stumpf cutouts, identifying him as a “Robber Banker.” Four burly men, presumably private security guards, stood in the doorway of the upscale apartment building where Stumpf lives, keeping the protesters out on the sidewalk.
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http://pjmedia.com/zombie/2012/02/26/occupiers-foreclose-on-wells-fargos-ceo-john-stumpf-auction-off-his-home/

Bank of America sued by Ireland-based Sealink Funding 2-23-12

New lawsuit, same script.

Charlotte-based Bank of America (NYSE: BAC) faces yet another lawsuit related to allegations that its mortgage unit misrepresented residential mortgage securities sold to investors. The latest complaint is a $949 million lawsuit.

The suit is brought by Sealink Funding Ltd., an Irish company that manages residential mortgage-backed securities, according to a report by Reuters. The complaint was filed in New York Supreme Court this week.
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http://www.bizjournals.com/dallas/news/2012/02/23/bank-of-america-sued-by-ireland-based.html

Saving The California Dream: Mortgage and Foreclosure Tool Box 2-21-12

Saving The California Dream: Mortgage and Foreclosure Tool Box: MyFoxLA.com

Massachusetts Home Seizures Threatened in Loan Case: Mortgages 2-21-12

Feb. 21 (Bloomberg) -- The highest court in Massachusetts is poised to rule as soon as this month on a foreclosure case that could lead to a surge in claims from home owners seeking to overturn seizures.

The justices are deciding whether to uphold a lower court ruling that gave a Boston home back to Henrietta Eaton after Sam Levine, a 25-year-old Harvard Law School student, argued in front of the nation's oldest appellate court that the loan servicer made mistakes when it foreclosed because it didn't hold the note proving she was obliged to pay the mortgage.

“If the Massachusetts court says this defense works, that would have a huge ripple effect across the country,” said Kurt Eggert, a professor at Chapman University School of Law in Orange, California.

A ruling in favor of Eaton would show how a $25 billion settlement reached this month with state and federal officials still leaves banks exposed to liabilities tied to home repossessions. It also underscores the challenge of resolving a foreclosure process that Federal Reserve Chairman Ben S. Bernanke said in a study last month is plaguing the housing recovery.

At issue in Eaton v. Federal National Mortgage Association, also known as Fannie Mae, are two documents borrowers sign to get a home loan. The first is the mortgage establishing the right to seize a property. The second is the promissory note that creates an obligation to pay the debt. While the servicer had the mortgage when it foreclosed, it didn't have the note. One without the other is known as a naked mortgage.
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http://news.businessweek.com/article.asp?documentKey=1376-LZKAUN0D9L3501-5TCTU8KVHPVUOQ034TMUOK0029

Citi whistle-blower to get $31 million 2-21-12

Four years after rotten mortgages helped trigger a global financial crisis, Sherry Hunt says, her Citigroup Inc. quality-control team in O'Fallon, Mo., was still finding flaws in new loans that included altered tax forms, straw buyers and borrowers who listed fictitious employers.

Instead of reporting the defects to the Federal Housing Administration, the bank saddled the agency with losses by falsely declaring the loans fit for its federal insurance program, according to a complaint filed last week by the U.S. Attorney's Office in Manhattan. Citigroup agreed to pay $158.3 million to settle the claims and admitted that it certified loans for FHA backing that didn't qualify.

Hunt, who filed a sealed lawsuit against New York-based Citigroup in August that the government joined, will collect $31 million of that sum — before taxes and attorney's fees — as a whistle-blower, she said in an interview. The settlement, which encompassed misconduct spanning 2004 to the present, indicates Citigroup has lingering problems in its O'Fallon CitiMortgage unit.

"Citigroup in particular received government funding, taxpayer dollars, because of its risky operations," said Peter Henning, a law professor at Wayne State University in Detroit. "It shows that they hadn't really learned much of a lesson from the financial crisis."

The inspector general for the U.S. Department of Housing and Urban Development faulted Citigroup's quality-control program during a 2008 audit, according to the complaint.

Taxpayers rescued the bank with a $45 billion bailout that same year and guaranteed more than $300 billion of its risky assets after the lender's stability was threatened by mounting costs on soured loans. The bank lost a total of $29.3 billion in 2008 and 2009.

Hunt's co-workers, instead of checking for fraud or making reports about underwriting defects to the FHA as required, argued with her over the soundness of the loans, she said.

Read more: http://www.stltoday.com/business/local/citi-whistle-blower-to-get-million/article_bdb89f68-e11d-52a5-96b8-a467a008e88e.html#ixzz1n2kl9dC3

The Foreclosure fraud iceberg 2-20-12

U.S. Housing Secretary Shaun Donovan is playing Julie the Cruise Director on the Titanic, telling everyone ‘Don’t worry, there’s no icebergs in these waters. Really, if you see any floating ice in front of us, it’s not the visible tenth of a catastrophe to come.’ Unfortunately ice is visible, it is an iceberg, and the leading edge of the submerged ice is already ripping into our democracy and our economy, leaving deep damage.

The happy talk to distract attention from the iceberg comes from two camps and has two synergistic messages.

Secretary Donovan is trying convince the American public that the what the Obama administration is doing is all that can be done to address our housing and foreclosure crisis. That’s farcically false. Other people are pushing the related message that fraud and forgery by foreclosing bankers isn’t important; the only thing that matters is whether homeowners are in default. Both groups want you to believe that the foreclosure fraud “settlement” is a good and just. Except the “settlement” isn’t. The “settlement” is just the latest in a long line of decisions not to enforce the law and further reinforces the idea that gold-collar criminals are above the law. (I put “settlement” in quotes because we’re now double digit days past the February 9 announcement, and still, there’s no deal submitted to a court for approval. And that means there’s no deal.)

So let’s take a good look at the foreclosure fraud iceberg.

The Visible Ice

Picture a ragged pyramid, with only the top tenth visible above the water. The most visible ice, the jagged peaks on top of the dry tenth, are individual foreclosure cases. Court cases generally involve public records and public processes, which makes the foreclosing bankers’ pervasive forgery and evidence manufacturing so sharply visible. Look and you’ll see endorsements suddenly, inexplicably, appear on the note that is the borrower’s promise to pay back the loan. Those magically appearing endorsements further two goals: facilitating foreclosure, and minimizing securities fraud liability. And by magically appearing, I’m being euphemistic: improperly adding an endorsement to a note to prove the right to foreclose is obstruction of justice.

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http://abigailcfield.com/?p=974

Ex-Bank President and Developer Both Charged With Mortgage Fraud 2-20-12

A former bank president and real estate developer were charged in a one count bill of information for conspiracy to commit mortgage bank fraud.

The case, which is being investigated by agents from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FBI, involves Reginald Harper, 58, former president and CEO of First Community Bank in Hammond, Louisiana, and Troy A. Fouquet, 43, developer based in Covington, Louisiana.

Both men were charged February 16 for their roles in a scheme involving the cover up of delinquent loans in place of “sham” loans.

“Rather than recognize losses on bad loans, Harper and Fouquet concocted a scheme to create and use sham loans to hide delinquent, non-performing loans,” said Christy

Romero, deputy special inspector general for SIGTARP. “Instead of living up to his fiduciary duties as president and CEO of the bank, Harper concealed the true status of the loans from the bank, regulators, and the U.S. Department of Treasury in the bank’s TARP application.”

In about 2004, Harper loaned Fouquet more than $2 million to purchase parcels of land, develop them into subdivisions, and then build homes on them to be bought by home buyers, according to court documents.

In 2005, it became difficult for Harper and Fouquet to find qualified buyers. To avoid reporting delinquency on loans made by Harper, the two developed various cover-up methods instead, according to the bill of information.

According to the bill of information, one scheme involved Harper making it appear to mortgage lenders that the prospective home buyers had more money than they did and another involved the use of “nominee” loans or “straw” borrowers to take out loans from First Community Bank, according to court documents. Nominee loans and straw buyers refers to a form of fraud involving the concealing of a borrower’s identity in place of a nominee’s name and credit history to take out a loan. Harper also accepted insufficient checks from Fouquet, crediting the loan payment in First Community Banks’s books and records, according to a release.

If Harper and Fouquet are convicted, the maximum penalty they face is up to five years in prison, a $250,000 fine, and a $100 special assessment, according to a release.

New York, Delaware Pursue Mortgage Securitization Investigation 2-20-12

Reluctant attorneys general for New York and Delaware both signed on to the multi-state $25 billion settlement last week with the nation’s largest servicers, securing $740 million and $45 million for their states, respectively. These amounts are divided into homeowner assistance and cash payments to the states.

The two attorneys general were lured back to the settlement in its final days when they were assured the settlement would not impede further investigation into additional civil and criminal claims at the five mortgage servicers – Bank of America, Citi, JPMorgan Chase, Wells Fargo, and GMAC.

“On multiple fronts, we will continue to investigate the mortgage crisis, and ensure that justice and accountability prevail,” Schneiderman said.

He and Biden are actively pursuing a joint investigation – initiated prior to the settlement agreement – into the packaging of mortgage backed securities.

“The settlement is not perfect,” Biden stated in a press release, “But I signed on to its terms because we can continue our investigations while providing some real relief to Delawareans and important new protections to the men and women who serve in our nation’s armed forces,” Biden said.

Biden will also continue his efforts to challenge an $8.5 billion settlement proposal between Bank of American and Bank of New York Mellon regarding mortgage securitizations and his lawsuit against MERS, a system, which through its “deceptive trade practices” has “left our time-tested public land recording system in shambles,” Biden said at a press conference.

“We cannot allow the housing crisis to go down in history as a manmade disaster for which no person or entity was held accountable,” Biden said.

Pelosi, Speier Request Justice Department Examination into Possible Violations of Federal Law in San Francisco Foreclosures 2-20-12

Washington, D.C. – February 20, 2012 – (RealEstateRama) — Democratic Leader Nancy Pelosi and Congresswoman Jackie Speier sent a letter today to Attorney General Eric Holder requesting he direct the Justice Department’s Financial Fraud Enforcement Task Force to examine whether any violations of Federal law occurred in the processing of foreclosures in San Francisco.

The County of San Francisco’s Office of the Assessor-Recorder recently commissioned a report assessing compliance with applicable foreclosure laws by certain entities in the mortgage industry operating in San Francisco.

Below is the full text of the letter.
February 17, 2012

The Honorable Eric H. Holder, Jr.
Attorney General
Robert F. Kennedy Department of Justice Building
950 Pennsylvania Ave., NW
Washington, DC 20530

Dear Attorney General Holder:

We are writing to request that you direct the Justice Department’s Financial Fraud Enforcement Task Force to examine whether any violations of Federal law occurred in the processing of foreclosures in San Francisco.

The County of San Francisco’s Office of the Assessor-Recorder recently commissioned a report, which is enclosed, assessing compliance with applicable foreclosure laws by certain entities in the mortgage industry operating in San Francisco. The report, based on a review of a random sample of mortgage loans that entered into foreclosure between January 2009 and October 2011, found that 99 percent of the San Francisco mortgages reviewed showed irregularities in the foreclosure process, and 84 percent showed potential violations of California non-judicial foreclosure laws. In addition, foreclosures involving mortgages that were part of the Mortgage Electronic Registration System (MERS), which are more likely to have been securitized, showed a high rate of conflicting information regarding the actual beneficiary, which raises questions about whether homeowners were denied their due process rights. We find these findings very troubling.
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http://california.realestaterama.com/2012/02/20/pelosi-speier-request-justice-department-examination-into-possible-violations-of-federal-law-in-san-francisco-foreclosures-ID01733.html

San Francisco's Foreclosure Audit Turns Up Irregularities, Illegal Activity 2-18-12

An audit of San Francisco foreclosures conducted by county officials revealed documentation errors were evident in nearly all of the cases examined.

Auditors reviewed 382 case files that resulted in a foreclosure sale between January 2009 and October 2011. They identified one or more irregularities in 99 percent of the loans and one or more clear violations of state law in 84 percent.

San Francisco’s Office of the Assessor‐Recorder says its analysis “presents an accurate picture of the nature and frequency of the mortgage industry’s performance respecting compliance with important aspects of California’s nonjudicial foreclosure laws” and by releasing the results, it hopes to open a dialogue on the importance of ensuring compliance so that corrective action can be taken.

The county recorder says this means working productively with the mortgage industry to improve compliance and effecting legislative change so that the laws more accurately reflect the current state of California’s mortgage market.

California’s foreclosure laws generally are concerned with imposing procedural obligations on foreclosing parties and providing due process rights to homeowners in order to ensure that the streamlined non judicial foreclosure process is not abused, the country recorder explained in the report.

“It is worth noting that the process was created long before things such as the secondary market and mortgage brokers existed. When the laws were first enacted, lenders ‘originated to hold’ loans for their portfolio and rarely sold mortgage loans,” the report points out.

The securitization-spurred boom in originations prior to the downturn ultimately made it infeasible to carry out large‐scale foreclosures once the market turned, according to the country recorder.

San Francisco officials contend that given the well documented and widespread origination and servicing issues related to mortgage transfers in securitization, as well as the foreclosure documentation errors uncovered with the robo-signing debacle of 2010, “it is not implausible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans.”

They maintain that just because these homeowners entered into a contractual lending-borrowing agreement, that should not be enough to rob them of their due process right.

The county officials, however, are quick to follow those claims with a reproof for blaming mortgage lenders and the mortgage industry as a whole.

“We are not asserting that every distressed borrower is a victim and that the mortgage industry is collectively guilty of defrauding homeowners,” the report said. “Certainly many borrowers knowingly and recklessly overextended themselves. The U.S. housing market’s … future stabilization depends heavily upon the responsible actions of many of the industry’s leading participants.”

The San Francisco County recorder’s report was published within a week of the announcement that 49 state attorneys general and the federal government finally agreed to a settlement with the country’s five largest mortgage servicers over allegations of robo-signing.

“If nothing else, this report provides a fuller context for understanding the general nature and extent of the problems precipitating California’s participation in the settlement,” county officials said.

Attorney General Kamala D. Harris Secures $18 Billion California Commitment for Struggling Homeowners 2-9-12

LOS ANGELES - Attorney General Kamala D. Harris today announced an historic commitment to California of up to $18 billion that will benefit hundreds of thousands of homeowners in the state hardest hit by the mortgage crisis.

"California families will finally see substantial relief after experiencing so much pain from the mortgage crisis," said Attorney General Harris. "Hundreds of thousands of homeowners will directly benefit from this California commitment."

"This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here. We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending," continued Harris.

California secured the $18 billion agreement as part of a national multistate settlement to penalize robo-signing and other bank servicing and foreclosure misconduct. The agreement comes after California departed from the multistate negotiations last September when the estimated relief to California was $4 billion. Attorney General Harris insisted on more relief for the most distressed homeowners, meaningful enforcement, and the ability of California and other states to pursue investigations into misconduct.

California's participation in the settlement also increased the amount of relief other states will receive by approximately $6 billion.

Attorney General Harris also obtained separate, enforceable guarantees to ensure that banks will be accountable for their commitments to California. As part of the separate California guarantee, banks must enact a minimum of $12 billion in principal reductions for California homeowners. Failure to achieve this minimum level of reductions will result in substantial cash payments of up to $800 million that the banks will have to pay to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers the Attorney General to summon the banks to California state court.

California's separate guarantee also creates important incentives to ensure that banks will reduce the principal mortgage balance of underwater homeowners in California's hardest-hit counties and that the principal reductions in these communities will occur within the first year of the settlement.

To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its Mortgage Fraud Strike Force, adding to the more than 42 members already working on the team. The state will continue its investigative alliance with Nevada, that allows the sharing of resources, information and strategies, and will look to collaborate with additional states focused on a law enforcement response to the wave of mortgage fraud.

The national multistate agreement and California commitment will provide substantial relief for thousands of Californians whose mortgages are owned by the five banks in the settlement, but thousands more will still need help as they struggle to stay in their homes.

"I will continue to fight for principal reductions for the approximately 60 percent of California homeowners whose loans are owned by Fannie Mae and Freddie Mac," Attorney General Harris added.

Attorney General Harris will propose a comprehensive legislative agenda to protect homeowners in the mortgage market. This legislation will build on the three-year reforms agreed to as part of the California commitment, including a single point of contact for mortgage-holders and an end to the unfair and confusing system of dual-track foreclosures.

"This is an historic amount of relief for California homeowners, but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify, reform and upgrade our broken mortgage system," Harris added.

The financial benefits of this historic agreement extend to homeowners whose loans are owned or serviced by one of the five largest mortgage lenders. Benefits include:
- More than $12 billion is guaranteed to reduce the principal on loans or offer short sales to approximately 250,000 California homeowners who are underwater on their loans and behind or almost behind in their payments.
- $849 million is estimated to be dedicated to refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans.
- $279 million will be dedicated to offering restitution to approximately 140,000 California homeowners who were foreclosed upon between 2008 and December 31, 2011.
- $1.1 billion is estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance as well as to communities to repair the blight and devastation left by waves of foreclosures, targeted at 16,000 recent foreclosures.
- $3.5 billion will be dedicated to relieving 32,000 homeowners of unpaid balances remaining when their homes are foreclosed.
- $430 million in costs, fees and penalty payments.

County-specific payments are based on the number of homeowners and the depth of the foreclosure crisis. It is estimated that homeowners in the following counties will accrue the following level of benefits over the three-year life of the commitment.
- Los Angeles: $3.92 billion
- Riverside: $1.59 billion
- San Bernardino: $1.13 billion
- Sacramento: $820 million
- Stanislaus County: $368 million

Additional details on the settlement, including how homeowners can apply for relief, can be found at www.oag.ca.gov.

$26B Mortgage Settlement: Good for Banks, Not So Good for Homeowners 2-9-12

After months of wrangling, the long-awaited foreclosure settlement between the government and the banks appears to be at hand.

A $26 billion settlement was announced Thursday morning between the federal government, state attorneys general and the five biggest banks in the mortgage market: Ally Financial (the old GMAC), Bank of America, Wells Fargo, JP Morgan and Citigroup. (Editor's note: An earlier version incorrectly identified Ally Financial as being the old GE Capital.)

The settlement is being hailed as the biggest multi-state settlement since the 1998 tobacco agreement. But as Henry and I note in the accompanying video, the settlement is too small to really help the housing market, or even do much for individual victims of fraud and abuse. The deal may, in fact, hurt housing by sending a message to people who've stayed current on their mortgages that irresponsible behavior is what gets rewarded in America. That, presumably, is not the intention of policymakers but the "moral hazard" fallout from the settlement. More Americans may "walk away" from uneconomic loans, which will put additional pressure on local housing markets.

Furthermore, several experts note that for all the rhetoric about punishing corporate crimes and helping victims of abuse, the banks have once again gotten away with a slap on the wrist and may end up benefiting most of all from the settlement.

According to The Wall Street Journal, the settlement will be broken down as follows:
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http://finance.yahoo.com/blogs/daily-ticker/26b-mortgage-settlement-good-banks-not-good-homeowners-154031911.html

Is Freddie Mac Betting Against Homeowners? 1-30-12

Is Freddie Mac trying to help homeowners-or hurt them?

A recent investigation into trades made by the taxpayer-owned mortgage giant shows that while Freddie with one hand is helping consumers get mortgages, it is, with its other, making those mortgages harder to refinance. Result: Homeowners trying to refinance their way out of high-interest mortgages say they feel trapped in "financial jail."

The investigation-a joint effort between National Public Radio and ProPublica, an independent, non-profit investigative news service-looked at multibillion-dollar investments made late in 2010 by Freddie. These investments pay off only if homeowners remain locked in high-interest mortgages.

Not only do the investments appear to be at odds with Freddie's public mandate, they increase the size of Freddie's investment portfolio at a time when the Freddie, under the terms of a 2008 bailout agreement, is supposed to be reducing it. Both Freddie Mac and Fannie Mae were bailed out by U.S. taxpayers in 2008 and are now owned by the public.

The NPR-ProPublica report finds, too, that Freddie's new investments have increased the volatility of its portfolio.

Securities owned by Freddie fall into two categories. In one are those backed mainly by principal. These pay a low return but are considered low-risk. The second category holds securities backed by mortgage interest payments only. These pay a higher rate but are considered riskier, since, if homeowner defaults, Freddie as the insurer must pay the entire value of the mortgage. Known as inverse floaters, these investments are harder for Freddie to offload onto investors.
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http://news.yahoo.com/freddie-mac-betting-against-homeowners-175445595--abc-news.html

IndyMac Exec’s Blame FDIC for Losing Documents, FDIC Still Suing 1-29-12

Former midlevel IndyMac executives Kenneth Shellem and Richard Koon are accused of negligence by the FDIC for signing off on commercial loans to home builders that had little chance of being repaid, the Wall Street Journal reports.

But now, the defendants are saying that the FDIC failed to collect and preserve documents and emails after taking receivership of IndyMac following the bank’s 2008 collapse, leaving the pair handicapped in mounting their defense. Lawyers for the IndyMac executives say the FDIC is required by law to retain all the records of a failed bank it takes over for six years. Based on the government’s failure to preserve relevant evidence, the lawyers are seeking dismissal of the counts in the lawsuit.

But, in recent court filings, the FDIC has called the IndyMac legal maneuvering ”meritless” and maintain that there is “absolutely no evidence” that it failed to preserve or destroyed any documents or emails relevant to the suit. They claim that the bank’s new owners are responsible for any records it didn’t hand over. So, if the IndyMac’s defense has any weight, than it seems like the FDIC is still prosecuting former bankers while being responsible for the fact said bankers can’t defend themselves. That is a scary notion where that is heading.

California’s Harris Seeks Tougher Terms in Refusal to Sign Mortgage Accord 1-29-12

California Attorney General Kamala Harris’s holdout position in a proposed agreement with banks over foreclosure practices may reap financial and political rewards at the cost of prolonging some constituents’ suffering.

Her strategy has created an obstacle in the negotiations between state attorneys general and the five largest U.S. mortgage servicers over a nationwide probe. By Harris’s own reckoning, her reluctance to sign onto a deal and any investigation she might pursue risk deepening the “blight and despair” for many of the 2.2 million California homeowners whom she has said are “holding on by their fingernails.”

Still, she is pushing a broader probe of banks’ mortgage practices, including securitization of the loans.
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http://www.bloomberg.com/news/2012-01-30/california-s-harris-seeks-to-improve-mortgage-deal-with-holdout.html

SEC Probes Deutsche Bank CDO Deal With Paulson, Spiegel Says 1-29-12

The U.S. Securities and Exchange Commission is investigating a collateralized debt obligation transaction in which Deutsche Bank AG (DBK) allowed U.S. hedge fund Paulson & Co. to select mortgage-backed securities, Der Spiegel reported.

For a CDO called “START,” the bank allowed Paulson to bet against the securities without telling other investors, the German magazine said on its website. Goldman Sachs settled a suit by the SEC for $500 million over a similar transaction, according to Der Spiegel.

Like other lenders, Deutsche Bank is faced with lawsuits brought forward by retail and institutional clients who have lost money in the financial crisis, Deutsche Bank spokesman Frank Hartman said when contacted by Bloomberg News. The lender look into the claims carefully and, if they prove wrong, will defend itself vigorously, he said.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

Who benefits from possible $25B mortgage settlement? 1-29-12

After nearly a year of negotiations, federal and state officials and major mortgage servicers are moving closer to amultibillion-dollar settlement over alleged foreclosure and mortgage loan-servicing abuses.
A deal could be finalized by early February, some officials say, although that's not a certainty. And its terms could change.
Based on interviews with officials on both sides of the negotiations, USA TODAY reporter Julie Schmit explains what a potential settlement might include and what it's likely to mean for borrowers and the housing market.

Q: What could a deal be worth?

A: It's expected to range from $17 billion to more than $30 billion, but that will depend on how many state attorneys general sign on to it and how many servicers are part of it.

The five biggest servicers, Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial, are in. Smaller ones are expected to join later.

California, the state with the most foreclosures, said last week that the proposed deal isn't good enough. If California eventually supports a deal covering the five biggest servicers, a settlement is likely to hit $25 billion.

Q: How might $25 billion be spent?

A: Terms could change, but the pot is likely to include:

•$17 billion for loan modifications. About 60% would go to reduce what people owe on their home loans. Other funds would be used to assist short sales, in which lenders agree to let borrowers sell homes for less than they owe, and to give unemployed borrowers a reprieve from making mortgage payments.

•$3 billion to help homeowners refinance at about a 5.25% rate.

•$5 billion in cash. About $1.35 billion would be distributed by states to eligible borrowers who were victims of loan-servicing abuses by one of the five servicers and lost their homes in foreclosure in 2008 through 2011. The rest would fund state and federal housing initiatives.

Q: Will I have to prove I was hurt by a servicer's misconduct?

A: Probably not. The five servicers will provide a list of people who lost homes in 2008-11, and they'll be contacted. Borrowers will likely have to attest to having suffered a loan-servicing abuse.

Q: If I take this payment, could I still sue if I felt I was wronged?

A: Yes, either as an individual or as part of a class action. It's also possible you could get restitution from a national review of foreclosures underway among 14 large servicers, including these five. That review is being overseen by federal banking regulators.

Specific amounts of compensation have not been announced. Find more information at this website: www.independentforeclosurereview.com.

Q: Who will get principal reductions?

A: Borrowers would have to be at least 60 days late on their mortgages as of a date that's yet to be determined. They would also have to be underwater, meaning they owe more on their home than it's worth.

And their state and servicer would have to be participants in the settlement.

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http://www.usatoday.com/money/economy/housing/story/2012-01-29/mortgage-settlement-questions/52873178/1

What a Strong Servicer Settlement Looks Like 1-28-12

By Abigail Caplovitz Field | January 28, 2012

Many–including me–have attacked the idea of a multistate and federal settlement with the biggest bailed out banks (wearing their mortgage servicing hats) on the grounds that it’s wrong to settle something that hasn’t been thoroughly investigated. We’ve also objected by pointing out the numbers on the table are too small by at least a zero to make much of a difference to homeowners or the housing market as a whole. We’ve raised more specific objections too, like the scope of the liability release and concerns about enforcement since the banks have exactly zero credibility on deals they’ve previously inked on these issues.

But community groups and others have countered hey: homeowners need help now, and desperately, don’t make the perfect the enemy of the good. So here’s a guide to what “the good” would look like, at least from where I sit. (And here’s a hint; it looks nothing like what we’ve been told is on the table.)

1) Enforcement. Now, there’s been rumors about an independent court appointed monitor to do enforcement. That sounds fine as far as it goes, but here’s what real enforceability means:

a) The monitor must have the ability to access and review servicer databases and other records at will. Servicers can’t be allowed to manage the info flow to the monitor.

b) If the monitor finds problems, s/he must be able to impose immediate penalties of a variety of strengths without going through a process that enables the servicers to appeal and object and delay. Think of the monitor as a probation officer.

c) The monitor should have a process for homeowners to file complaints, and a certain threshold of substantiated complaints should trigger enforcement action.

d) The monitor must be truly independent with the skills, experience, staffing and other resources to do the job right.

e) The monitor’s job and powers must continue into perpetuity unless the agreement is superceded by statute or regulation. This is important because homeowners are not servicers’ customers. The economic interests of the servicer do not align with homeowners, and after a deal’s expiration there’s zero reason to expect compliance to continue.

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http://abigailcfield.com/?p=859

Citigroup sued for fraud over $1 billion of CDOs 1-24-12

NEW YORK (Reuters) - Citigroup Inc (NYSE:C - News) was sued for fraud by Loreley Financing over nearly $1 billion worth of collateralized debt obligations purchased in 2006 and 2007.

Citigroup is accused of defrauding Loreley into purchasing "fraudulent investments that are now worthless," Loreley said in a complaint filed Tuesday in New York State Supreme Court in Manhattan.

Citi used the CDOs to offload the risks of toxic mortgage-backed securities on its books and to help preferred clients "short" the housing market, the lawsuit claims.

Danielle Romero-Apsilos, a spokeswoman for Citigroup, said in an email, "We believe the suit is without merit."

Loreley Financing is a group of special-purpose entities formed to invest in CD0s. The entities are organized under the laws of Jersey in the Channel Islands.

The entities, whose claims include fraud and unjust enrichment, are seeking at least $965 million paid for the notes and buybacks.

The case is Loreley Financing v. Citigroup Global Markets, 650212/2012, New York State Supreme Court.

Mortgage deal between banks, states on hold 1-24-12

There was a deal, and then there wasn't.

Reports started circulating last week that a draft settlement had been reached among the Obama administration, 50 states and the nation's five biggest banks, including San Francisco's Wells Fargo, to settle allegations of fraudulent foreclosure and other mortgage practices.

At one point on Monday, the Associated Press reported that President Obama would be referring to the settlement in his State of the Union address this evening. Then Delaware Attorney General Joseph "Beau" Biden (son of the vice president), announced he would not sign the agreement, and Iowa Attorney General Tom Miller, the states' point man in the negotiations, said no deal would be reached this week.

So, is it back to square one, in a process that has lasted more than a year and could impact millions of homeowners in California? Possibly not. Some progress appears to have been made since California Attorney General Kamala Harris and others walked away from a proposed settlement in September.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/01/23/BU8F1MSCMT.DTL#ixzz1kQllgEPC

Harris County Commissioners To Sue Mortgage Clearing House Over Filing Fees 1-24-12

The Harris County Commissioners Court is joining other Texas counties in suing a Virginia-based mortgage clearing house for unpaid mortgage filing fees.


The Commissioners Court has hired a Dallas law firm that is currently representing Dallas County in a similar claim against Mortgage Electronic Registration Systems. County Judge Ed Emmett isn't sure how just how much money is involved in unpaid mortgage filing fees, even after a preliminary analysis of the County Clerk's records.

"Nobody knows, I mean, they say anywhere from 10 to a 100 million, and it's a nationwide thing. You know, MERS was created by a lot of companies, and it will be a long drawn-out struggle."

Special Assistant County Attorney John Odam says MERS failed to file appropriate records with the County Clerk.

"MERS is a clearing house — a large number of banks, lending institutions, are members of MERS. And they're kind of a, quote, 'middle man,' if you will — a clearing house on the reassignments of the mortgage on someone's home."

Odam says Harris County is unhappy about two things:

"The original lending institution should have, along with MERS, filed when there have been transfers made by a lending institution to someone else, and consequently paid a filing fee that was not paid, and also to do the filing. And the second part of it, the public does not have an accurate knowledge on who truly holds the mortgage."

Mortgage Electronic Registration Systems didn't reply to our inquiry by deadline.

Tom Miller Says No Mortgage Deal Imminent 1-23-12

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.

Lender Processing Services Robo-signer Whisleblower Found Dead in Nevada 1-23-12

A notary public who signed tens of thousands of false documents in a massive foreclosure scam before blowing the whistle on the scandal has been found dead in her Las Vegas home.

NBC station KSNV of Las Vegas reported that the woman, Tracy Lawrence, 43, was scheduled to be sentenced Monday morning after she pleaded guilty this month to notarizing the signature of an individual not in her presence. She failed to show up for her hearing, and police found her body at her home later in the day.

It could not immediately be determined whether Lawrence, who faced up to one year in jail and a fine of up to $2,000, died of suicide or of natural causes, KSNV reported. Detectives said they had ruled out homicide.

Lawrence came forward earlier this month and blew the whistle on the operation, in which title officers Gary Trafford, 49, of Irvine, Calif., and Geraldine Sheppard, 62, of Santa Ana, Calif. — who worked for a Florida processing company used by most major banks to process repossessions — allegedly forged signatures on tens of thousands of default notices from 2005 to 2008.

Trafford and Sheppard were charged two weeks ago with 606 counts of offering false instruments for recording, false certification on certain instruments and notarization of the signature of a person not in the presence of a notary public.

Big Banks and AGs Reportedly Reach $25 Billion Settlement to Revamp Mortgage Practices 1-23-12

.
Five major U.S. banks, Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial, have reportedly reached a $25 billion settlement with U.S. state attorneys general nationwide to revamp their mortgage lending guidelines and make it easier for those at risk of foreclosure to restructure their loans. A draft of the settlement between the banks and the AGs has been sent for review.

The settlement would apply to privately-held mortgages issued between 2008-2011, not those held by the government-sponsored enterprises (GSEs), Fannie Mae or Freddie Mac. As part of the deal, nearly 750,000 U.S. homeowners could get the principal amount of their mortgages written down by an average of $20,000. Democratic AGs have already met to discuss the deal Shaun Donovan, Secretary with the U.S. Department of Housing & Urban Development (HUD).

Under the terms of the proposed deal:

?$17 billion would be used toward reducing the principal that struggling homeowners owe on their mortgages.

?Approximately $5 billion would be placed in a reserve account for various state and federal programs; a portion of that money would cover checks in the amount of $1,800 each that would be sent to nearly 750,000 homeowners affected by deceptive foreclosure practices.

?Approximately $3 billion would be dedicated toward the refinance of homes nationwide at 5.25 percent.

The proposal could be adopted within weeks.

Banks and Justice Officials: How Connected? 1-23-12

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows. The firm, Covington & Burling, is one of Washington's biggest white shoe law firms, and law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

Both the Justice Department and Covington declined to say if either official had personally worked on matters for the big mortgage industry clients. Justice Department spokeswoman Tracy Schmaler said Holder and Breuer had complied fully with conflict of interest regulations, but she declined to say if they had recused themselves from any matters related to the former clients.

Reuters reported in December that under Holder and Breuer, the Justice Department hasn't brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases. The evidence, including records from federal and state courts and local clerks' offices around the country, shows widespread forgery, perjury, obstruction of justice, and illegal foreclosures on the homes of thousands of active-duty military personnel.

In recent weeks the Justice Department has come under renewed pressure from members of Congress, state and local officials and homeowners' lawyers to open a wide-ranging criminal investigation of mortgage servicers, the biggest of which have been Covington clients. So far Justice officials haven't responded publicly to any of the requests. While Holder and Breuer were partners at Covington, the firm's clients included the four largest U.S. banks – Bank of America, Citigroup, JP Morgan Chase and Wells Fargo & Co. – as well as at least one other bank that is among the 10 largest mortgage servicers.
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http://www.thefiscaltimes.com/Articles/2012/01/23/Banks-and-Justice-Officials-How-Connected.aspx#page1

Foreclosure Settlement's Value Hinges on California's Participation 1-19-12

As the national settlement talks to resolve mortgage companies' wrongful foreclosures inch towards a conclusion, the size of the deal hinges on California.

Starting Wednesday and continuing throughout the remainder of the week, negotiators representing 50 states attorneys generals and the Obama administration are distributing to all parties documents outlining two possible deals: one based on California's participation and a second, smaller one, based on California's absence, said sources familiar with the discussions. The documents provide a hard number for each state's share of the settlement and also an estimate of the potential benefits to homeowners under both scenarios. California, which has the nation's highest foreclosure rate, is one of a handful of states that have threatened to leave the deal over concerns that the settlement is too soft on banks.

That California's participation could sweeten the terms of the deal reflects the important role that this state plays in any settlement. As part of the settlement, participating states will agree not to pursue various claims against the lenders in the future. California, which is not only a large state but has been ground zero for many of the wrongful foreclosures, represents significant future liability for banks. Thus, the lenders are more inclined to offer a greater sum to ensure that California will not pursue claims against them down the road.
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http://www.huffingtonpost.com/2012/01/18/foreclosure-settlement-talks_n_1214782.html

HUD, DOJ to Meet With States for Support on Foreclosure Deal 1-18-12

U.S. Housing and Urban Development Secretary Shaun Donovan and a Justice Department official are set to meet with state attorneys general next week to rally support for a proposed settlement with banks over foreclosure practices, said the Iowa Attorney General’s Office.

Materials about the proposed deal are being sent to all states, and Democratic attorneys general have been invited to meet on Jan. 23 with Miller, Donovan and Associate Attorney General Thomas Perrelli, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller.

State and federal officials have been negotiating a settlement with the five largest mortgage servicers, including Bank of America Corp. and JPMorgan Chase & Co., which would set requirements for conducting foreclosures and provide mortgage relief to homeowners. Miller, a Democrat, has been leading negotiations for the states.

The attorneys general from all 50 states announced in 2010 they were investigating bank foreclosure practices after disclosures that the companies were using faulty documents in seizing homes.

At the Jan. 23 meeting in Chicago, the federal and state officials will answer questions and discuss details of the potential deal in an effort to win support, Greenwood said. Republican attorneys general will separately discuss the proposed settlement by phone the same day with their Republican counterparts on the negotiating committee in addition to Donovan and Perrelli, Greenwood said.
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http://www.bloomberg.com/news/2012-01-18/hud-doj-to-meet-with-states-for-support-on-foreclosure-deal.html

SEC charges BankAtlantic, CEO with fraud 1-18-12

(Reuters) - BankAtlantic Bancorp Inc, a large Florida bank that once sued an industry analyst for defamation, and its chief executive were charged by a U.S. regulator with defrauding investors as problems mounted in a commercial real estate portfolio tied to residential housing.

Wednesday's civil lawsuit by the U.S. Securities and Exchange Commission prompted a combative response by Alan Levan, BankAtlantic's chairman and chief executive, who said that when the case is over, "the SEC's credibility as a neutral enforcer of securities laws will be tarnished."

The case arose from BankAtlantic loans made on large tracts of land intended for the development of single-family homes and condominiums. Florida is among the U.S. states hardest hit by the nation's housing crisis.

According to the regulator, BankAtlantic and Levan knew many loans were in "serious jeopardy" by March 2007, but minimized the risks in public filings and earnings conference calls, and waited until October to reveal the depth of the problem. That disclosure prompted a 38 percent one-day decline in BankAtlantic's share price.

The SEC said BankAtlantic and Levan then failed to properly account for problem loans it tried to sell as being "held for sale," as part of a scheme to understate the bank's 2007 loss by more than 10 percent.
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http://www.reuters.com/article/2012/01/18/us-bankatlantic-sec-idUSTRE80H2B620120118

One million homeowners may get mortgage writedowns: U.S. 1-18-12

(Reuters) - About one million American homeowners would get writedowns in the size of their mortgages under a proposed deal with banks over shady foreclosure practices, U.S. Housing and Urban Development Secretary Shaun Donovan said on Wednesday.

The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.

"We're very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help," Donovan said at a U.S. Conference of Mayors meeting in Washington.

Talks between federal officials, state attorneys general and major banks to resolve allegations of "robo-signing" and other misconduct in foreclosures have dragged into their second year.

Donovan's announcement came the same day that two big regional U.S. banks disclosed they had set aside funds related to mortgage servicing matters, a sign that lenders beyond the five largest mortgage servicers may join the expected settlement.

In exchange for between $20 billion to $25 billion in relief to distressed homeowners, the banks - Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and Ally Financial Inc - will put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing the loans.

Using Donovan's estimate, the settlement could provide roughly a $20,000 reduction each for the one million borrowers.
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http://www.reuters.com/article/2012/01/18/us-usa-housing-donovan-idUSTRE80H1LI20120118

Foreclosure Nightmares: 3 Families Fight for Their Homes 1-18-12

With more than 200,000 households receiving foreclosure notices each month, there are bound to be a few mistakes. But for some unlucky homeowners, these blunders carry some serious consequences.

Maria and Joseph Perez were threatened with foreclosure and abandoned their home after a routine refinancing of their mortgage turned into a four-year (and counting) battle.

The couple had initially purchased their Seguin, Texas home in 2007 with a mortgage that was backed by Bank of America and serviced by a firm called Taylor, Bean & Whitaker. In August 2009, the couple refinanced the loan through Quicken in order to get a better rate.

So Jose was puzzled when, a month after refinancing, he received a notice from Bank of America that said he was behind on his payments on the old loan.

It turned out that Taylor, Bean & Whitaker, the mortgage servicer, had ceased operations the same month they had refinanced. And Bank of America hadn't received the funds from the new loan to pay off the old one, said attorney Barry Brown, who is representing the couple.

Since there is pending litigation, Bank of America wouldn't comment on this specific case. But company spokesman Richard Simon said that when Taylor, Bean & Whitaker went bankrupt, the state government froze its deposits, including monthly payments that customers had made to the servicer and recently processed payoffs on refinanced loans.

Adding an even odder twist was that Quicken had sold the servicing rights to the new loan to Bank of America. So while the couple was sending Bank of America payments on the new loan each month, Bank of America was sending them notices demanding payments for the old loan.
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http://finance.yahoo.com/news/foreclosure-nightmares--3-families-fight-for-their-homes.html

Shelby Township family fights foreclosure, beats bank in court 1-18-12

Ruling could stop foreclosures on others
UTICA, Mich. - A landmark ruling by the Michigan Court of Appeals could stop some foreclosures by banks, even if they are late in the process including eviction.
The Kim family, of Shelby Township, sued Chase Bank after the bank took over their mortgage that was with Washington Mutual.
The Kims purchased the home in 2006 and refinanced with "WaMu" in 2007.
WaMu, Countrywide and other lenders went under during the mortgage crisis. Chase and other banks assumed those loans, including the Kims', in 2008.
According to Chris Christenson, the attorney for the Kim family, Chase did not record its interest with the Register of Deeds.
Chase foreclosed on the house, got it from the sheriff's sale in 2009 for $218,000 and now wants to go after
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http://www.clickondetroit.com/news/Shelby-Township-family-fights-foreclosure-beats-bank-in-court/-/1719418/8269776/-/u35rhk/-/

House GOP chair got discounted loan 1-18-12

WASHINGTON (AP) — The House Republican campaign chairman, Rep. Pete Sessions of Texas, has been notified that he received a discounted mortgage from the former Countrywide Financial Corp.

Sessions' spokeswoman, Torrie Miller, confirmed that the congressman was told that records show he received the discounts through Countrywide's VIP program.

Sessions becomes the fourth House member — and third Republican — whose records were sent to the House Ethics Committee for further investigation. The ethics panel will likely investigate whether the lawmakers received improper gifts and whether they performed any favorable actions for the lender. The four were notified by the House Oversight Committee.

Two of the Republicans play prominent roles: Sessions, as the person responsible for Republican efforts to maintain their House majority in the November elections and Rep. Howard "Buck" McKeon of California, who has major influence over the defense budget as chairman of the Armed Services Committee.

Rep. Elijah Cummings, ranking Democrat on the Oversight Committee, wrote a letter to committee Chairman Darrell Issa, saying documents received by the committee indicate McKeon "obtained a significant discount on his VIP loan as a direct result of personal intervention by Countrywide CEO Angelo Mozilo."

McKeon spokeswoman Alissa McCurley said: "Mr. McKeon is committed to transparency on this. He believes that the actions of Countrywide should be looked into and wants to get to the bottom of what Countrywide did to his loan 13 years ago."
The others who received discounts are Rep. Elton Gallegly, R-Calif., and Rep. Edolphus Towns, D-N.Y. All four denied that they were aware of receiving any sweetheart deals from Countrywide.

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http://news.yahoo.com/house-gop-chair-got-discounted-loan-231358680.html

Protesters climb on Wells Fargo roof to protest evictions 1-17-12

Activists held a massive banner and pitched a tent on the roof of the Wells Fargo branch at 16th and Mission Jan 14, while 150 supporters watched from the parking lot. Seven were arrested.

Organizers say the demonstration was meant to draw attention to the bank’s complicity in unfair foreclosures and evictions.

The protest was planned by a coalition of Bay Area housing rights and homelessness advocacy groups, along with organizers from Occupy San Francisco.

Sarah Shortt, Executive Director of the San Francisco Housing Rights Committee, says that abuses by corporate banks are inextricably linked to issues that her group has been working on for years; “evictions, displacement, affordable housing, and tenants rights.”

After rallying at 16th and Mission, protesters looked up to see that six had climbed to the roof. They unfurled a banner reading “Banks: No Foreclosures/Evictions for Profit!”
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http://www.sfbg.com/politics/2012/01/17/protesters-climb-wells-fargo-roof-protest-evictions

MERS Settles, Avoiding Class Action Foreclosure Fee Lawsuit 1-17-12

An 11th-hour settlement is expected to stave off potential class action status in a lawsuit that claims foreclosed borrowers were overcharged for attorneys’ fees that the Mortgage Electronic Registration Systems Inc. did not actually incur.
The plaintiffs, Jose and Lorry Trevino, filed a motion seeking class action status and an amended complaint on Jan. 12. The defendants had until Jan. 17 to respond, but received a two-week extension, “so that the parties can memorialize their settlement,” according to court documents filed Jan. 13.

The parties have agreed to terms, but the settlement is pending final paperwork. The case hasn’t been dismissed and likely won’t until the settlement is finalized.

The suit, originally filed in 2007, names Merscorp and a number of its shareholders, including Citigroup, Countrywide, Fannie Mae, Freddie Mac, GMAC Residential Funding, HSBC, JPMorgan Chase, Washington Mutual and Wells Fargo.

The shareholder defendants were dismissed from the case in 2008, though they were renamed in the recent amended complaint. Representatives from the companies declined to comment about the case.

Janis Smith, Merscorp vice president of corporate communications, said the parties resolved the case, but declined to provide additional details, citing the settlement’s confidentiality agreement.

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http://www.nationalmortgagenews.com/mt_features/mers-settles-fee-lawsuit-1028371-1.html

States Discuss Mortgage Investigations as Bank Talks Drag On 1-17-11

About a dozen state attorneys general met last week to discuss their mortgage investigations and how they might work together as settlement talks with banks over foreclosures drag on, three people familiar with the matter said.

The group, which met in Washington, included New York Attorney General Eric Schneiderman, California’s Kamala Harris and Martha Coakley of Massachusetts, according to two of the people, who declined to be named because they weren’t authorized to speak about the meeting. Schneiderman, Harris and Coakley are each conducting separate investigations of bank practices.

The meeting occurred as state and federal officials are negotiating a settlement with the five largest mortgage servicers, including Bank of America Corp. and JPMorgan Chase & Co., that would set requirements for conducting foreclosures and provide relief to homeowners.

Schneiderman, Harris and Coakley, along with Nevada Attorney General Catherine Cortez Masto and Delaware’s Beau Biden, have raised concerns about any deal that protects banks from future investigations. Masto and Biden also attended the Jan. 10 meeting, according to one of the people. The five states aren’t among those negotiating directly with the banks.

“A number of likeminded AGs met together to discuss current and ongoing investigations into the mortgage finance and foreclosure industries in addition to prospective or future investigations that may be fruitful,” Delaware Deputy Attorney General Ian McConnel said in a phone interview. He declined to comment further.

Harris and Masto announced in December they were collaborating in their mortgage and foreclosure investigations. Schneiderman and Biden are also cooperating. In December, Coakley sued Charlotte, North Carolina-based Bank of America, New York-based JPMorgan, Citigroup Inc. (C), Wells Fargo & Co. and Ally Financial Inc. (ALLY), accusing them of conducting unlawful foreclosures and deceiving homeowners.

Iowa Attorney General Tom Miller is leading talks for the states. Geoff Greenwood, his spokesman, said in an e-mailed statement that Miller and other representatives of the negotiating team “encourage input from their colleagues.”

Questions Raised About Chairman Issa’s Three-Year Campaign to Investigate Members of Congress Who Received Countrywide “VIP” Loans 1-17-12

Washington, DC (Jan. 17, 2012)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Chairman Darrell Issa seeking information about how he plans to proceed with his investigation of Members of Congress who received mortgage loans from Countrywide Financial Corporation under its VIP loan program, also known as the “Friends of Angelo” program after the company’s embattled CEO, Angelo Mozilo.

In one of his first official acts after becoming Chairman last year, Rep. Issa issued a unilateral subpoena demanding the mortgage files of the Members of Congress who received Countrywide VIP loans. He stated that “the American people have a right to know the totality of who participated in the Countrywide’s VIP program and what they did in return for access to it,” and that his goal was to “find a way to disclose it all and then get the American people outraged enough to make sure that it never happens again.”

Below is the full letter (click the link for footnotes):

January 17, 2012

The Honorable Darrell E. Issa
Chairman
Committee on Oversight and Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:
I am writing to request information about how you plan to proceed with the Committee’s investigation of Members of Congress who received mortgage loans from Countrywide Financial Corporation under its VIP loan program, also known as the “Friends of Angelo” program after the company’s CEO, Angelo Mozilo.
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http://democrats.oversight.house.gov/index.php?option=com_content&view=article&id=5561:questions-raised-about-chairman-issas-three-year-campaign-to-investigate-members-of-congress-who-received-countrywide-vip-loans&catid=3:press-releases&Itemid=49

Bank foreclosing on O.J. Simpson's Florida house while he serves prison time in Nevada 1-16-12

MIAMI - Like tens of thousands of other Florida homeowners, imprisoned former football star O.J. Simpson is in danger of losing his house to foreclosure.

Miami-Dade Circuit Court records show that JPMorgan Chase filed for foreclosure in September on the four-bedroom, four-bath house south of downtown Miami. Simpson's attorney has since filed a motion to dismiss the case, but there has been no further action since November.

Simpson bought the 4,233-square-foot house in 2000 for $575,000, property records show. Its current assessed value is $478,401, with property taxes of about $9,000. The 2011 taxes were paid in December.

The 64-year-old former football star and actor is serving a nine-to-33-year prison sentence stemming from a 2007 armed confrontation with sports memorabilia dealers in a Las Vegas casino hotel room. Simpson was convicted of kidnapping, armed robbery and other charges. He is appealing the conviction.
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http://www.startribune.com/nation/137416638.html

Foreclosure “Squatters” Goad Lenders and Stand Pat 1-16-12

Delinquent borrowers are beginning to see a bright side to foreclosure -- they can stay in their homes, often living rent-free as courts and banks bat around their cases for months if not years.

As of last November, it took a mortgage lender an average of 646 days to process a foreclosure and reclaim the property, according to recent data from LPS Applied Analytics, a mortgage and loan processing service firm. That compares with 394 days as of Nov. 2009 and 251 days in January 2008.

Housing analysts and lenders agree that one of the main causes of the hold-up is simply the sheer volume of post-2008 housing crash defaults overwhelming mortgage lenders and servicers—the companies to whom borrowers directly pay their loans. Currently, between 4.5 and 6 million homes are either in foreclosure or 90 days past due on paying their loans, according to estimates from Mark Dotzour, chief economist and director of research at Texas A&M University’s Real Estate Center.

But there are other factors: It’s become much more difficult for lenders to reclaim properties as foreclosed homeowners have become more emboldened. Rather than packing up and leaving their homes, many of these delinquent mortgage holders are seizing on recent legal and marketplace trends to fight back in court while remaining in their homes. According to figures from the law firm Patton Boggs, foreclosure litigation cases rose 26 percent in the second quarter of 2011, more than doubling from one year earlier, and reaching the highest level since the firm began indexing cases in 2007.

“Not only are consumers getting savvier on fighting back and protecting themselves, but in many cases, we actually have people who are sort of gaming the system now,” said Rick Sharga, Executive Vice President of Carrington Mortgage Holdings. Sharga says he has come across increasing numbers of delinquent borrowers intent on defaulting. “These are borrowers who aren’t interested in loan modification, short-sales, or negotiating settlements—they’re mostly interested in not paying until the foreclosure is over,” he said. In many cases, the borrower is completely off the hook on making payments during and after a foreclosure since mortgage loans are non-recourse, meaning the lender is only legally entitled to collect the property, and the borrower has no personal financial liability.
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http://www.thefiscaltimes.com/Articles/2012/01/17/Foreclosure-Squatters-Goad-Lenders-and-Stand-Pat.aspx#page1

MERS, the law, and the State 1-16-12

By lambert strether.

The current version of Harpers — go buy it on the newstand! — has a terrific article by Christopher Ketcham on the MERS mess, which NC has done so much to bring to the attention of the public. I’m going to excerpt and contextualize two portions of the article. First, Ketcham interviews foreclosure activist Vermont Trotter of Coeur D’Arlene, Idaho on the “clouded title” problem. I’m a connoisseur of the worst case scenario, and this is a doozy:

Trotter told me that the “true horror” of MERS [1818 Library Street, Suite 300
Reston, VA 20190, 1-800-646-6377] was what it could do to homeowners who were current on their mortgage payments: The “good” homeowners who still had a job and weren’t facing foreclosure. If there was no legal record of which bank owned their debt [see below if you haven't been following NC on MERS], and the MERS-mortgaged homeowners had been making payments, then who exactly was the homeowner paying? The checks, clearly, were going out every month, cashed by a bank that claimed to own the note. But without the legal record to certify the owner of the note, it followed that the bank could not legally issue the homeowner a clear title to the home. In effect, a homeowner with MERS on his mortgage could spend thirty years paying a lender that wasn’t the owner of the note. …. “[Y]ou’d always be looking over your shoulder,” said Trotter. “Some other lender could come and say ‘No, we owned that note. You paid the wrong guy.” “WIth MERS”, he said, “nobody owns anything. You’re only paying rent.”

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Kamala Harris at Odds with Obama on Mortgage Fraud 1-14-12

Four years ago, when most of the Democratic Party establishment stood firmly behind Hillary Rodham Clinton, Kamala D. Harris, then San Francisco’s district attorney, spent a winter week in Iowa stumping for Barack Obama.

When she ran for attorney general two years later, the mixed-race Harris (her mother is Indian, her father Jamaican-American) drew frequent comparisons to Obama, as a rare candidate who inspired young people and ethnic minorities often alienated from the political process. The PBS newscaster Gwen Ifill once referred to her as the “female Obama.”

“Like Obama, she represents the next generation of leadership that talks about issues in a new way,” said Steve Phillips, co-founder of Power PAC, which backed Obama with millions of dollars in 2008 and then spent nearly $400,000 to support Harris’s campaign for attorney general.

But since taking office as attorney general a year ago, Harris has clashed with the Obama administration over one of her signature issues: foreclosures and mortgage fraud.

In September, Harris walked away from settlement talks with the nation’s five largest mortgage servicers, saying the proposed deal to have them pay roughly $25 billion in restitution for mortgage abuses was too weak. She said the proposed settlement sought by the Obama administration asked California to “excuse conduct that has not been adequately investigated.”

Source: http://www.baycitizen.org/housing/story/kamala-harris-odds-obama-mortgage-fraud/

Is signing foreclosure documents for others forgery? 1-14-12

The Nevada attorney general calls signing another person's name on documents used to repossess a home "forgery" and a "scheme."

Michigan's attorney general launched a criminal investigation that includes whether "falsified signatures" were used in foreclosure cases.

But Theresa Edwards and June Clarkson were forced to resign their jobs as foreclosure fraud investigators for the Florida Attorney General's Office, in part, for referring to so-called "surrogate signing" as forgery.

According to a Florida Inspector General report that cleared Attorney General Pam Bondi's office of wrongdoing in the firings, the duo repeatedly used the word "forgery" in a 2010 presentation that included documents from the Jacksonville-based Lender Processing Services. The company complained and drew the attention of economic crimes boss Richard Lawson.

Lawson says in the inspector general's Jan. 6 report that surrogate signing as it relates to Lender Processing Services, also called LPS, is not forgery, which requires an intent to defraud. The practice was authorized by the company, more evidence, Lawson said, that no forgery occurred.

Homeowner advocates who support Edwards and Clarkson are now questioning portions of the 83-page report. They point to the LPS signature issue as an example of what they say is Florida's resistance to go after foreclosure fraud.
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http://www.palmbeachpost.com/money/foreclosures/is-signing-foreclosure-documents-for-others-forgery-2102340.html

Potential Lawsuits, Wells Fargo Faces Scrutiny by Investors on Mortgage Bonds 1-8-11

A bondholder group that won an $8.5 billion settlement (BAC) from Bank of America Corp. on securities backed by soured home loans may also seek payments from Wells Fargo & Co. (WFC), the nation’s biggest mortgage lender.

The law firm Gibbs & Bruns LLP said in a statement yesterday it’s seeking information on pools securing more than $19 billion of residential mortgage-backed securities issued by affiliates of Wells Fargo.

Faulty mortgages and foreclosures (HOMFCLOS) have cost the five largest U.S. home lenders about $70 billion since the start of 2007 and helped drive Bank of America’s shares down almost 60 percent in the past 12 months. Gibbs & Bruns said last month it may also seek reimbursements from JPMorgan Chase & Co. (JPM), the biggest and most profitable U.S. bank.

“Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS pools and deficient servicing of those loans,” Kathy Patrick, the Houston-based law firm’s lead counsel on the case, said in the statement. Mary Eshet, a spokeswoman for San Francisco-based Wells Fargo, didn’t have an immediate comment.



Countrywide Sued by U.K. Banks ‘Looking for Someone to Blame’ on Mortgage 1-8-11
Suninder Sandha bought his luxury apartment in Coleorton Hall, a 19th century country mansion near Leicester in central England, using a 1.2 million-pound loan ($1.86 million) from Barclays Plc (BARC) in 2005.

When the property market collapsed two years later, Sandha couldn’t make his mortgage payments and Barclays seized the apartment, selling it for 500,000 pounds. The lender has now sued Countrywide Plc (CWD), whose surveying unit valued it at the peak of the boom, for its losses, according to court papers.

The suit is one of 38 filed last year in London’s High Court against Countrywide, the nation’s largest residential property broker, by lenders including Barclays, Lloyds Banking Group Plc (LLOY) and GMAC-RFC. That’s more claims than any of the four largest U.K. banks faced in 2011, according to Bloomberg data. As many as 97 lawsuits have been filed since 2007 against Countrywide, bought that year by private equity firm Apollo Management LP.

“These banks have incurred huge losses and they are looking for someone to blame,” said Alexandra Anderson, a partner at law firm Reynolds Porter Chamberlain LLP representing surveyors including Countrywide. “Often the blame is themselves, and the lending practices they had.”
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http://www.bloomberg.com/news/2012-01-09/banks-blame-countrywide-for-u-k-mortgage-losses-in-97-lawsuits.html

From East and West, Foreclosure Horror Stories 1-7-11

THE authorities have fallen silent lately about a possible settlement over foreclosure abuses at big mortgage servicing companies.
The talks began in earnest last March, and people keep whispering that a deal is nigh. But last week, a spokesman for Shaun Donovan, the secretary of Housing and Urban Development and a lead negotiator, said that there was nothing new to report.

That’s probably not a terrible thing. After all, no deal is better than a bad deal. State and federal authorities jumped into these talks without conducting serious investigations into foreclosure shenanigans. Why strike a deal — one that would, say, shield banks from new litigation over toxic loans, flawed securitizations and the mess at MERS, the registry that has made such a jumble of land records — without knowing what happened?

So it’s nice to know some attorneys general are taking matters into their own hands. One is Martha Coakley of Massachusetts, whose lawsuits against big banks have unearthed important details about dubious mortgage practices.
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http://www.nytimes.com/2012/01/08/business/mortgage-servicing-horror-stories-fair-game.html?_r=1

Raskin Urges Penalties on Mortgage Servicers 1-7-11

WASHINGTON (Reuters) - Federal Reserve Governor Sarah Bloom Raskin on Saturday said the Fed must
impose monetary penalties on banks who entered into an April agreement with regulators over how to fix problems in their mortgage servicing businesses.
"The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law," Raskin said in remarks to the Association of American Law Schools. "The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties."

Raskin did not say when the penalties will be announced.

She said that "appropriately sized" penalties would "incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models."

Mortgage servicers, many of which are large banks, collect home loan payments and manage issues like foreclosures.

The servicing issue burst into public view last year when government agencies began investigating bank mortgage practices, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day.

In April, 14 mortgage servicers, including Bank of America and JPMorgan Chase, entered into a settlement with the Fed, the Office of the Comptroller of the Currency and the now defunct Office of Thrift Supervision on steps that have to be taken to correct and improve their servicing practices, such as providing borrowers with a single point of contact for questions.
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http://www.nytimes.com/reuters/2012/01/07/business/business-us-financial-regulation-raskin.html?nl=todaysheadlines&emc=tha25

NY Fed President Dudley Crosses Swords With GSEs and Board of Governors on Housing/Mortgage Mess 1-6-11

A speech by New York Fed president William Dudley is a bit of a surprise, in that it acknowledges the severity of the deepening mortgage crisis and sets forth some specific policy proposals. I still find these recommendations frustrating, in that they are insufficient given the severity of the problem and also fail to come to grips with widespread servicer abuses (not just servicer driven foreclosures, but also what amounts to theft from investors, via schemes such as double charging fees to borrowers and investors, inflating principal balances, reporting REO as sold months later than the transaction closed, and getting kickbacks on third party charges). But they are more serious than other ideas from senior financial officials. Specifically, the Dudley advocates principal relief via a program of “earned principal reduction” which would allow for put options for all severely underwater borrowers who stay current on their mortgages for three years. But as we will discuss, this proposal is less meaningful than it sounds.
It looks at if the NY Fed is trying to provide intellectual leadership in the debate around the housing mess, which given the level of denial and kick the can down the road strategies being offered as alternatives, means this effort stands out in part by virtue of the shoddy alternatives. And this posture put it squarely at odds with the Board of Governors, whose paper published earlier this week pooh-poohs principal writedowns and specifically opposes giving broad scale principal reductions to homeowners with negative equity. One has to wonder whether the Board of Governors paper was released prior to the Dudley speech with the specific aim of undermining it. Similarly, the NY Fed is also in opposition to the GSE’s resistance to offering principal mods, as evidenced by the leak from the mortgage settlement talks, in which the GSEs refused participate in the banks’ scheme to use mods on securitized loans (which would include GSE loans) as a way to reach the settlement target for principal mods.
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http://www.nakedcapitalism.com/2012/01/ny-fed-president-dudley-crosses-swords-with-gses-and-board-of-governors-on-housingmortgage-mess.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Home loan protesters disrupt two Antioch banks 1-6-11

Business at two Antioch banks was disrupted Friday by protesters demanding help for two homeowners who haven't been able to pay their mortgage.

About three dozen members and supporters of a grass roots social justice organization went to the Bank of America and Wells Fargo Bank branches on Somersville Road asking officials there to intervene on behalf of an elderly Antioch woman who lost her home just days ago as well as a Concord couple that received an eviction notice last month.

Holding signs and chanting, they asked employees to fax a letter to the banks' chief executive officers insisting that the companies work with these people they had victimized with their "predatory lending practices."

Bank of America refused and called the police, who dispersed the crowd by warning that they would be arrested if they didn't leave, said John Adams, local director of the Alliance of Californians for Community Empowerment.

The crowd then walked to Wells Fargo, where the branch manager agreed to fax the plea to rescind its foreclosure on Eva Cader, a 78-year-old Antioch woman who was evicted Jan. 3 while trying to obtain a loan modification, Adams said.

Although the Bank of America branch didn't comply with the group's request, its manager discovered she knew Jessi Koritz, a small-business owner who frequents the Concord branch where she used to work.
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http://www.mercurynews.com/occupy/ci_19691001

Raskin says Fed will fine mortgage servicers 1-6-11

Federal Reserve Governor Sarah Bloom Raskin on Saturday said the Fed must impose monetary penalties on banks who entered into an April agreement with regulators over how to fix problems in their mortgage servicing businesses.
"The Federal Reserve and other federal regulators must impose penalties for deficiencies that resulted in unsafe and unsound practices or violations of federal law," Raskin said in remarks to the Association of American Law Schools. "The Federal Reserve believes monetary sanctions in these cases are appropriate and plans to announce monetary penalties."

Raskin did not say when the penalties will be announced.

She said that "appropriately sized" penalties would "incentivize mortgage servicers to incorporate strong programs to comply with laws when they build their business models."

Mortgage servicers, many of which are large banks, collect home loan payments and manage issues like foreclosures.

The servicing issue burst into public view last year when government agencies began investigating bank mortgage practices, including the use of "robo-signers" to sign hundreds of unread foreclosure documents a day.
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http://www.4-traders.com/news/Raskin-says-Fed-will-fine-mortgage-servicers--13959691/

Judge rips ‘know nothing’ bank 12-29-11

A Brooklyn judge yesterday blasted HSBC bank as acting like both Pontius Pilate and Sgt. Schultz of TV’s “Hogan’s Heroes’’ in a foreclosure case.

Supreme Court Justice Arthur Shack issued a $10,000 fine against the bank for “frivolous conduct” that included using robo-signers to process foreclosure documents.

“HSBC sounds like a combination of Pontius Pilate and Sgt. Schultz in the classic 1960s television comedy ‘Hogan’s Heroes.’

“HSBC washes its hands of any responsibility and places any blame upon” the company that serviced the mortgage for HSBC,” while also acting like Schultz, who’s always claiming, “I know nothing!’’ Shack wrote in a decision published yesterday.

HSBC’s law firm, Shapiro, DiCaro & Barak, did not immediately respond to a request for comment.

Read more: http://www.nypost.com/p/news/local/brooklyn/judge_rips_know_nothing_bank_57viq6SbtFXM46dSLnjz9O#ixzz1hxL5FsLv

Nevada Supreme Court to Hear Case to Determine Legality of MERS Foreclosures 12-29-11

Nevada’s real estate market was devastated by the bursting real estate bubble and the subsequent foreclosure crisis. Home prices in many areas of Nevada are down by 50-60% or more since the market peaked in 2006. Until recently, Nevada has consistently had one of the highest rates of foreclosure in the country.

Now, the Nevada State Supreme Court is set to hear a case that may consider whether or not the Mortgage Electronic Registration System (MERS) has the right to foreclose on a property in its own name. If the State Supreme Court rules that mortgages assigned by MERS cannot establish ownership, homeowners could challenge any foreclosure done in MERS’ name. Other courts across the country are split on this issue.

MERS holds more than half of mortgages across the United States, and a similar number in Nevada. MERS has been at the center of much controversy over the past couple of years, and was recently the focus of a scathing piece in Harper’s Magazine (Stop Payment! A Homeowner’s Revolt Against the Banks), as well as an investigative report on 60 Minutes.
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http://www.totalmortgage.com/blog/mortgage-rates/nevada-supreme-court-to-hear-case-to-determine-legality-of-mers-foreclosures/15155

A Solution to the Foreclosure Crisis: Make Banks Write Down Underwater Mortgages 12-29-11

The federal government and state attorneys general, including Washington State’s Rob McKenna, are currently negotiating a settlement with the big banks over foreclosure abuses, with a deal expected within the next few weeks.

Unless the public stays vigilant, this settlement could turn into a slap on the hand for Wall Street, with a slap in the face to homeowners.

Recently reported settlement proposals would effectively absolve major financial institutions of meaningful civil and criminal liability in one of the largest alleged fraud schemes of the Wall Street Recession.

Because the deal lets the big banks off easy, attorneys general from New York, Delaware, Massachusetts and Nevada are no longer participating in discussions (with California mostly out as well). The last thing Attorney General McKenna should be doing right now is absolving the big banks of responsibility for their role in the foreclosure crisis.

We want to applaud Senator Maria Cantwell (D-WA) for demanding in a letter recently that the Department of Justice fully investigate fraudulent foreclosures before coming to a settlement that lets the big banks off the hook. Cantwell rightfully insists that a final settlement must adequately compensate victims of the foreclosure crisis.

So, what would a fair settlement look like?

Forcing big banks to write down all underwater mortgages to market value would help stabilize the housing market while helping families and our economy get back on track. Widespread principal reduction would save Washington homeowners $496 per month, add a total annual stimulus of more than $1.4 billion, and create more than 20,000 jobs.

Those are big numbers, especially in a struggling economy. Fewer families would lose their homes, more money would go in homeowners’ pockets, and more jobs would be created—all resulting in a stronger economy.

It’s no secret that Washington has been hit hard by the foreclosure crisis. According to a recent report by the New Bottom Line, there are currently 238,476 underwater mortgages in Washington.

RealtyTrac reports that Washington had over 29,398 homes go through foreclosure in the first six months of 2011.

Imagine the entire population of SeaTac getting evicted in just half a year. That’s the scale of this problem.

A national study by the Center for Responsible Lending found that black and Latino borrowers, respectively, were 76 and 71 percent more likely than whites to experience foreclosure.
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http://publicola.com/2011/12/29/a-solution-to-the-foreclosure-crisis-make-banks-write-down-underwater-mortgages/

Bondi can go after banks: Appellate rulings have shielded lawyers, so target lenders 12-28-11

Florida Attorney General Pam Bondi should look to Nevada, California and Massachusetts for guidance on handling foreclosure fraud. Attorneys general in those states are going after the lenders and mortgage servicing companies that falsified court documents to foreclose on delinquent borrowers. Florida has, with limited success, gone after the lenders' attorneys who allegedly did the same.

The 4th District Court of Appeals has now ruled twice that the attorney general's office does not have the authority to investigate foreclosure attorneys for alleged fraud under the Florida Deceptive and Unfair Trade Practices Act. Last year, then-Attorney General Bill McCollum issued subpoenas to Boca Raton-based Shapiro & Fishman, the Law Offices of Marshall C. Watson in Fort Lauderdale and the Plantation-based Law Offices of David J. Stern.

The appellate court ruled in April that Shapiro & Fishman did not have to comply with the subpoena because their work on behalf of lenders did not constitute trade or commerce as defined by statute. Ms. Bondi did not appeal that ruling. This month, the 4th DCA made the same finding on behalf of the Stern firm. Ms. Bondi's office has said it is reviewing that decision.

The Watson law firm settled with the AG's office in March, agreeing to pay $1 million for the cost of the investigation and $1 million to the Florida Bar Foundation for Legal Aid attorneys for foreclosure cases. Ms. Bondi's office fired the two attorneys who negotiated the settlement citing poor job performance, despite stellar performance reviews.
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http://www.palmbeachpost.com/opinion/editorials/bondi-can-go-after-banks-appellate-rulings-have-2063500.html

FBI Reportedly Investigating Fannie Mae, Freddie Mac For Role In Subprime Crisis 12-22-11

It's been a bad month for Fannie Mae and Freddie Mac.

The Securities and Exchange Commission announced last week that it was suing half a dozen former executives from the mortgage giants, including the ex-CEOs of both companies. Now, the Federal Bureau of Investigation is reportedly asking questions about Fannie and Freddie's behavior in the months preceding the financial crisis, according to The Daily.

At issue is whether Fannie and Freddie -- two of the largest mortgage companies in the country, and the recipients of a major government bailout in September 2008 -- misled the public and investors about the relative risk of their loans in the lead up to the financial crisis, the Daily reports. The matter has serious implications, since many allege that mortgage lenders' enthusiasm for making loans to homeowners with shoddy credit, and banks' penchant for using those loans as financial instruments, are among the principal reasons for the housing crash and financial crisis.

The SEC's lawsuit probes much the same question, hitting six former executives at the two companies with charges of security fraud, and accusing them of continuing to hold onto questionable loans even after the magnitude of the risk became clear. Neither company is directly named as a defendant in the SEC's suit.

The SEC appears to be framing that suit as a response to critics who have accused the agency of going easy on the major banks and financial institutions who played a central role in the financial meltdown, according to The New York Times.
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http://www.huffingtonpost.com/2011/12/21/fbi-fannie-mae-freddie-mac_n_1164051.html

Terminally ill woman to stay in foreclosed home until she dies , Sacramento , Ca  12-18-11

Pale afternoon light filled the small bedroom where Claire Findley lay immobile in a hospital bed, an intravenous line running into her arm. An orchid bloomed on the dresser, a gift from a friend who visited over the weekend. Nearby were her breathing machine and a suctioning device. Next to her bed was the cot where her husband, Luther, sleeps every night.

She learned this past week that her last wish, to die in the modest Fair Oaks house where she and Luther have lived since 1996, will be possible.

"I'm ready to die," said Claire, her voice strangled and hushed.

At 59, she is in the late stages of amyotrophic lateral sclerosis, or ALS, and requires 24-hour care. The illness has left her almost unable to speak, quadriplegic and in constant pain. Eventually, it will rob her of the ability to swallow and breathe.

"She'd like to go to sleep and not wake up, and see Jesus," said her husband. "She's worked so hard and so long, and she's worn out."

The Findleys lost their house to foreclosure in March because Luther, a 55-year-old contractor, hasn't worked since the end of 2007 – and because the income limits required for Claire to maintain her Medi-Cal coverage at no share of cost meant that he couldn't pursue new employment.

Bank of America, which held their mortgage, agreed this week not to evict Luther until after Claire dies.

Their situation shows what can happen when a medical crisis meets the foreclosure crisis and the spiraling effects of the recession. As a result, they represent an especially desperate economic reality: bankrupt, facing terminal illness and, until recently, coping with the stress of possible homelessness.

Read more: http://www.sacbee.com/2011/12/18/4130567/terminally-ill-woman-to-stay-in.html#ixzz1guXKe7u6

S.E.C. Accuses Fannie and Freddie Ex-Chiefs of Deception 12-16-11

Regulators have accused the former chief executives of the mortgage giants Fannie Mae and Freddie Mac of misleading investors about their firms’ exposure to risky mortgages, one of the most significant federal actions taken against those at the center of the housing bust.

The lawsuits filed Friday against the two chief executives and four other top executives are an aggressive move by the Securities and Exchange Commission, and come after a three-year investigation.

The agency has come under fire for not pursuing top Wall Street and mortgage industry executives who contributed to the financial crisis. In cases contending the deceptive marketing of securities tied to mortgages, the S.E.C. has been criticized for citing only midlevel bankers while settling with the Wall Street firms themselves. Recently, the agency drew criticism from a federal judge after allowing Citigroup to settle a fraud case without conceding wrongdoing.
On Friday, S.E.C. officials trumpeted their actions in the Fannie and Freddie case as part of a renewed effort to crack down on wrongdoing at the highest levels of Wall Street and corporate America.

“All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors,” said Robert S. Khuzami, the agency’s enforcement chief. “Investors were robbed of the opportunity to make informed investment decisions.”
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http://dealbook.nytimes.com/2011/12/16/s-e-c-sues-6-former-top-fannie-and-freddie-executives/?nl=afternoonupdate&emc=aua2

Top Fed Official Makes Strong Pitch for More Aggressive Housing Policies Including Targeted Principal Reduction Program 12-16-11

Washington, DC (Dec. 16, 2011)—The President of the New York Federal Reserve Bank today called for much more aggressive action to address the nation’s housing crisis, including a targeted program to reduce the principal of certain mortgages in order to bolster the nation’s economic recovery and serve the long-term interests of U.S. taxpayers.

Testifying in response to questions by Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, William C. Dudley, the President of the Federal Reserve Bank of New York, explained why more aggressive measures to address the current housing crisis are so critical to furthering the nation’s economic recovery:

If you took these steps, I think you could stabilize housing prices.  And if you stabilize housing prices, I think you’d actually start to see more demand for housing.  And if you saw more demand for housing, then housing prices would start to go up.  And that would actually bolster household confidence because houses are a very large component of the household balance sheet.  So if home prices are stable or rising, people are going to feel a little bit better about the outlook, not just for housing, but also about their own willingness to go out and spend and consume.  So we think this would be very favorable for the housing sector.

President Dudley then explained that targeted programs to reduce mortgage principal would serve the interests of American homeowners and taxpayers alike:
We think that you can devise a program that, for home buyers that have mortgages that are under water, to incent them to continue to pay on those mortgages by giving them some program of principal reduction.  Obviously the devil’s in the details, so you have to have good program design.  But we are confident that one can design a program, which would be net beneficial—net positive—to the taxpayer.
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http://democrats.oversight.house.gov/index.php?option=com_content&view=article&id=5556:top-fed-official-makes-strong-pitch-for-more-aggressive-housing-policies-including-targeted-principal-reduction-program&catid=3:press-releases&Itemid=49

NEVADA ATTORNEY GENERAL SUES LENDER PROCESSING

SERVICES FOR CONSUMER FRAUD 12-16-11

Carson City, NV – Attorney General Catherine Cortez Masto announced today a
lawsuit against Lender Processing Services, Inc., DOCX, LLC, LPS Default Solutions,
Inc. and other subsidiaries of LPS (collectively known “LPS”) for engaging in deceptive
practices against Nevada consumers.
The lawsuit, filed on December 15, 2011, in the 8th Judicial District of Nevada, follows
an extensive investigation into LPS’ default servicing of residential mortgages in
Nevada, specifically loans in foreclosure. The lawsuit includes allegations of
widespread document execution fraud, deceptive statements made by LPS about
efforts to correct document fraud, improper control over foreclosure attorneys and the
foreclosure process, misrepresentations about LPS’ fees and services, and evidence of
an overall press for speed and volume that prevented the necessary and proper focus
on accuracy and integrity in the foreclosure process.
“The robo-signing crisis in Nevada has been fueled by two main problems: chaos and
speed,” said Attorney General Masto. “We will protect the integrity of the foreclosure
process. This lawsuit is the next, logical
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http://ag.state.nv.us/newsroom/press/2011/lpspressrelease.pdf

Charles Murphy back to policymaking with homeowner protection push 12-11-11

Rep. Charles Murphy, who laid low for most of 2011 until he burst into open conflict with Speaker Robert DeLeo this week, turned back toward policymaking Wednesday, announcing the filing of legislation he said would aid homeowners facing foreclosure.

In an interview, the Burlington Democrat said his legislation would dovetail with a lawsuit filed by Attorney General Martha Coakley against five major banks over alleged violations of foreclosure laws.

The bill would force mortgage holders to record with registries of deeds anytime they transfer mortgages to a third party, preventing situations in which homeowners are unaware which company holds their mortgage. The proposal would also prohibit a practice by which large banks chopped up and dealt mortgages to one another through a repository known as the Mortgage Electronic Registration System without ever notifying registries.
Without this requirement, Murphy said, homeowners are often foreclosed upon by banks that do not actually hold title to their property, resulting a tangled thicket of litigation. In addition, banks have escaped paying hundreds of millions of dollars in fees by failing to record title transfers, Murphy argued.

“This honestly affects anyone who owns a home, a condo or real property,” Murphy said.
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http://www.bostonherald.com/news/politics/view/20111207charles_murphy_back_to_policymaking_with_homeowner_protection_push

AG: Wells Fargo Settles Fraud Case 12-9-11

HARTFORD – Attorney General George Jepsen announced a $58.75 million multi-state settlement with Wachovia Bank N.A. and Wells Fargo Bank, N.A., as its successor by merger, as part of an ongoing investigation of alleged anticompetitive and fraudulent conduct in the municipal bond derivatives industry.

Connecticut and New York led the investigation for the working group of 25 states and the District of Columbia.

As part of the multistate settlement, Wachovia has agreed to pay $54.5 million in restitution to affected state agencies, municipalities, school districts and not-for-profit entities nationwide that entered into municipal derivative contracts with Wachovia between 1998 and 2004.

“This settlement with Wachovia is another example of the state task force’s determination to prosecute anticompetitive conduct in the municipal bond derivatives marketplace,” said Attorney General Jepsen. “Wachovia was entrusted with taxpayer money and Wachovia violated that trust. This settlement is about righting that wrong.”

A preliminary estimate of the state’s share of the restitution payments is less than $50,000, given the limited impact of the conduct in Connecticut. However, as a lead state in the investigation, Connecticut also will receive an as-yet undetermined share of a $1.25 million civil penalty and $3 million in fees and expenses for the investigation, which Wachovia agreed to pay to the settling states.

The multistate settlement is one part of a coordinated $148 million settlement that Wachovia entered into today. The bank also reached agreement with the U.S. Department of Justice’s Antitrust Division, the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the Internal Revenue Service.

Wachovia is the fourth financial institution to settle with the multistate task force in the ongoing municipal bond derivatives investigation, which has obtained settlements for the participating states worth approximately $310 million to date. The other settlements were with Bank of America, UBS AG and JP Morgan.
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http://www.thehartfordguardian.com/2011/12/09/ag-wells-fargo-settles-fraud-case/

California, Nevada team up to investigate mortgage abuses 12-6-11

California and Nevada's attorneys general announced Tuesday in a press conference that they are teaming up to prosecute mortgage fraud in their respective states.

The planned cooperation between the attorneys general in two of the states hardest hit by the collapse of the housing market could shift the landscape of the national foreclosure crisis. For one, the new partnership could weaken attempts by other states and the Obama administration to negotiate a single, national foreclosure settlement with the nation's five largest home-loan companies over alleged misdeeds, such as the mass-signing of foreclosure documents and the foreclosure of borrowers who were in the process of seeking mortgage modifications.

But the move also serves as a warning to the financial institutions accused of defrauding hundreds of thousands of homeowners. The states plan to work together on a broad range of issues related to mortgage fraud, the sources said.

In the past California has been burned by large, multi-state mortgage settlements. In 2008 the state joined 10 others in agreeing to a settlement regarding fraudulent mortgage practices at Countrywide, the sub-prime lender that came to epitomize questionable lending during the mortgage boom. Bank of America, which owns Countrywide, agreed to offer up to $3.5 billion in loan modifications and foreclosure relief to California homeowners victimized by Countrywide's mortgage fraud. But as of June 30, 2011, only roughly $80 million in payments have been made to California residents through the program.

California Attorney General Kamala Harris may be trying to avoid another disappointing mortgage settlement by partnering up with Nevada Attorney General Catherine Cortez Masto.

"There's been a lot of frustration [in California] with prior settlement agreements that have not delivered," said Kevin Stein, associate director of the California Reinvestment Coalition, a nonprofit organization that advocates for the financial rights of low-income communities. "I think there's a recognition that the Countrywide settlement didn't play itself out as people had hoped. We want to look forward and not repeat whatever mistakes may have occurred then."

Countrywide has not only underperformed in terms of the amount of money offered to borrowers. It has also neglected to help thousands of homeowners who qualified for mortgage relief under the terms of the settlement, say sources familiar with the situation. Kim Ramirez, 42, is one of those borrowers.

Read more:http://www.huffingtonpost.com/2011/12/06/california-mortgage-fraud_n_1130534.html

3 Nevada notaries named in foreclosure fraud case 12-5-11

LAS VEGAS (AP) - Three more Nevada notaries are accused of falsely attesting to legal signatures on foreclosure documents in a broad Las Vegas-area mortgage fraud scheme that has led to the indictment of two Southern California title officers, the state attorney general's office said Monday.

The announcement that Meghan Shaw, Jennifer Lowe and Joseph Noel each face one charge of notarizing a signature of a person not in their presence came a week after Tracy Lawrence, the first notary identified as a key witness in the so-called "robo-signing" case, was found dead at home after missing sentencing on a similar charge.

The charge is a gross misdemeanor and carries up to a year in jail and a $2,000 fine. Court records filed Wednesday refer to Lowe as Jennifer Bloecker.

Each of the three, like Lawrence, testified before a grand jury that handed up a more-than-600-count indictment accusing Geraldine Ann Sheppard, 62, of Santa Ana, Calif., and Gary Randall Trafford, 49, of Irvine, Calif., of heading a scheme that led to the filing of tens of thousands of fraudulent foreclosure documents in Las Vegas between 2005 and 2008.

Sheppard and Trafford are employees of a publicly traded company, Lender Processing Services Inc., based in Jacksonville, Fla., that provides technology and services to major banks across the company. Noel formerly worked for the company.

The indictment alleges that Sheppard and Trafford directed employees to notarize forged signatures on documents filed with the Clark County recorder's office to begin home foreclosures.

Nevada has been the state hit hardest by the recession and the housing crisis, leading the nation in bankruptcies, foreclosures and unemployment.

Lender Processing Services officials declined to comment Monday about Nevada Attorney General Catherine Cortez Masto's announcement that more notaries were cooperating with the prosecution.

President and CEO Hugh Harris issued a statement last month acknowledged flaws in signing procedures on some documents, but the company said it also believed documents were properly authorized and their recording didn't result in a wrongful foreclosure.

Trafford and Sheppard have not been arrested or appeared in a Nevada court to answer more than 200 felony charges of offering a false instrument and false certification of an instrument, and more than 100 misdemeanor notarization charges in the 439-page indictment handed up against them Nov. 16. They could face decades in prison if convicted.
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http://money.msn.com/business-news/article.aspx?feed=AP&date=20111205&id=14589512

Prosecuting Wall Street 60 minutes 12-4-11

Two high-ranking financial whistleblowers say they tried to warn their superiors about defective and even fraudulent mortgages. So why haven't the companies or their executives been prosecuted? Steve Kroft reports.
(CBS News)  Two whistleblowers offer a rare window into the root causes of the subprime mortgage meltdown. Eileen Foster, a former senior executive at Countrywide Financial, and Richard Bowen, a former vice president at Citigroup, tell Steve Kroft the companies ignored their repeated warnings about defective, even fraudulent mortgages. The result, experts say, was a cascading wave of mortgage defaults for which virtually no high-ranking Wall Street executives have been prosecuted.
The following is a script of "Prosecuting Wall Street" which aired on Dec. 4, 2011. Steve Kroft is correspondent, James Jacoby, producer.


It's been three years since the financial crisis crippled the American economy, and much to the consternation of the general public and the demonstrators on Wall Street, there has not been a single prosecution of a high-ranking Wall Street executive or major financial firm even though fraud and financial misrepresentations played a significant role in the meltdown. We wanted to know why, so nine months ago we began looking for cases that might have prosecutorial merit. Tonight you'll hear about two of them. We begin with a woman named Eileen Foster, a senior executive at Countrywide Financial, one of the epicenters of the crisis.

Behind the financial crisis: A fraud investigator talks

Steve Kroft: Do you believe that there are people at Countrywide who belong behind bars?


Eileen Foster: Yes.


Kroft: Do you want to give me their names?


Foster: No.


Kroft: Would you give their names to a grand jury if you were asked?


Foster: Yes.


But Eileen Foster has never been asked - and never spoken to the Justice Department - even though she was Countrywide's executive vice president in charge of fraud investigations. At the height of the housing bubble, Countrywide Financial was the largest mortgage lender in the country and the loans it made were among the worst, a third ending up in foreclosure or default, many because of mortgage fraud.


It was Foster's job to monitor and investigate allegations of fraud against Countrywide employees and make sure they were reported to the board of directors and the Treasury Department.


Kroft: How much fraud was there at Countrywide?


Foster: From what I saw, the types of things I saw, it was-- it appeared systemic. It, it wasn't just one individual or two or three individuals, it was branches of individuals, it was regions of individuals.


Kroft: What you seem to be saying was it was just a way of doing business?


Foster: Yes.


In 2007, Foster sent a team to the Boston area to search several branch offices of Countrywide's subprime division - the division that lent to borrowers with poor credit. The investigators rummaged through the office's recycling bins and found evidence that Countrywide loan officers were forging and manipulating borrowers' income and asset statements to help them get loans they weren't qualified for and couldn't afford.


Foster: All of the-- the recycle bins, whenever we looked through those they were full of, you know, signatures that had been cut off of one document and put onto another and then photocopied, you know, or faxed and then the-- you know, the creation thrown-- thrown in the recycle bin.
rest here including video
http://www.cbsnews.com/8301-18560_162-57336042/prosecuting-wall-street/?tag=currentVideoInfo;videoMetaInfo

Five National Banks Sued by AG Coakley in Connection with Illegal Foreclosures and Loan Servicing 12-1-11

Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC All Named As Defendants; Mortgage Electronic Registration System (“MERS”) Also Sued
BOSTON – Five national banks have been sued in connection with their roles in allegedly pursuing illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing, Attorney General Martha Coakley announced today.  The lawsuit was filed today in Suffolk Superior Court against Bank of America, Wells Fargo, JP Morgan Chase, Citi, and GMAC.  It also names Mortgage Electronic Registration System, Inc. (“MERS”) and its parent, MERSCORP Inc., as defendants.

“The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis,” said AG Coakley.  “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. Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners.”

In the complaint  , the Attorney General alleges these five entities engaged in unfair and deceptive trade practices in violation of Massachusetts’ law by:

•Pervasive use of fraudulent documentation in the foreclosure process, including so-called “robo-signing”;
•Foreclosing without holding the actual mortgage (“Ibanez” violations);
•Corrupting Massachusetts’ land recording system through the use of MERS;
•Failing to uphold loan modification promises to Massachusetts homeowners.
USE OF FALSE DOCUMENTS TO EXPEDITE FORECLOSURES “ROBO-SIGNING”:

According to the complaint, the banks used false documentation in the foreclosure process, including so-called “robo-signing”, whereby bank personnel signed affidavits that were untrue, or not based on the signor’s actual knowledge.  An entity wishing to foreclose on a property must demonstrate it has filed an affidavit in compliance with Massachusetts law.  By  October 2010, the banks’ flagrant disregard of affidavit and notary process requirements became widely known.  Filings with various Registers of Deeds provided to the Attorney General’s Office revealed the pervasive use of mortgage service employees to sign hundreds of affidavits and sworn statements without personal knowledge of the information contained in those affidavits.   Evidence also suggests these practices were not confined to the foreclosure process, but also used in the assignment, transfer and modification of mortgages secured by property in Massachusetts.

FORECLOSING WITHOUT LEGAL AUTHORITY “IBANEZ VIOLATIONS”:

Second, these five entities participated in unlawful foreclosures when they commenced foreclosures on mortgages where they were not the holders of those mortgages.  The Supreme Judicial Court (SJC), in Commonwealth v Ibanez, recently upheld Massachusetts law and stated that “only the present holder of a mortgage is authorized to foreclose on the mortgaged property.”  The complaint alleges that these entities ignored this fundamental legal mandate and proceeded to foreclosure even though they did not hold the mortgage, and thus had no legal authority to conduct the foreclosure.  The banks’ failure to obtain a valid assignment of the mortgage prior to foreclosure has adversely impacted titles to hundreds, if not thousands, of properties in the Commonwealth.  The complaint alleges that the banks falsely claimed to be the holder of a mortgage in several foreclosure documents even though they failed to obtain a valid assignment of the mortgage.

UNDERMINING PUBLIC RECORDS “MERS”:

Third, the complaint alleges that these banks have undermined our public land record system through the use of MERS, a private electronic registry system.  According to the complaint, the creation and use of MERS was adopted by these defendants primarily to avoid land registration and recording requirements, including payment of recording and registration fees, and to facilitate sales of mortgage loans.  The use of MERS has resulted in a lack of transparency as to the entities that have the legal authority to enforce mortgages, and unfairly conceals from borrowers the true identity of the holder of the debt.  Since 1997, more than 63 million home loans have been registered on the MERS System, accounting for more than 60 percent of all newly-originated mortgage loans.  The complaint also alleges that through the use of the MERS system, the banks unlawfully failed to register assignments of mortgages and transfers of the beneficial interests in mortgages.
rest here
http://www.mass.gov/ago/news-and-updates/press-releases/2011/five-national-banks-sued-by-ag-coakley.html

George Knapp, Las Vegas Journalist, Becomes Victim Of Foreclosure Fraud He Reported On 11-29-11

Mortgage fraud: State a holdout in bank settlement 11-13-11

With all due respect to the Occupy Wall Street movement and its local offshoots, there are some real battles being waged on behalf of members of the 99 percent that have little do with tent encampments, general strikes and shutting down the Port of Oakland.

Take the case pitting California Attorney General Kamala Harris against the combined forces of the Obama administration and the nation's biggest banks.

Harris said Sept. 30 that she would not be party to a proposed settlement between the banks and the nation's 50 states, which, she said, holds the banks insufficiently accountable for illegal practices that have thrown millions of Americans out of their homes and left others owing more than their homes are worth.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/12/BULN1LTE4U.DTL#ixzz1dc3vTPk8

The FDIC Fights Back Against BofA's Attempt To Put The Taxpayer On The Hook For Trillions Of Dollars Of Derivatives11-12-11

Regulators may keep Bank of America from shifting derivatives from its Merrill Lynch unit to its consumer retail division, Bloomberg reports.

The Federal Reserve and Federal Deposit Insurance Corporation are discussing whether to allow further transfers between the two units. Bank of America Corp., the holding company of BofA's retail and institutional services units, had moved the derivatives to take advantage of a higher debt rating in its consumer division, which allowed it to post lower collateral levels.

In a 460 page SEC filing made after it reported earnings this October, Bank of America noted that these derivative moves could be limited by regulators, without naming either agency.

Read more: http://www.businessinsider.com/fdic-fights-fed-over-trillions-in-bank-of-america-derivatives-2011-11#ixzz1dc5I5Dvg

Foreclosed Homeowners Could Receive Small Checks Under Big Bank Settlement 11-11-11

Foreclosed borrowers abused by their lenders won't get their homes back, but they could get a little cash from a settlement under negotiation between state officials, the Obama administration, and the nation's biggest banks.

A coalition of attorneys general led by Iowa AG Tom Miller and federal housing chief Shaun Donovan is currently pushing for a $25 billion settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and Ally Financial (formerly known as GMAC). At issue is bad mortgage servicing and fraudulent foreclosure paperwork.

Attorneys General Eric Schneiderman of New York and Beau Biden of Delaware have warned Miller's focus is too narrow and the deal would let banks off the hook for too much wrongdoing. In August, Schneiderman and Biden broke off from the talks; they are now pursuing their own investigations.

The deal as currently stands would extract $17 billion worth of mortgage modifications and principal reduction for struggling borrowers, among other things, according to a source familiar with the situation. Another $3 billion would be set aside to boost refinancing. And from $5 billion paid directly to state and federal governments, foreclosure victims abused by one of the five banks would be eligible for restitution payments of around $1,500 or $2,000.
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http://www.huffingtonpost.com/2011/11/11/foreclosure-fraud-foreclosed-homeowners_n_1071826.html

Reminder to Settlement Class Members in Wells Fargo Mortgage-Backed Certificates Litigation: The Deadline to Submit Claim Forms Is December 7, 2011 11-10-11

NEW YORK, NY, Nov 10, 2011 (MARKETWIRE via COMTEX) -- Settlement Class Members who wish to participate in the proposed settlement obtained in the In re Wells Fargo Mortgage-Backed Certificates Litigation ("Action") are reminded that a completed Proof of Claim and Release ("Proof of Claim") and supporting documentation must be mailed to the Claims Administrator, postmarked no later than December 7, 2011.

The Settlement Class includes: ALL PERSONS AND ENTITIES WHO PURCHASED OR OTHERWISE ACQUIRED MORTGAGE PASS-THROUGH CERTIFICATES PURSUANT OR TRACEABLE TO WELLS FARGO ASSET SECURITIES CORPORATION'S JULY 29, 2005 REGISTRATION STATEMENT, OCTOBER 20, 2005 REGISTRATION STATEMENT, OR SEPTEMBER 27, 2006 REGISTRATION STATEMENT, AND THE ACCOMPANYING PROSPECTUSES AND PROSPECTUS SUPPLEMENTS IN THE FOLLOWING 28 OFFERINGS AND WERE DAMAGED THEREBY: The WFMBS 2006-1 offering, WFMBS 2006-2 offering, WFMBS 2006-3 offering, WFMBS 2006-4 offering, WFMBS 2006-6 offering, WFMBS 2006-AR1 offering, WFMBS 2006-AR2 offering, WFMBS 2006-AR4 offering, WFMBS 2006-AR5 offering, WFMBS 2006-AR6 offering, WFMBS 2006-AR8 offering, WFMBS 2006-AR10 offering, WFMBS 2006-AR11 offering, WFMBS 2006-AR12 offering, WFMBS 2006-AR14 offering, WFMBS 2006-AR17 offering, WFMBS 2007-11 offering, WFMBS 2006-7 offering, WFMBS 2006-10 offering, WFMBS 2006-AR16 offering, WFMBS 2006-18 offering, WFMBS 2006-AR19 offering, WFMBS 2006-20 offering, WFALT 2007-PA1 offering, WFMBS 2007-AR4 offering, WFMBS 2007-10 offering, WFMBS 2007-13 offering, and WFMBS 2006-AR15 offering.
REST HERE
http://www.marketwatch.com/story/reminder-to-settlement-class-members-in-wells-fargo-mortgage-backed-certificates-litigation-the-deadline-to-submit-claim-forms-is-december-7-2011-2011-11-10?reflink=MW_news_stmp

Dallas County DA's office explands lawsuit against MERS into class action involving other Texas counties 11-1-11

The Dallas County District Attorney's office said Tuesday in a press release that it expanded its lawsuit against the Mortgage Electronic Registration System and its parent company to a class action lawsuit that includes other counties.
It was not clear Tuesday afternoon which other counties were involved.
The DA's office did not say which other counties will be included. Dallas County argues that MERS acted as a "shadow recording system for the millions of mortgages in the United States, save its members money by avoiding filing fees in counties like Dallas County, and facilitate the buying and selling of mortgage rights as commodities," according to the press release.
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http://crimeblog.dallasnews.com/archives/2011/11/dallas-county-das-office-expla.html

Judge to reopen Patchogue foreclosure judgment 11-1-11

A state judge Monday agreed to reopen the foreclosure judgment against an East Patchogue couple -- a year after his order to wipe out their mortgage was overturned -- in the latest twist in a six-year battle.

Judge Jeffrey Arlen Spinner in Riverhead signed an order to temporarily bar IndyMac Mortgage Services from auctioning off the home of Gregory Horoski and his wife, Diana Yano-Horoski.

A few weeks ago the couple and their attorney, Ivan Young of Bohemia, accused IndyMac and its former law firm, Steven J. Baum in Amherst, of deception on several key details. They're also suing for $10 million in fraud damages. IndyMac hasn't responded in court yet.

"The anxiety that has been caused over the years is much more than the value of the mortgage," Greg Horoski said in an interview.

The central allegation is that IndyMac has no right to foreclose because it does not own the mortgage note. The couple alleges in court documents that IndyMac representatives "did actually slip up" in court by admitting the investor owner was Deutsche Bank.
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http://www.newsday.com/business/judge-to-reopen-patchogue-foreclosure-judgment-1.3288511

Bank Of America Forecloses On Home That Was Destroyed By A Hurricane 11-1-11

Bank of America has had some spectacular screw-ups when it comes to foreclosures recently, from foreclosing on an elderly couple who supposedly paid their mortgage too early to incorrectly repossessing a woman’s pet parrot. Add to the list of horror’s this tale from Texas, where one homeowner, Brad Gana, had his home destroyed by Hurricane Ike, and then had the remnants foreclosed upon by Bank of America after the bank took out an insurance policy on the non-existent home and raised Gana’s mortgage payments:

Hurricane Ike destroyed dozens of homes in Seabrook. Many families are just now rebuilding, but when Brad Gana tried to pick up the pieces, he learned that Bank of America was trying to take what little he had left.

“I was shocked when they said they were foreclosing on it,” Gana told investigator Amy Davis.
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http://thinkprogress.org/economy/2011/11/01/358159/bofa-foreclosure-hurricane/

Banks, regulators start massive review of foreclosures 11-1-11

Some people who lost their homes to a foreclosure system wrought with error and misconduct may now request their cases be independently reviewed and potentially may be compensated.

A large-scale review of foreclosures that occurred in 2009 and 2010 began on Tuesday with federal regulators requiring the nation’s largest mortgage servicers to start mailing letters to potential victims. Independent consultants that the banks were ordered to hire in April will conduct the assessments. More than 4 million borrowers could be eligible.

“The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions,” said John Walsh, acting Comptroller of the Currency, who along with the Federal Reserve and Office of Thrift Supervision ordered the reviews. “These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions.”

The actions affect 14 large mortgage servicers that were required to correct the shortcomings and errors in their foreclosure processes. The outreach effort that began Tuesday is a first step.
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http://latimesblogs.latimes.com/money_co/2011/11/massive-review-of-foreclosures-begins-by-banks-and-regualtors.html

Latest Leak on State Attorney General Mortgage Settlement: A Shameless Sellout to the Banks 10-30-11

There have been so many rumors about the so-called 50 state attorney general settlement (which now is more like a 43 state settlement) being on the verge of having a deal that we’ve discounted them. We’ve said from the beginning that this was a cash for release deal. Basically, because the Federal regulators and state AGs, by design, had done no meaningful investigations, they didn’t have any threats to bring the banks to heel. So they’d have to offer a bribe, and the bribe has always been a “get out of jail free” card.
Put it more simply: The banks got bailed out, and the rest of us got left out. Yet all levels of government are actively trying to find a way to release from wrong doing for the banks, when everyone knows that they violated a host of laws every step of the way in the mortgage business.
We said the only way a deal would get done is if the state AGs capitulated completely. There have been enough leaks about state AGs being uncomfortable with a broad release, plus the banks greatly overplaying their hand, that it looked like no deal would happen. Tom Miller, the Iowa AG who is the lead negotiator for the states, has been saying a deal is imminent since last January, so his credibility is pretty thin. But the Obama administration is moving heaven and earth to get a deal done, since they seem to think the public can be snookered into thinking motion is progress.
Nevertheless, the negotiations appear to be grinding forward. And it isn’t the banks that are giving ground. Gretchen Morgenson tells us at the New York Times what an utter joke the settlement has become.
The $25 billion being bandied about is about as solid as AIG’s credit default swaps. Of that total, only $3.5 to $5 billion would be paid in cash. That’s spread across 12 or more companies, with Bank of America presumably paying the most. So how do you get to $25 billion? Smoke and mirrors, natch. Per Morgenson:
The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.
rest here
http://www.nakedcapitalism.com/2011/10/latest-leak-on-state-attorney-general-mortgage-settlement-a-shameless-sellout-to-the-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Viewpoints: Obama plan avoids real fixes to housing crisis 10-29-11

When you examine President Barack Obama's most recent plan to help underwater homeowners you can't help but ask: Why is the federal government in the mortgage business?

Hasn't the loss of nearly half the value of our homes – thanks in large part to the federal scheme to make sure everyone owns a house whether they can afford it or not – been a lesson enough?

It is true, big banks that made bad mortgage loans got bailed out and many homeowners haven't. It's not fair. But neither is it fair to offer new false hopes based on old failed premises.

Nearly a third of mortgages in California are underwater, but why should we believe that this new program will work any better than previous federal efforts?

A federal inspector general's report found that the Home Affordable Modification Program, launched in 2009, which was designed for those behind in their mortgage payments or in foreclosure, was supposed to help 3 million to 4 million borrowers, but by Sept. 30, only 720,612 mortgages had been permanently modified. Some participants were left with "more principal outstanding on their loans, less home equity … and worse credit scores," and others with the very loss of their homes that the program was meant to prevent. The program became so notorious that a moneywatch.com reporter began posting "loan modification hell horror stories."

Read more: http://www.sacbee.com/2011/10/29/4015137/obama-plan-avoids-real-fixes-to.html#ixzz1cITvkJCj

Is the Jig up for MERS? 10-29-11

The Mortgage Electronic Registration System (MERS) has been the target in a lot of lawsuits during the mortgage crisis for its shoddy, opaque practices. But because these suits tend to be brought by borrowers in default, the courts have been willing to stretch the law to dismiss plaintiffs' claims. Something new is going on now. The Delaware Attorney General on October 27 sued MERS, a Delaware corporation, for deceptive trade practices for sowing confusion among investors and consumers and running an extra-legal registration system riddled with errors. The Delaware AG, Beau Biden, son of the vice president, is invoking the importance of transparent recording of property interests as a central part of American democracy since the colonial era. Some other AGs and other public officials are pursuing similar legal theories. The argument is that nothing is more important to our democracy than secure property rights recorded in transparent public records, and that the mortgage industry should not be permitted to take this away from us. To read about this new development, visit the Delaware Department of Justice web site, at http://attorneygeneral.delaware.gov/

State Court Voids Home Sale Due to Improper Foreclosure 10-19-11

A Massachusetts man lost something he never had – his home. The Masachusetts Supreme Judicial Court ruled this week that when Francis Bevilacqua purchased the home from U.S. Bank in 2006, the bank did not actually hold the home’s title.

The court ruled that because U.S. bank did not hold the mortgage note when it foreclosed on the property, it did not obtain the title in the foreclosure. Therefore, Bevilacqua did not purchase a legal title when he made the purchase.

In its ruling in Bevilacqua v. Rodriguez, the court referenced a case tried in the same court last January, U.S. Bank, N.A. v. Ibanez, in which the court ruled that if a bank cannot provide proof it owns the mortgage note, any foreclosure filings it initiates are void.

The Ibanez case, however, simply involved a foreclosure action. Bevilacqua extends that ruling to instances when a new homeowner has already purchased the property.

“As we recently held in the Ibanez case, Massachusetts ‘adhere[s] to the familiar rule that ‘one who sells under a power [of sale] must follow strictly its terms’‘ so, where a foreclosure sale occurs in the absence of authority, ‘there is no valid execution of the power, and the sale is wholly void,’” the court wrote.

“This case is just one example of a much larger problem,” stated Massachusetts Attorney General Martha Coakley in response to the ruling. “In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure.”

“This is yet another clear demonstration that the only way we are going to restore a healthy economy is to address the foreclosure crisis and hold the banks accountable for their actions,” she continued.

State stops foreclosing on borrowers who rent out their homes 10-29-11

Reporting from Sacramento— A state-run housing agency that provides low-interest mortgages to first-time home buyers has temporarily suspended foreclosures on borrowers who rented out their homes in violation of program rules.

The office of Senate President Pro Tem Darrell Steinberg announced Friday that the California Housing Finance Agency had agreed to his request to halt the proceedings.
Earlier this week, Senate investigators issued a report that said the agency, known as CalHFA, initiated or threatened foreclosures on about 200 borrowers who were current on their payments but no longer living in their homes as required by state regulations and federal tax law.

The borrowers, who owed more on their properties than the homes were worth, moved out for a variety of personal reasons but did not want to sell the homes at losses. A typical foreclosure proceeding costs the agency $50,000, according to a CalHFA spokesman.

"The agency is making the right decision during difficult economic times," said Steinberg (D-Sacramento). "Struggling families, who are working to do the right thing in meeting their obligations, shouldn't be saddled with an extra, unnecessary burden."
rest here
http://www.latimes.com/business/la-fi-california-foreclosures-20111029,0,3468950.story

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California reportedly subpoenas BofA over toxic securities 10-19-11

Investigators with the state attorney general's office have subpoenaed Bank of America Corp. in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to a person familiar with the probe.

The state is trying to determine whether the bank and its Countrywide Financial subsidiary sold investments backed by risky mortgages to institutional and private investors in California under false pretenses, according to the person, who was not authorized to speak publicly and requested confidentiality.

The subpoenas, which were served Tuesday, come as talks continue for a broad foreclosure settlement by a coalition of state attorneys general and federal agencies. California walked away from those discussions with major banks more than two weeks ago, saying what the banks were offering was not enough and the state would pursue its own investigations.

California has left the door open to signing on to a bigger settlement, and the BofA subpoenas were seen as a move to exert further pressure on the bank. The person familiar with the matter would not say how much the securities in question cost investors.

"I think the California AG is seeking leverage here," Nancy Bush, an independent bank analyst and contributing editor to research firm SNL Financial, said. "They have backed out of whatever 50-state AG settlement that is coming down the road, and they want more from that settlement, so, you know, why not bring a little extra pressure to bear?"
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http://www.latimes.com/news/local/la-fi-bank-america-harris-20111020,0,7737925.story

Eshoo: Obama fails on foreclosures 10-19-11

U.S. Rep. Anna Eshoo heaped criticism on President Barack Obama and his administration this week for failing to address the “catastrophic” wave of home foreclosures across the country and is pressuring the White House to adopt effective policies to turn the housing crisis around.


Eshoo’s office wants to see Obama get a little more aggressive in tackling the issue.


Numbers released yesterday suggest the crisis may worsen as real estate information service DataQuick reported that banks sent nearly 26 percent more default notices to California homeowners in the third quarter compared to the previous three months.


Default notices actually reached a three-year low in the second quarter this year at about 56,000 but the number spiked dramatically in July, August and September to more than 71,000 first-time notices of default, a 26 percent increase in just three months, according to DataQuick.


To combat the problem and keep people from losing their homes to foreclosure, Eshoo, D-Palo Alto, and other California Democrats in Congress, including U.S. Rep. Jackie Speier, D-San Mateo, are urging the Obama administration to institute a “Homeowner’s Bill Of Rights” and to establish a plan to refinance all mortgages owned or guaranteed by Fannie Mae and Freddie Mac.


The Homeowners Bill of Rights would affect federal programs including the Federal Housing Administration and Home Affordable Modification Program.

In response to Eshoo’s demands, a White House spokesman said Obama is focused on taking steps to help struggling homeowners, particularly in states hardest hit by the housing crisis.
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http://www.smdailyjournal.com/article_preview.php?id=220673&title=Eshoo:%20Obama%20fails%20on%20foreclosures

Citigroup paying $285M to settle SEC fraud charges 10-19-11

WASHINGTON (AP) -- Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of complex mortgage investment just as the housing market was starting to collapse.

The Securities and Exchange Commission said Wednesday that the big Wall Street bank bet against the investment in 2007 and made $160 million in fees and profits. Investors lost millions.

Citigroup neither admitted nor denied the SEC's allegations in the settlement.

"We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibly," Citigroup said in a statement.

The penalty is the biggest involving a Wall Street firm accused of misleading investors before the financial crisis since Goldman Sachs & Co. paid $550 million to settle similar charges last year. JPMorgan Chase & Co. resolved similar charges in June and paid $153.6 million.

All the cases have involved complex investments called collateralized debt obligations. Those are securities that are backed by pools of other assets, such as mortgages.

Citigroup's payment includes the fees and profit it earned, plus $30 million in interest and a $95 million penalty. The money will be returned to the investors, the SEC said.

In the July-September quarter, Citigroup earned $3.8 billion. CEO Vikram Pandit this year was awarded a multi-year bonus package that could be worth nearly $23.4 million if performance goals are met.

At the height of the financial crisis in 2008, regulators worried that Citigroup was on the brink of failure. It received $45 billion as part of the $700 billion government bailout.
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http://finance.yahoo.com/news/Citigroup-paying-285M-to-apf-4119340037.html?x=0

New Proposal Floated in Servicer/AG Settlement Talks 10-18-11

A new plan is on the table in the seemingly endless parade of negotiations aimed at ending the foreclosure crisis and resolving the legal impasses over alleged foreclosure abuses by the big banks. The latest proposal, detailed in today's Wall Street Journal, was presented in a meeting last week between the banks and government negotiators.

According to The Journal the new plan is designed to win the support of California's Attorney General Kamala D. Harris who, as was reported here, recently announced she would not be a part of the proposed settlement between five major banks and the 50 state attorneys general over processes used by the large banks' servicing arms in pursuing foreclosures. When Harris withdrew from the negations she said that the settlement was inadequate for California homeowners. "It became clear to me," she said, "that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated. In return for this broad release of claims, the relief contemplated would allow too few California homeowners to stay in their homes."

If Harris's statement can be taken at face value, it seems that the current proposal will do little to drag her back on board. The plan would make refinancing available to borrowers where the home is worth less than the mortgage, the borrower is current on payments, and the mortgage is owned by the bank. The Journal estimates that around 20 percent of all U.S. mortgages are owned by U.S.-chartered commercial banks with the remainder held by investors in mortgage-backed securities. In return the banks are reported to want an even broader release from legal claims than they were seeking before the refinancing proposal hit the table.

Lack of equity has prevented many homeowners from refinancing to take advantage of the current record-low interest rates. CoreLogic has estimated that around eight million homeowners who are "under water" have above market rates but refinancing through traditional mortgages is not available to most. Some government programs such as HARP have been aimed at helping these borrowers but have been limited to mortgages held or guaranteed by the GSEs or FHA. California has an estimated 2.06 million homes that are underwater and insiders have said that it would be difficult to reach a settlement without that involvement of the state.
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http://www.mortgagenewsdaily.com/10182011_ag_servicer_settlement.asp

NC court weighs if foreclosure needs original docs 10-17-11

North Carolina's Supreme Court heard arguments Monday in a case that could decide whether mortgage lenders can foreclose on a home without producing original documents that prove they're owed the money.

The hearing in a state traditionally friendly to banks and home to U.S. industry leader Bank of America comes as paperwork problems have gummed up foreclosures nationwide.

Those problems include missing documents validating a mortgage transaction and unqualified employees "robo-signing" affidavits improperly swearing to the accuracy of overdue mortgage debts. The problem of suspect documents could create legal trouble for homeowners and mortgage lenders for years.

The case came before the state's high court after years of an active secondary market which saw lenders loosen standards, then combine thousands of mortgages into securities which were then sold on to investors who might buy a slice of the new financial instrument.

The court heard from attorneys representing Wells Fargo and a Duplin County homeowner whose $50,000 loan was transferred to a series of secondary financial companies. Lawyers for Linda Dobson of Magnolia argued that Wells Fargo and its affiliates can't foreclose on her home without producing the original promissory note proving they're due the debt, something they haven't done after more than three years.

"Mrs. Dobson was not clear who owned her mortgage," said her lawyer Celia Pistolis, an attorney with Legal Aid of North Carolina. "That is, in essence, the issue before this court today."

Wells Fargo attorney John Mandulak said it hasn't produced the original loan documents yet, but might be able to do that if the court agrees to revive its case and send it back to a lower court for trial. Meanwhile,
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http://www.businessweek.com/ap/financialnews/D9QEDB5G0.htm

Bernstein Liebhard LLP Announces Filing of a Class Action against MERS and Its Members 10-13-11

NEW YORK, Oct 13, 2011 (BUSINESS WIRE) -- Bernstein Liebhard LLP, with David P. Joyce, Prosecuting Attorney for Geauga County, Ohio, announced today that a lawsuit has been filed in the Geauga County Court of Common Pleas by Plaintiff Geauga County, on behalf of itself and all other Ohio counties, (the "Class") against MERSCORP, Inc., Mortgage Electronic Registration System, Inc. ("MERS"), and MERS's members (collectively, "Defendants").

In the class action complaint, Plaintiff Geauga County, on behalf of itself and all other Ohio counties, alleges violations of Ohio state law arising from Defendants' failure to record intermediate mortgage assignments in, and pay the attendant county recording fees to, Ohio county recording offices. In failing to record, Defendants systematically broke chains of title throughout Ohio counties' public land records by creating "gaps" due to missing mortgage assignments they failed to record, or by recording patently false and/or misleading mortgage assignments. Defendants' purposeful failure to record has eviscerated the accuracy of Ohio counties' public land records, rendering them unreliable and unverifiable -- damage to public land records that may never be entirely remedied.
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http://www.marketwatch.com/story/bernstein-liebhard-llp-announces-filing-of-a-class-action-against-mers-and-its-members-2011-10-13

Comedian Chris Tucker faces foreclosure on mansion 10-13-11

MONTVERDE, Fla. (AP) — Court records show comedian Chris Tucker is facing foreclosure on his multimillion-dollar mansion in central Florida. Records show SunTrust Bank filed papers against the California resident with Lake County courts earlier this week.

According to documents, Tucker bought the 10,000-square-foot lakefront home for $6 million in 2007 — before the housing market crashed. The bank claims he still owes more than $4.4 million, but the county property appraiser has the home currently assessed at $1.6 million.
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http://movies.yahoo.com/news/comedian-chris-tucker-faces-foreclosure-mansion-225141856.html

California Dems intensify pressure on Obama to tackle foreclosures 10-12-11

An exasperated group of California Democrats is intensifying its attack on President Obama's handling of the ongoing foreclosure crisis.


The lawmakers — who maintain the president has unilateral powers to help struggling homeowners — say he's chosen instead to prioritize the well-being of the financial industry. And they aren't mincing words.

"The challenges that we are facing are exacerbated by an administration that has simply not gotten it right over, and over, and over," Rep. Dennis Cardoza (D-Calif.) told reporters Thursday in the Capitol. "The administration has simply not done a darn thing to help my constituents."

"The dignity of people is gone," added Rep. Anna Eshoo (D-Calif.), "and the administration has not come up with a response that is satisfactory."

Other California Democrats were only too eager to pile on, with Rep. Lois Capps hammering the administration's housing initiatives as "woefully inadequate," Rep. Jackie Speier urging "bold" reforms in lieu of tweaks to existing programs, and Rep. Barbara Lee decrying an administrative timidness that's "turned the dream of home-ownership into a nightmare."
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http://thehill.com/homenews/house/187187-california-dems-intensify-pressure-on-obama-to-tackle-foreclosures

Robosigning 2.0: Mortgage Foreclosure File Reviewers 10-10-11

posted by Adam Levitin
Do you have what it takes to be a Mortgage Foreclosure File Reviewer Level 2? An intrepid researcher forwarded to me a job ad for a mortgage foreclosure reviewer who will be reviewing bank foreclosures per the OCC/Fed servicing fraud consent orders. I have seldom seen a document that says more about the bullshit malarkey that the OCC and Fed are trying to pass off to cover for the banks than this job ad. I think it demolishes even the thin fiction that the OCC/Fed servicing consent orders are anything more than Potemkin villages. Instead, what we have here is nothing less than a federally-blessed Robosigning 2.0.

The ad is for a Mortgage Foreclosure File Reviewer Level 2 (whatever Level 2 means). It states that the:
Key responsibility will be to determine if there was financial harm to the borrower.

It further states that the MFFR-L2 will:

Conduct a complete review of the foreclosure file to ensure all default timeframes were processed accurately.

Review to determine if ownership of the note and mortgage was properly documented when foreclosure was initiated, and document any exceptions.

Determine if the foreclosure was processed in accordance with applicable state and federal laws, to include SCRA and US Bankruptcy Codes, and document any exceptions.

Validate fees and penalties charged and assessed were reasonable, customary and within the applicable state and federal laws, and document any exceptions.

Now I'm just a simple law professor, but gosh, these sure look like legal questions to me. A determination of whether there is financial harm (as in whether the harm is legally cognizable) is a question of law, not a question of fact--it would go to a judge, not a jury. The amount of the damages are a fact question, but that's a secondary inquiry after one determines that there was a legally cognizable harm. Similarly, proper documentation of the "ownership" of the note and mortgage is a legal question (and the legal terminology is not about "ownership" if the note is negotiable--itself a serious and unresolved legal issue). And how about determining of the foreclosure was processed in accordance with applicable state and federal laws? That sure seems like something one would want a lawyer reviewing. Same thing with the legality of fees and penalties.

So given this job requires a determination of a whole number of legal questions, it's a job ad for a lawyer right?

Nope. No law degree required, much less experience in legal issues relating to foreclosure (and appropriate conflicts screening). Instead, consider the "Minimum Requirements" for the position:

•Mortgage Servicing/Foreclosure experience (minimum of one year with Foreclosure experience)
Hmmm. I did a year of robosigning after graduating high school. Do I qualify? Sure seems like it.

•Audit experience (Ability to independently review foreclosure files)
This is "audit experience"? For real? Not even Arthur Anderson would have made this sort of claim with Enron. This ain't an audit in the CPA sense of the word. Instead, I take the "ability to independently review foreclosure files" to mean that no one is going to double-check your work. Or put in legal terms, a second set of eyes via appellate review is more expensive than the OCC will make the banks shell for.

•Pay rate is $19 - $23/hr DOE.
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http://www.creditslips.org/creditslips/2011/10/robosigning2.html

Signing scandal hitting home 10-9-11

Dubious names affect verification of deeds
Dan Stockman | The Journal Gazette
FORT WAYNE – Allen County Recorder John McGauley knew property documents with suspect signatures were prevalent. After all, there were so many that a year ago the nation’s largest banks had to halt foreclosures to deal with the sea of paperwork that could not be trusted.

The problem was so big it spawned a new word to describe it: “robo-signing,” meaning offices filled with low-paid workers signing documents they had never read, documents they were not qualified to sign and often signing someone else’s name.

Still, McGauley was surprised to hear that robo-signing was not limited to foreclosure documents but was being found on thousands of homeownership documents having nothing to do with seized homes.


He was even more surprised when a quick check of Allen County records revealed more than 8,000 suspect documents have been filed here since 2006 – records McGauley’s office is charged with preserving as the final word in property ownership.

“It was just like reaching into a hat where your number was on more slips of paper than it wasn’t on,” McGauley said. “Everything you pulled out was another one.”

But the real surprise was when McGauley looked through the documents for his own home. The mortgage release on the house he and his wife sold in 2005 bears the signature of Linda Green – the most notorious robo-signer in the nation.

“This is the kind of thing that can really upset people because the biggest investment most people will ever make is their home,” McGauley said. “It’s frustrating me.”

It could be frustrating millions soon and frustrating an already-battered real estate market.

If invalid documents are discovered in the chain of ownership, it could delay a home sale or make it difficult for buyers to get a mortgage because title insurers will not write a policy for the property, said Justin Ailes, vice president of government affairs of the American Land Title Association, which represents the title insurance industry.

Banks and other mortgage lenders will not write a home loan without title insurance.

That means your house – even if you’ve never missed a payment or had an ownership dispute – could be impossible to sell until the documents are verified, or it could be impossible to buy your dream home.

“Because of these bad titles, property owners can’t prove they own the properties they think they bought, and banks can’t prove they had the right to sell them,” said Jeff Thigpen, the registrar of deeds in Guilford County, N.C.
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http://www.journalgazette.net/article/20111009/LOCAL10/310099910

Our Guide to Obama’s Floundering Foreclosure Programs 10-7-11

More than 6 million Americans are behind on their mortgage payments or facing foreclosure [1]. Housing prices have continued to drop [2], and many neighborhoods across the U.S. are filled with foreclosed homes [3].

What exactly has the administration done in the face of such historic need? We've put together a guide to the administration's major efforts to help homeowners, laying out the promise of each and how they've actually performed.
It's a sobering list. Obama himself has called his approach to the foreclosure crisis one of his biggest mistakes [4] dealing with the recession. Overall, the foreclosure programs have failed to reach more than a fraction of the homeowners they were designed to help.

Here are the depressing details:

Programs That Have Been Enacted
Plan: Help millions of homeowners by encouraging servicers to lower mortgage payments

Obama launched his "homeowner bailout," Making Home Affordable [5], in the spring of 2009, with the aim of helping at least 3 million to 4 million homeowners avoid foreclosure. The program gives banks and other mortgage servicers modest incentives to adjust the terms of mortgages so that homeowners who can't afford their current monthly payments can stay in their homes.

Reality: Mistakes, lost documents, lax oversight; billions remain unspent

As we've detailed, the program has been marked by deep dysfunction [6]. Mortgage servicers mishandled cases, made errors and lost documents, while government watchdogs looked on and did almost nothing [7]. In one case, a government auditor found that mortgage servicer GMAC had made errors on 80 percent of audited cases — but kept the mistakes secret. GMAC said it didn't reverse a single foreclosure action as a result of the sobering audit results [8].

Meanwhile, as of August, only about 816,000 homeowners [9] had received loan modifications through the program, or fewer than one in four of those who applied [9]. The government is on track to spend only about $7 billion of the $45.6 billion in bailout funds [10] set aside to help homeowners. As a result, nearly $30 billion meant to address the foreclosure crisis may instead be used to pay down the deficit [10].

Plan: Allow millions of homeowners to refinance their mortgages at lower interest rates

Launched in 2009, the Home Affordable Refinance Program was designed to allow some homeowners to take advantage of this year's historically low interest rates [11] and refinance their loans. The administration estimated "up to 4 [million] to 5 million" homeowners [12] would be able to take part. In his jobs speech in early September [13], Obama promised to work with federal agencies to make this option available to more people.
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http://www.propublica.org/article/our-guide-to-obamas-floundering-foreclosure-programs

Baron and Budd, P.C. Investigating Potential Mortgage Fraud by Wells Fargo 10-7-11

LOS ANGELES, Oct 07, 2011 (BUSINESS WIRE) -- Baron and Budd, P.C. is investigating an alleged mortgage scheme that banks may be using to take advantage of consumers. Baron and Budd has determined that the mortgage-lending arm of Wells Fargo may be charging inappropriate fees to clients who are more than 20 days late, a period termed "in default," on their mortgage payments. The policy appears to be upheld even if the customer gets caught up and makes payments on time. These fees are typically added to a homeowner's loan balance or otherwise charged to them without the homeowner's knowledge or consent.

"Sadly, this is yet another deceptive practice that banks have developed to make money from consumers," said Roland Tellis, head of Baron and Budd's consumer fraud litigation team. "These banks are taking advantage of homeowners when they're down, and most homeowners don't even know that this is happening."
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http://www.marketwatch.com/story/baron-and-budd-pc-investigating-potential-mortgage-fraud-by-wells-fargo-2011-10-07?reflink=MW_news_stmp

Wells Fargo Forecloses On Home Because The Title Was Never Transferred 10-7-11

We've covered a number of stories of homeowners who weren't behind on their mortgage payments but found themselves the subject of foreclosure because someone at the bank transposed a number or didn't pay attention to the documents they were robo-signing. But here's one about a Houston couple who find themselves facing foreclosure from Wells Fargo, all because someone never transferred the title.

The couple purchased the home in 2008 and made their mortgage payments every month to Bank of America. Unfortunately, not long after they bought the house, the title company used for the purchase went bankrupt and, unbeknownst to the homeowners, the title was never transferred.
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http://consumerist.com/2011/10/wells-fargo-forecloses-on-home-because-the-title-was-never-transferred.html

Another Texas County Mulls Possible MERS Suit; Up to $100M Could Be In Issue in Harris County 10-7-11

With as much as $100 million in unpaid filing fees at issue, another Texas county is pondering possible litigation against those responsible for an electronic system that circumvented the traditional method of recording paperwork when lenders purchase mortgages from each other.

On the agenda for a Tuesday meeting of the governing body of Harris County is whether to hire the same law firm that filed a similar suit on behalf of Dallas County last month concerning the Mortgage Electronic Registration Systems, reports Bloomberg.

That firm is Malouf & Nockels, says Harris County Attorney Vince Ryan, who estimates, based on preliminary figures, that at least $11 million and as much as $100 million in recording fees could be at issue in Harris County alone.

“Our cause is mirrored by every other county in Texas that can tag onto this,” he said. “This thing is huge.

A spokeswoman for Merscorp Inc., based in Reston, Va., declined Bloomberg's request for comment on the county's plan.

Similar suits over MERS have also been filed by counties in Michigan and Pennsylvania, and a law professor tells the news agency that counties in Utah are also considering such litigation.

California Attorney General Harris Now Signaling Willingness to Rejoin Foreclosure Talks 10-7-11

Dave Dayen saw this one coming. When Kamala Harris said she was not willing to participate in the so called “50 state” attorney general mortgage negotiations, he recognized Harris’ refusal to join the New York attorney general Schneiderman’s group as a bad sign. Note that the state of the talks is persistently misreported in the MSM as being only Schneiderman, when Delaware, Massachusetts, Kentucky, Nevada, and Minnesota are also out of the talks.
It is a safe bet that the Democratic party has been muscling Harris since her defection last week. The Administration is desperate to have the AGs provide legitimacy to their planned “settlement as coverup” strategy. Not that it will be that effective in the end. The threat of the two states where all securitization trusts are domiciled (New York and Delaware) has the potential to undermine the value of any settlement, particularly since New York has the potent weapon of the Martin Act. Merely those two states moving forward (and remember, it is more than those two states) has the potential to be extremely embarrassing to the Administration and the AGs who continue to serve as human shields for the Administration.
But the belief appears to be that even with this group pushing forward, nothing all that earth shattering will happen prior to the 2012 elections. That is an awfully risky bet. The filings this year by Schneiderman, Beau Biden, and Catherine Masto alone have provided ample evidence of bank misconduct, and also provide ideas and cover for private sector litigants (particularly investors, who are a very conservative bunch). And any settlement will not restrict the rights of private plaintiffs, such as aggrieved homeowners, to act.
Note that Harris’ body language is ambiguous: she has only said she is would take a better deal from the banks if she offered one, which merely means she is willing to negotiate with them separately. So narrowly, this is just a reiteration of her position as of last week. But this reaffirmation also opens the door to her rejoining the talks if the banks make meaningful movement, and Reuters concurs with this reading. I don’t see this happening (and neither does Massachusetts AG Martha Coakley, as quoted in the Wall Street Journal account).
From the Journal:
California Attorney General Kamala Harris, who dropped out last week from talks aimed at wringing a huge settlement from banks accused of foreclosure abuses, remains open to a deal if it involves “a stronger proposal” from lenders, according to a person familiar with the situation….
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http://www.nakedcapitalism.com/2011/10/california-attorney-general-harris-now-signaling-willingness-to-rejoin-foreclosure-talks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

What happens if AG mortgage deal falls through? 10-6-11

With the news Wednesday that Massachusetts Attorney General Martha Coakley has "lost confidence" in the multistate AG talks with five big banks and is revving up to sue, coupled with last week's announcement by California AG Kamala Harris that she's also dropping out of talks and launching her own investigation, I've been wondering what shape an AG suit against mortgage lenders would take. I reached out to both the New York and Delaware attorneys general offices, since they were the first to start talking about filing their own cases. They didn't return my calls. But according to the bank lawyers I talked to (caveat emptor), there's a huge gap between the wrongs the states will be able to show and the relief for troubled homeowners that they say they want.

"There's a fundamental disconnect between what they want and they claims they might have," one bank lawyer said.

Let's put aside securities fraud claims the states may have for troubled mortgage-backed securities, since those have nothing to do with the robosigning revelations that led all 50 states to enter talks with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial a year ago. The basis of the talks has been deficiencies in the foreclosure process. Mortgage servicers took all sorts of shortcuts as they pushed an unprecedented surge of homeowners into foreclosure beginning in 2008. It's pretty much undisputed that foreclosure law firms filed untold numbers of false certifications and deficient affidavits with the courts in states that require foreclosures to be approved by a judge.

There are also myriad problems with mortgage documentation, as MBS investors have discovered when they've reviewed underlying loan files. The chain of ownership is another potential area for AG claims. The Mortgage Electronic Registry System, a database set up to facilitate mortgage loan trading, has spent the last two years fending off all sorts of homeowner claims that it has either engaged in a conspiracy to force homeowners into foreclosure or else is responsible for administrative fiascos.
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http://newsandinsight.thomsonreuters.com/New_York/News/2011/10_-_October/What_happens_if_AG_mortgage_deal_falls_through_/

Fannie Mae calls off eviction, will negotiate with Bassett resident Rose Gudiel 10-6-11

LOS ANGELES - Hours after being released from Pasadena Police custody, Rose Gudiel went from desperation to elation when she got the phone call she's been fighting for all these months.

The embattled Bassett resident got a phone call early Thursday morning from Pasadena bank OneWest on behalf of Fannie Mae letting her know that the mortgage giant will sit down with her Friday afternoon and negotiate a loan modification.

"I'm so happy and relieved," Gudiel said. "That's all we have been asking. We do not want charity, just a chance to keep our home."

The bank also called the Los Angeles County Sheriff to cancel a planned eviction from her home in the 13000 block of Proctor Avenue. Gudiel and her supporters had been defying a court order to vacate for days and battling to get the banks' attention for months.

That battled has included two years of paperwork, a day in court and several months of protest, including a brief takeover in August of OneWest headquarters in Pasadena by a group of 50 Gudiel supporters.

It all culminated Wednesday, when Gudiel was arrested with her 63-year-old mother Rosa and several others on suspicion of unlawful assembly inside Fannie Mae's regional headquarters. They were cited and released hours later.

The arrests came after about 70 protesters took over the lender's lobby for about 90 minutes, demanding that someone come down to talk to Gudiel.

For two years, bank officials have refused to take her house payments because Gudiel was in the modification process, she said. Most banks require borrowers to be in default before considering modification.

Thursday afternoon, Gudiel was back fighting for homeowners' rights when she led a group of hundreds through Downtown Los Angeles' Financial District.
REST HERE
http://www.pasadenastarnews.com/news/ci_19054825

Baum Law Firm to Pay $2 Million Over Foreclosure Practices 10-6-11

Oct. 6 (Bloomberg) -- Steven J. Baum's foreclosure law firm, one of the largest in New York state, will pay the U.S. $2 million and change its practices, including those related to Merscorp Inc.'s mortgage database, to resolve a probe of its foreclosure filings.

The agreement, signed today, resolves an investigation into whether the Baum firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement doesn't constitute a finding of wrongdoing.

“There are no excuses for sloppy practices that could lead to someone mistakenly losing their home,” Bharara said in the statement. “Homeowners facing foreclosure cannot afford to have faulty paperwork or inadequate evidence submitted, and today's agreement will help minimize that risk.”

Steven J. Baum PC, located in Amherst, New York, just north of Buffalo, has attracted lawsuits and fines for its actions during the housing crisis. It has been accused of overcharging, filing false documents and representing parties on both sides of a mortgage transfer.

State attorneys general and federal regulators are negotiating with banks including JPMorgan Chase & Co. and Bank of America Corp. to try to reach a settlement over faulty foreclosure practices in the wake of the financial crisis.

The changes in procedure “go over and above what current law requires,” Baum said in an e-mailed statement. “We will continue to adhere to the highest ethical standards.”
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http://news.businessweek.com/article.asp?documentKey=1376-LSNJHI6K50YB01-0AO3U1V7HS8DHJ0QK1N7RV7C6B

BofA, JPMorgan, Wells Accused of Charging Veterans Illegal Fees 10-5-11

Oct. 5 (Bloomberg) -- Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. were among 13 banks and mortgage lenders accused in a so-called whistleblower lawsuit of charging military veterans illegal fees to refinance home loans.

The banks charged fees barred under a U.S. Department of Veterans Affairs program and hid the charges to get government guarantees for the loans, according to the whistleblower complaint brought in 2006 by two mortgage brokers that was unsealed yesterday in federal court in Atlanta.

“This is a massive fraud on the American taxpayers and American veterans,” James E. Butler Jr., a lawyer for the plaintiffs, said in an e-mailed statement. “Knowing they weren’t allowed to charge the fees, the banks and mortgage companies inflated allowable charges to hide these illegal fees without telling the veterans who were the borrowers or the VA they were doing so.”

The Justice Department isn’t joining the lawsuit, according to a Sept. 30 filing by the U.S. Attorney’s office in Atlanta.
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http://www.businessweek.com/news/2011-10-05/bofa-jpmorgan-wells-accused-of-charging-veterans-illegal-fees.html

Massachusetts preparing to file foreclosure lawsuits 10-5-11

Mass to sue big banks on foreclosure issues

* AG "lost confidence" in multi-state agreement

* States that pull out could still benefit from settlement

Oct 5 (Reuters) - Massachusetts on Wednesday said it is preparing to sue big banks related to unlawful foreclosures, dealing another blow to the multi-state talks aimed at resolving those investigations on a national scale.

"I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures," Massachusetts Attorney General Martha Coakley said in a statement.

Federal and state officials met with representatives of several large U.S. banks this week with hopes of reaching a deal in the coming weeks.

Mortgage servicing units of Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N), Wells Fargo (WFC.N), Citigroup (C.N), and Ally Financial are accused of coping with an unexpected deluge of mortgage defaults beginning in 2008 by cutting corners and unlawfully rushing through foreclosure paperwork.

A settlement with all 50 states and federal authorities could help the banks move beyond the legal fallout that has dogged them since the peak of the financial crisis.

But the long-running talks -- which will hit the one-year mark later this month -- have been plagued from the start with criticism from states concerned about the extent of the legal immunity the banks have sought.

Last Friday, California pulled itself from the negotiating team and said the deal under discussion would not provide enough relief to the state's homeowners.
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http://www.reuters.com/article/2011/10/05/financial-regulation-mortgages-idUSN1E7941D620111005

Bank of America’s Countrywide May Face Fraud Suit After U.S. Housing Audit 10-4-11

Bank of America Corp. (BAC), the biggest U.S. lender by assets, should face fraud claims after the firm’s Countrywide unit submitted incorrect data on borrowers for government-insured loans, a federal watchdog said.

Half of 14 loans reviewed had “material underwriting deficiencies” that resulted in more than $720,000 in losses, according to a Sept. 30 report from the Office of the Inspector General for the Department of Housing and Urban Development. A regional inspector general for HUD, Kelly Anderson, recommended that the agency’s lawyers pursue legal remedies against Charlotte, North Carolina-based Bank of America.

“Countrywide did not properly verify, analyze, or support borrowers’ employment and income, source of funds to close, liabilities and credit information,” Kelly wrote in the audit. “This noncompliance occurred because Countrywide’s underwriters did not exercise due diligence in underwriting the loans.”

Bank of America, which bought Countrywide Financial Corp. in 2008, is among lenders facing the most costs if the Federal Housing Administration rejects claims for reimbursement on soured government-guaranteed loans, FBR Capital Markets Corp. analyst Paul Miller said yesterday. The government said in May that it could pursue other lenders after suing Deutsche Bank AG for more than $1 billion, accusing the firm of lying to the FHA while arranging mortgage insurance.
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http://www.bloomberg.com/news/2011-10-04/bank-of-america-s-countrywide-may-face-fraud-suit-after-u-s-housing-audit.html

Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite 10-4-11

Why has the administration’s flagship foreclosure prevention program been so ineffective in helping struggling homeowners get loan modifications and stay in their homes? One reason: The government’s supervision of the program has apparently ranged from nonexistent to weak.

Documents obtained by ProPublica – government audit reports of GMAC, the country’s fifth largest mortgage servicer – provide the first detailed look at the program’s oversight. They show that the company operated with almost no oversight for the program’s first eight months. When auditors did finally conduct a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications – miscalculating homeowner income in more than 80 percent of audited cases, for example. Yet GMAC suffered no penalty. GMAC itself said it hasn’t reversed a single foreclosure as a result of a government audit.
The documents also reveal that government auditors signed off on GMAC loan-modification denials that appear to violate the program’s own rules, calling into question the rigor and competence of the reviews.

Some of the auditors’ mistakes are “appalling,” said Diane Thompson of the National Consumer Law Center, an advocacy group. “It suggests the government isn’t taking the auditing process seriously.”

In a written response to ProPublica questions [1], a spokeswoman for the Treasury Department, which runs the program, denied there were serious flaws in its oversight system, calling it “effective and unprecedented in many ways.”

The audits of GMAC, though revealing, give only a limited view into the program, because the Treasury has refused to release the documents for other servicers. For more than a year, ProPublica has sought the audits for ten of the largest program participants through a Freedom of Information Act request. The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports.

Abuses of the foreclosure process, in which banks and mortgage servicers cut corners or even created false documents [2] to move trouble borrowers out of their homes, have been extensively documented [3], along with failures by government [4] to regulate the industry. But the lapses revealed in the documents obtained by ProPublica stand out because they occurred within the government’s main effort to prevent foreclosures, the Home Affordable Modification Program, or HAMP.
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http://www.propublica.org/article/secret-docs-on-foreclosure-watchdog

Why California left multi-state foreclosure talks 10-4-11

California has left multi-state settlement talks with major American banks over foreclosure wrongdoing and will take its own path to provide relief to affected homeowners.

"We have decided to walk an independent path," said State Attorney General Kamala Harris on Wednesday in a telephone conference with reporters.

Harris pulled out of negotiations that involved other state attorneys general because the settlement "didn't provide a fair deal to California." However, she declined to elaborate what that means or the dollar amount that was offered but added it was "not meaningful relief."

"In our discussions, I have carefully considered every proposal on the table," said Harris, in a letter to Associate US Attorney General Thomas Perrelli and Iowa Attorney General Tom Miller, dated Sept. 30.

She added: "Last week, I went to Washington, D.C. in hopes of moving our discussions forward. But it became clear to me that California was being asked for broader release of claims than we can accept and to excuse conduct that has not been adequately investigated. In return for this broad release of claims, the relief contemplated would allow too few California homeowners to stay in their homes."
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http://www.signonsandiego.com/news/2011/oct/04/calif-departs-multi-state-foreclosure-talks/

Class Action Lawsuit Alleging Fair Debt Collection Violations to Proceed Against Bank of America and Recontrust Company 10-4-11

(Salt Lake City, UT) - US District Judge Dee Benson ruled Tuesday that a class action lawsuit can proceed against ReconTrust and Bank of America (NYSE: "BAC"). Court Order

The class action lawsuit filed by attorneys John Christian Barlow and E. Craig Smay on November 5, 2011(Case No. 10-1099) against ReconTrust and Bank of America (NYSE: "BAC"), Mortgage Electronic Registration Systems ("MERS"), Countrywide Home Loans, HSBC Bank (NYSE: "HSBC"), Wells Fargo Bank (NYSE: "WFC"), U.S. Bank (NYSE: "USB"), Bank of New York/Mellon (NYSE: "BK"), KeyBank (NYSE: "KEY") alleges violations of the, Fair Debt Collections Practices Act, Utah Pattern of Unlawful Activity Act (FDCPA), Unlawful Foreclosures, and Intentional Infliction of Emotional Distress.

Judge Benson said that after considering the memoranda and the oral arguments, the Court finds the plaintiffs failed to allege that MERS, HSBC, Wells Fargo, and Bank of New York Mellon were involved in the conduct giving rise to any claims.

Regarding ReconTrust, Bank of America, N.A., and BAC Home Loans Servicing, LP, the Court finds that the Plaintiffs have plead sufficient allegations against them to survive a motion to dismiss.

Read more: http://www.kcsg.com/view/full_story/15893293/article-Class-Action-Lawsuit-Alleging-Fair-Debt-Collection-Violations-to-Proceed-Against-Bank-of-America-and-Recontrust-Company?instance=home_first_stories

Fannie Mae Knew Early of Abuses, Report Says 10-3-11

Fannie Mae, the mortgage finance giant, learned as early as 2003 of extensive foreclosure abuses among the law firms it had hired to remove troubled borrowers from their homes.
But the company did little to correct the firms’ practices, according to a report issued Tuesday.
Only after news reports in mid-2010 began to describe the dubious practices, like the routine filing of false pleadings in bankruptcy courts, did Fannie Mae’s overseer start to scrutinize the conduct. The report was critical of that overseer, the Federal Housing Finance Agency, and was prepared by the agency’s inspector general.

In one notable lapse, even after the agency reported problems to Fannie Mae in late 2010 about some of the approved law firms, it did not request a response from the company, the report said.

“American homeowners have been struggling with the effects of the housing finance crisis for several years, and they shouldn’t have to worry whether they will be victims of foreclosure abuse,” said Steve Linick, inspector general of the finance agency. “Increased oversight by F.H.F.A. could help to prevent these abuses.”
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http://www.nytimes.com/2011/10/04/business/fannie-mae-ignored-foreclosure-misdeeds-report-says.html?_r=1

Dozens arrested at Bank of America offices 10-1-11

BOSTON -Police have arrested two dozen protesters for trespassing during a demonstration against Bank of America's foreclosure practices at the banking giant's offices in downtown Boston.

The Boston Herald reports ( http://bit.ly/ohHrLa) that the event was an act of civil disobedience that the organizers intended to send the message that the lender's practices were unfair.

"They wanted to be arrested, and we obliged," Boston police Commissioner Edward F. Davis told the newspaper.

Organizers say about 3,000 people joined the protest.

Bank of America spokesman T.J. Crawford dismissed the demonstration as a publicity stunt.

There was no mention of Bank of America's planned debit card fees, which recently have generated headlines and frustrated customers nationwide.

Wells Fargo accused of forging loan documents 9-22-11

A Las Vegas attorney who represents people facing foreclosure has accused Wells Fargo of forging loan documents. The allegation is the latest sign that efforts to hold mortgage lenders accountable are escalating in Nevada.

In court papers filed this month in Clark County District Court, attorney Dave Crosby alleged bank employees committed forgery and fraud in making a $350,000 loan to a father of four who was unemployed at the time.

"They forged signatures, they backdated documents," Crosby said. "We've got them cold."

Crosby said the bank has presented two deeds of trust for the same property. One bears the signature of Olivia A. Todd, who on Jan. 27, 2010, was identified as an assistant secretary with MERS, Inc., a mortgage servicer from the Phoenix area and a co-defendant in the lawsuit.

But on Feb. 16, 2010, Todd's signature appears on a second deed of trust, where she is identified as the firm's president. Both assignments were notarized as authentic, Crosby said in court papers.

Crosby made his allegations in a request to have a judge review three failed mediations between him and his clients, Ryan and Mical Henderson of Las Vegas, and lawyers with Wells Fargo, formerly Wells Fargo Home Mortgage.
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http://www.lvrj.com/business/wells-fargo-accused-of-forging-loan-documents-130337818.html?ref=818

Moody's downgrades big banks on changed policy 9-21-11

(Reuters) - Moody's Investors Service lowered debt ratings for Bank of America Corp, Citigroup Inc and Wells Fargo & Co on Wednesday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.

The government is "more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled," said the rating agency, a unit of Moody's Corp.

"This is crystallizing the fact we're in a new political reality," said Jason Ware, equity analyst with Salt Lake City-based Albion Financial Group.

Moody's decision hit Bank of America hardest, as it downgraded the long- and short-term debt of the holding company and long-term deposits at its main banking unit.

The ratings agency downgraded only short-term debt at Citigroup and limited the Wells' cut to its senior debt and to deposits at its lead bank.

Bank of America is struggling with billions of dollars of mortgage losses, litigation and stresses from the need to raise capital to meet new regulatory obligations.

After Moody's downgrade, the cost to insure $10 million of Bank of America's debt for 5 years in the credit default swap market rose 48 basis points to $378,000 per year.

But analysts and investors said the downgrade was likely to have little immediate impact on Bank of America's business.

"It certainly doesn't look good, but operationally it shouldn't affect them that much," said Jon Finger, managing partner of Finger Interests Number One Ltd, a Houston-based investment firm that owns Bank of America shares.

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http://news.yahoo.com/moodys-downgrades-bank-america-170347830.html

"Buying frenzy" lawsuit vs homebuilders revived 9-21-11

Reuters) - A federal appeals court revived a lawsuit by homeowners who accused eight major homebuilders of causing them to overpay for their homes by marketing nearby houses to high-risk borrowers who later went into foreclosure.

Against what it called "the backdrop of the national housing crisis," the 9th U.S. Circuit Court of Appeals in San Francisco said on Wednesday a lower court erred in concluding the homeowners lacked standing to pursue their fraud claims.

The plaintiffs had bought houses from 2004 to 2006 in new developments built by Beazer Homes USA Inc, DR Horton Inc, Lennar Corp, MDC Holdings Inc, PulteGroup Inc's Centex Homes, Ryland Group Inc, privately-held Shea Homes Inc and Standard Pacific Corp.

Many of these homeowners claimed the developers falsely represented they were building "stable, family neighborhoods" in the Inland Empire region of California, one of the hardest hit in the nation's housing crisis.

In fact, the plaintiffs said the homeowners were marketing homes to and financing unqualified borrowers, fueling a "buying frenzy" that artificially inflated demand and prices.

When the bubble burst, foreclosures and short sales soared, causing a surge in abandoned homes, multifamily homes, unkempt yards and even crime, the plaintiffs said. They sought to hold the homebuilders responsible because their homes lost value and became less desirable.

A federal district judge in Riverside, California dismissed the complaint, saying the injuries were "speculative" because the plaintiffs had not sold their homes and any injuries were not "fairly traceable" to the defendants' actions.

The 9th Circuit disagreed. Writing for a three-judge panel, Judge Betty Fletcher said the homeowners sufficiently alleged that the defendants' practices "inflated the 'bubble' in their particular neighborhoods."
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http://www.wgntv.com/business/sns-rt-us-homebuilders-rulingtre78k545-20110921,0,2348958.story

Bank of America-ReconTrust to Face State Court Judicial Process in Illegal Homeowner Foreclosures 9-20-11

(Salt Lake City, UT) - St. George attorney John Christian Barlow, representing homeowners who have lost their home to the Bank of America's (NYSE: "BAC") foreclosure machine ReconTrust, may have finally achieved a measure of success in the battle of Utah homeowners against ReconTrust's illegal foreclosures.

Federal Judge Clark Waddoups Thursday returned to Utah Fifth District Court in St. George a case in which ReconTrust was named as a third-party in the complaint claiming immunity under the National Bank Act in an unlawful detainer action. (ORDER and MEMORANDUM DECISION)

Attorney Barlow explains the legal steps taken to help Utah homeowners protect their rights under State statutes in this exclusive interview with KCSG News.

Read more:http://www.kcsg.com/view/full_story/15588516/article-Bank-of-America-ReconTrust-to-Face-State-Court-Judicial-Process-in-Illegal-Homeowner-Foreclosures-?instance=home_stories2

Nevada AG puts Bank of America on notice over foreclosures 9-19-11

Call it Nevada’s version of David versus Goliath.

As foreclosures continue and homeowners cry foul against lenders in their bids to stay in their homes, Nevada’s Attorney General Catherine Cortez Masto is taking on Bank of America in federal court. And the issue is going to heat up as Cortez Masto’s office investigates BofA and other parties in the foreclosure process. She says criminal charges are likely coming to the industry soon, which could provide more ammunition for her foreclosure fraud case.

Cortez Masto wants to revoke a 2009 settlement with BofA over loan abuses involving its Countrywide Financial Corp., saying the bank has violated its terms. She claims the banking giant has harmed homeowners by failing to modify their mortgages and maliciously deceived some by telling them their loans would be modified, then foreclosing on them. BofA denies the allegations.

Cortez Masto has long been viewed as a rising star in the party. She was criticized for politicizing her office after her charge that Lt. Gov. Brian Krolicki, a Republican, misallocated office funding for a marketing campaign in order to benefit himself was dismissed in District Court in 2009. Cortez Masto denied the move was politically motivated as alleged by Krolicki supporters.

Cortez Masto stopped by the VEGAS INC offices to discuss Assembly Bill 284, which she and Assembly Majority Leader Marcus Conklin, D-Las Vegas, pushed in the last session to protect homeowners and businesses from mortgage fraud.

The law, which takes effect October 1, requires documents used in the foreclosure process to be recorded with counties and specifies who can be a trustee on a deed of trust along with a trustee’s duties in the foreclosure process.

This is big stuff, but Masto says she’s up to the task. Hey, big bank: Bring it on.
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http://www.vegasinc.com/news/2011/sep/19/fighting-good-fight/

Bank of America protested by people in Malden, Mass. 9-19-11

(NECN: Peter Howe) - In some of the New England communities hardest hit by the real estate collapse, neighborhoods are dotted by dozens of foreclosed homes, often owned by a bank based several states away and abandoned and spreading blight.

That has some people turning to picking up -- as well as picketing -- to try to push banks to be better landlords. Such was the scene Monday when a group of activists from MassUniting.org came to a home on Clinton Street here owned by Bank of America after a foreclosure, collecting several bags of trash and debris and then bringing it to the BofA branch downtown, telling the bank it was their trash they owned and should have taken in earlier.

It is, admitted, a publicity-seeking stunt -- but it's meant to show what kind of damage derelict bank-owned homes are doing to thousands of neighborhoods.

Gus Cooks of Malden, who participated in the protest said, "If you're taking property back from the people, then you should take care of it. Make sure that it doesn't become an eyesore. We're trying to get the bank to take responsibility for abandoned houses and do the cleanup.''

Dale Averill of Malden, who said he was foreclosed on himself after bad experiences investing in real estate, said, "You can't walk up and down the street anywhere without seeing an abandoned property nowadays. It doesn't have a good effect on anybody.'' From Averill's standpoint, banks seem to be hoarding and hiding properties that have lost hundreds of thousands of dollars in value, rather than facing up to losses that could take a big hit on their balance sheets and stock prices. From the bankers' perspective, Averill said, "It's better to leave them abandoned than to sell them for what they're really worth and take the loss. They would have massive losses all over the country that they'd have to declare at that point.''

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http://www.necn.com/09/19/11/Bank-of-America-protested-by-people-in-M/landing_business.html?blockID=565070&feedID=4209

Paralyzed Oregon man, living on $22,000 a month and able to pay, fights foreclosure  9-17-11

Robert Galanida was a skinny teenager when a drunken driver rammed the pickup he was riding in, hurtling him to the blacktop and paralyzing him from his shoulders down.

With the help of multimillion-dollar legal and insurance settlements, he and his mother now live comfortably on annuity payments of $22,000 a month.

So they are at a loss as to why his mortgage servicer, Bank of America, has repeatedly tried to evict him from his Tualatin home. Custom-built 14 years ago for less than $400,000, it boasts wide halls and doorways to accommodate his wheelchair and an air purification system to keep his body temperature and breathing in check.

How did someone who could so clearly afford a $4,800 monthly loan payment fall so far behind?

Galanida, 41, stopped payment in 2009, insisting a discrepancy arose in his loan after Bank of America took it over from troubled Countrywide Home Loans. Bank representatives told him to continue withholding payments while they investigated, his mother said.

But then, without offering Galanida a workaround plan, the bank foreclosed on his home, sold it to another lender and tried to evict him. Galanida's pleas for help from federal authorities and Oregon Attorney General John Kroger haven't resolved matters.

"I am not aware of any options to save the house," a paralegal with Bank of America's law firm told Galanida on July 29.

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http://www.oregonlive.com/business/index.ssf/2011/09/paralyzed_man_lost_in_mortgage.html

Dems slam Obama for going ‘AWOL’ on mortgage crisis 9-16-11

Leading House Democrats are accusing the Obama administration of ignoring the lingering mortgage crisis and threatening tens of millions of Americans with foreclosure in the process.

The lawmakers — encouraged by Obama's mention of mortgage relief in his address to Congress last week — were quickly deflated just days later when their efforts to learn the details of the White House plan proved unsuccessful.

"The administration has been AWOL on this issue," charged Rep. Dennis Cardoza (D-Calif.), "and the American people are suffering because of the mismanagement."

"In my entire political career, I've never seen anything this irresponsible," he added.
The Democrats were fired up after the administration declined their request for a briefing with Edward DeMarco, the acting director of the Federal Housing Finance Agency (FHFA), on the specifics of the White House plan.

Instead, said Rep. Elijah Cummings (D-Md.), "they [FHFA] sent us some career employees, and they were not able to answer the questions that we were most concerned about."

"We need to have [DeMarco] here to address the questions," said Cummings, the senior Democrat on the Oversight and Government Reform Committee. "He's the person who answers directly to the president."

Cardoza said that, during a June 2 Democratic Caucus meeting with Obama at the White House, the president vowed to propose "a very significant housing initiative in September."

"Today we just heard that they don't know anything about it at the FHFA," Cardoza said.

Neither the White House nor the FHFA — an agency independent of the administration — responded to requests for comment.

Hours later, Cummings and Cardoza spearheaded a letter to DeMarco requesting a face-to-face meeting. Twenty-eight other House Democrats and one Republican — Oversight Committee Chairman Darrell Issa (R-Calif.) — were cced on the letter. Those Democrats signed on to a letter last week requesting a face-to-face meeting with DeMarco.
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http://thehill.com/homenews/house/181961-dems-rip-white-house-for-going-awol-on-mortgage-crisis-

Law firm flourishes taking on big banks in mortgage bust 9-16-11

The partners at the law firm of Quinn Emanuel Urquhart & Sullivan concluded a few years ago, before the financial crisis, that there was simply too much competition for representing major banks.

So they decided to find some elbow room. The Los Angeles-based company would get out of the business of representing big banks and accounting firms and gear the work toward companies suing those institutions.
“There weren’t many, if any, prestigious law firms who were willing to be adverse to these global financial firms,” said William Urquhart, a partner at Quinn Emanuel.

After the nation’s housing bust, the opportunity turned out to be bigger and more lucrative than he and his colleagues realized.

This month, Quinn Emanuel filed more than a dozen of the 17 lawsuits that federal regulators brought against foreign and domestic banks, claiming they had sold nearly $200 billion in fraudulent mortgage investments to housing giants Fannie Mae and Freddie Mac.

The troubled home loans that banks bundled into securities and sold to investors in the years before the financial crisis have tanked in value. Amid that wreckage has arisen a wave of lawsuits in the past few years that claim banks misled customers and portrayed the investments as far less risky than they turned out to be. Many firms that specialize in banking and securities law, including some of the country’s most prestigious names, have been unwilling or unable to take these cases because the banks are their clients.

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http://www.washingtonpost.com/business/economy/law-firm-takes-on-big-banks-in-housing-bust/2011/09/08/gIQAbGZTXK_story.html?wpisrc=nl_headlines



 

Wells Fargo sues JPMorgan unit over mortgages 9-16-11

JPMorgan Chase's EMC Mortgage unit was sued by Wells Fargo, the trustee for a mortgage portfolio, for refusing to buy back more than 800 defective home loans.

EMC rejected "repeated repurchase demands" for the loans in the Bear Stearns Mortgage Funding Trust 2007-AR2, San Francisco's Wells Fargo said in a public version of the complaint filed Wednesday in Delaware Chancery Court in Wilmington. The case was initially filed under seal.

"The loans have been plagued by an alarming rate of defaults and foreclosures," Wells Fargo said in the complaint. "Approximately three-quarters of the loans in the trust have been modified or liquidated, or are now seriously delinquent."

The complaint is the second Wells Fargo has filed as trustee against EMC. The trustee settled a suit brought in January after EMC agreed to turn over files for more than 2,000 underlying mortgages in the trust.

Patrick Linehan, a spokesman for JPMorgan, declined to comment on the lawsuit.

A review of 948 loan files revealed that at least 840, or about 89 percent, failed to comply with EMC's representations and warranties, according to the complaint. As many as 1,503 mortgage loans are subject to repurchase, Wells Fargo said.

Of those 1,503 loans, 49 percent already have been liquidated, according to a letter filed as an exhibit to the complaint. Principal losses on those loans, including accrued interest, total about $214.4 million, according to the letter.

About 51 percent of the loans are still held by the trust, with an outstanding balance of about $344.5 million, according to the letter.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/15/BUR31L53JP.DTL#ixzz1YLs9IXGm

San Jose: Community group urges residents to fight foreclosure 9-15-11

As part of a statewide effort to help people keep their homes, a group of community activists urged residents in San Jose's Tropicana neighborhood Thursday to get angry about the housing crisis -- and then do something about it.

"We have to stand up," said Louise Vaughn, a member of the Alliance of Californians for Community Empowerment. "It's time for us to start talking to each other, writing letters, making phone calls."

A coalition of community groups kicked off their "Refund and Rebuild California" campaign by releasing a report called "The Wall Street Wrecking Ball, What Foreclosures are Costing San Jose Neighborhoods" at a news conference in front of a foreclosed home.

Prepared by ACCE and the California Reinvestment Coalition, a nonprofit organization that advocates for equal access to banking for low-income communities, the report claims San Jose homeowners will have lost $22 billion in home values as a result of the more than 43,500 homes foreclosed here from 2008 through next year. As a result, the city of San Jose has lost an estimated $135 million in property tax revenue.

"When people lose their homes, it affects all of us," said David Sharples, a member of the alliance. "Property tax revenues plummet, police, firefighters and teachers get laid off. We want banks to give homeowners reductions on their principal so they can stay in their homes."

According to the report, there have been 1.2 million foreclosures

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http://www.mercurynews.com/bay-area-news/ci_18905627

Democratic Lawmakers Criticize Delay In Mortgage-Relief Programs 9-15-11

WASHINGTON -(Dow Jones)- Three U.S. lawmakers criticized a federal housing agency on Thursday for not moving quickly enough to help troubled homeowners refinance their mortgages.

Rep. Elijah Cummings of Maryland, the top Democrat on the House Committee on Oversight and Government Reform and fellow Democratic Reps. Dennis Cardoza and Jim Costa, both of California, said they were frustrated by federal housing regulators' delay in improving housing relief programs. Cummings said seven or eight lawmakers met behind closed doors with employees from the Federal Housing Finance Agency.

Read more: http://www.foxbusiness.com/industries/2011/09/15/democratic-lawmakers-criticize-delay-in-mortgage-relief-programs/#ixzz1YMKVsExI

Issa launches probe of Fannie, BofA mortgage servicing deal 9-15-11

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, opened an investigation into the reported Fannie Mae purchase of a Bank of America (BAC: 7.23 -1.36%) mortgage servicing portfolio.

According to The Wall Street Journal, the deal was finalized in August. The portfolio includes 400,000 loans with an unpaid principal balance of $73 billon and a delinquency rate of 13%, twice the national average. Fannie reportedly paid $500 million for it.

"Some commentators have labeled this transaction as a back-door bailout of BofA by permitting the bank to shift part of its risky portfolio to American taxpayers. Under these circumstances, I am unclear why the Federal Housing Finance Agency allowed Fannie to proceed with the transaction," Issa wrote in a letter to FHFA Acting Director Edward DeMarco.

Issa wants DeMarco to give a full explanation of the FHFA decision to approve the deal and provide all financial analyses Fannie conducted before the sale. He also asked in the letter if Fannie considered purchasing servicing rights from other institutions and what Fannie plans to do with those reportedly bought from BofA.

Issa also asked for all documents and communication between Fannie and BofA relating to the portfolio purchase.

"Bank of America periodically sells mortgage servicing rights (MSR) or transfers mortgage-related assets to third party business partners," a BofA spokesman said. "This is a commonly accepted, industry-wide practice that many mortgage loan servicers, including Bank of America, have engaged in for many years."

BofA added that the purchaser in these transactions already holds the loss exposure on the loans, and through the sale of servicing rights, servicing responsibilities for these loans will be transferred to other loan service providers.

Fannie and Freddie owe the Treasury Department roughly $142 billion in bailouts given since the two giants were taken into conservatorship in 2008. The Congressional Budget Office estimates the two firms will need an additional $51 billion between now and 2021.

BofA received $50 billion through the Troubled Asset Relief Program but has paid it back.

"Congress and the American people deserve a full explanation for what appears to be yet another bailout paid for by taxpayers benefitting businesses that made bad business decisions," he said.

Neither Fannie nor the FHFA immediately replied to requests for comment.

Senate hears hidden risks of major refinancing plan 9-14-11

As the Obama administration works to construct a plan to refinance millions of underwater borrowers into lower-rate mortgages, a Senate subcommittee heard the hidden risks and difficulties of building such a program Wednesday.

Nearly 11 million borrowers currently owe more on their mortgage than the home is worth, according to CoreLogic (CLGX: 12.10 +0.83%). Nearly every panelist testifying Wednesday said these borrowers along with the overhang of more than 1.25 million vacant homes and 3.5 million loans in the foreclosure process to be the obstacle holding back the housing recovery and the overall economy.

Senators Barbara Boxer (D-Calif.) and Johnny Isakson (R-Ga.) reiterated before the subcommittee the need to adopt their plan, which would eliminate the loan-to-value restrictions and fees for refinancing Fannie Mae and Freddie Mac loans into lower rates.

"Our bill is based on a very simple premise: if you have paid your mortgage through this difficult time and it has a high interest rate, but you've never missed a payment and you're underwater, you should be rewarded with a program like this," Boxer said Wednesday. "You should have a chance to refinance at the current levels."

The Congressional Budget Office studied a possible refinance plan and found that such a program would actually save the government-sponsored enterprises about $3.9 billion, though Anthony Sanders, an economist at George Mason University said could be a slight overestimate.

But the program would also cost the Federal Reserve $4.5 billion in the reduction of interest payments on mortgage-backed securities it bought during the credit crisis of 2008, leaving a $600 million net loss to taxpayers.

Getting Congress, which is looking for at the very least $1.5 trillion in deficit reductions before the end of the year, to eat those losses would be the first obstacle.

Rep and warranty risk

David Stevens, the CEO of the Mortgage Bankers Association, told the subcommittee that no proposal addresses the represenation and warranty risk of refinancing a mortgage. If the Obama administration's program does not force Fannie and Freddie to waive its right to force lenders to buy back the refinanced mortgage should it slip into default, lenders may not participate.

"All lenders are necessarily cautious with respect to protecting their capital base given the widespread uncertainties in this environment," Stevens said. "MBA believes policy makers should consider setting a clear limit on the duration of an originator’s repurchase obligation following the origination date."

Moody's Analytics Chief Economist Mark Zandi, who supports the Boxer-Isakson bill, agreed.

"I think it would worth thinking about urging Fannie and Freddie to waive rep and warranty claims," he said.

Not enough

Christopher Mayer, a professor of finance and real estate at Columbia Business School said a refinance program developed by other professors at the university would cut about $70 billion in mortgage payments for roughly 25 million borrowers, an average of $2,800 in savings.

"This plan would function like a long-lasting tax cut for these 25 or 30 million American families," Mayer said. "Empirical evidence suggests that consumers spend a larger portion of permanent increases in income than temporary increases."

Mayer and others in support of such a refinancing plan point to the boost to the overall economy getting borrowers into lower-rate mortgages would have.

"The Boxer bill is not about the housing market. It's about trying to create consumption by lowering monthly payment to go out and buy other things," said Mark Calabria, director of financial regulation studies at the Cato Institute. "But a mortgage is one person's liability and another person's asset. So it's not clear to me as an economist if the effect on consumption will be zero."

Meaning if a borrower receives more cash in their pocket from paying a lower rate, the investor in that very mortgage would have less because the basis points on his or her portfolio would be cut.

Sanders agreed: "I'm not sure it's going to have the stimulative effect that it would need."

Let's just revamp HARP

Many panelists suggested the Obama administration should simply revamp and expand the Home Affordable Refinance Program.

HARP launched in March 2009 to allow current borrowers who are up to 125% loan-to-value ratio. So far, roughly 838,400 Fannie and Freddie loans received a refinance, according to data released by the Federal Housing Finance Agency.

But the program was expected to reach between 4 million and 5 million borrowers.

Zandi said the average coupon rate on a Fannie and Freddie security is 4.5%. If that is refinanced down to 4.25%, borrowers would be saving up to $10 billion in interest payments.

"That's not going to solve our problems but it's not insignificant. Roll back the loan level price adjustments, waive rep and warranties, and be proactive. Let borrowers know about this option. Right now they don't do that," Zandi said. "These are reasonable, not difficult to do."

Stevens said the private sector has refinanced roughly 4 million mortgages, nearly four times the amount of public programs. While he warned that using the GSEs to support the housing recovery could only further jeopardize their viability, he did say HARP should be expanded.

"GSEs could still expand lending guidelines, and the origination deadline for HARP qualification could be extended," Stevens said.

Richard Smith, the CEO of Realogy Corporation, which holds a 25% share of the real estate market, said, he too would like to see HARP revised to include more borrowers even before reforming the GSEs themselves.

"The expansion of HARP we're very much in favor of," Smith said. "GSE reform can be handled at a later date."

Action likely to come?

A slew of other obstacles remain for refinancing borrowers so deep underwater. Stevens said existing requirements under the "To-Be-Announced" market and current tax law make pricing securities with loans in excess of 125% LTV nearly "insurmountable."

Calabria said because the Boxer-Isakson bill has no cap on LTV, someone with one as high as 300% could theoretically get a refinance.

"The Federal Housing Finance Agency is having a hard enough time raising the limit on HARP," he said. "I have a hard time seeing it removed all together."

Despite the wave of panelists appearing Wednesday to speak before the subcommittee, there were at most two Senators posing questions against of backdrop of empty seats around them. The scene alluded to the near impossibility of moving yet another major housing program through Congress.

Still, Boxer herself begged lawmakers to do something.

"Let's get in front of this crisis for once," she said.

Dallas County D.A. Craig Watkins takes on Wall Street with MERS lawsuit 9-13-11

In an interview with Dallas South News, Dallas County District Attorney Craig Watkins says he plans to file a lawsuit against a company representing organizations who he says owes the county millions of dollars.

A group of private attorneys is working with the county on a claim against Mortgage Electronic Registration Systems (MERS) who they say has avoided paying county fees. The suit will be filed in Dallas County District Court sometime next week.

“Counties are suffering financially,” Watkins said, “If the fees were paid, they would not have to [struggle].” The district attorney says he felt this lawsuit was necessary to protect the interests of Dallas County citizens. “It’s because of the nefarious activities of some of these entities that the county has been harmed,” he adds.

MERS is a subsidiary of MERSCORP, Inc., and was created in 1995 by many of the country’s major banks. The privately owned company is basically a computer database designed to track ownership rights and servicing of mortgage loans. Reuters describes MERS by saying, “Its main purpose was to be an electronic registry that would keep track of repeated sales of mortgage loans as the number of new mortgages and refinancings boomed.”

The MERS website explains, “Shareholders played a critical role in the development of MERS.” The site goes on to say that “through their capital support, MERS was able to fund expenses related to development and initial start-up.”

Some of MERS stakeholders includes Bank of America, Chase, GMAC, Nationwide, Stewart Title and Wells Fargo. According to this Washington’s Blog article, MERS has no employees and holds 60% of the worlds’ mortgages. The Huffington Post notes courts across the nation are looking into whether or not MERS even has the right to transfer mortgages.

Watkins says that every time a mortgage in Dallas County changed hands, lenders should have noted the transaction with the county clerk’s office, which would have required a fee to be paid. “They didn’t even cross the first step,” Watkins said.

Watkins said he recently spoke with Dallas County Clerk John Warren about MERS and the possible damages the county may have incurred. Watkins said Warren estimates more than $50 million in unfiled fees are due to the county. Attorneys have told the district attorney the amount could exceed $100 million.

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http://www.pegasusnews.com/news/2011/sep/13/dallas-county-da-craig-watkins-wall-street-lawsuit/

New York Appellate Court rejects validity of loan assignments by MERS 9-13-11

The New York Appellate Division, Second Department, has held that a lender does not have standing to commence a foreclosure action when the lender’s assignor was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but never actually held the underlying notes. Bank of New York v. Silverberg, 926 N.Y.S.2d 532 (2d Dep’t 2011). The court’s decision casts doubt on the validity of loan assignments executed by the Mortgage Electronic Registration System (“MERS”), and has significant ramifications for the foreclosure process in New York, suggesting that foreclosing lenders may have to present substantially more robust documentation concerning the mortgage note’s history of assignment and transfer.

The Mortgage Agreements

In October 2006, Countrywide Home Loans, Inc. (“Countrywide”) allegedly loaned $450,000 to Stephen and Frederica Silverberg (“defendants”) to purchase residential real property. The mortgage named MERS as the mortgagee for purposes of recording, but stated that the underlying promissory note was in favor of Countrywide. The mortgage stated: “’MERS holds only legal title to the rights granted by the [defendants] . . . but, if necessary to comply with law or custom,” MERS had the right to foreclose and “to take any action required of [Countrywide].” Subsequently, in April 2007, the defendants allegedly signed a second mortgage on the same property, which again named MERS as the nominee and mortgagee of Countrywide, and executed a promissory note in Countrywide’s favor. The promissory note provided that Countrywide “may transfer this Note.”

In April 2007, the defendants signed a consolidation agreement which merged the two prior notes and mortgages into one loan obligation, once more naming MERS as nominee and mortgagee of Countrywide. While the consolidation agreement named Countrywide as the lender and note holder, Countrywide was not a party to this agreement. All of these agreements were recorded in the Suffolk County, New York Clerk’s office. In December 2007, the defendants allegedly defaulted on the consolidation agreement. On April 30, 2008, MERS assigned the consolidation agreement to the Bank of New York (“BoNY”), as trustee for a mortgage securitization vehicle, through a “corrected assignment of mortgage.”

Foreclosure Action

On May 6, 2008, BoNY brought a foreclosure action against defendants. The defendants moved to dismiss the complaint for lack of standing. The trial court denied the motion to dismiss because MERS assigned the mortgages, as nominee of Countrywide, to BoNY before the foreclosure action commenced. The defendants appealed this decision and set forth several arguments as to the plaintiff’s lack of standing: (i) MERS and Countrywide did not transfer or endorse the notes described in the consolidation agreement to plaintiff, in violation of the Uniform Commercial Code; (ii) MERS never had authority to assign the mortgages; (iii) the mortgages and notes were unenforceable because they were bifurcated; and (iv) the trial court should not have considered the “corrected assignment of mortgage” because it was not authenticated.

Role of MERS

The Appellate Division first described the role of MERS in the mortgage process. Real estate mortgage participants created MERS in the 1990’s to “track ownership interests in residential mortgages.” MERS members subscribe to the MERS system for electronic processing and tracking of ownership and transfers of mortgages. As part of membership, members agree to appoint MERS as an agent for all mortgages registered with MERS. Further, in local county recording offices MERS is named the mortgagee of record. With the creation of MERS, banks were able to transfer mortgage interests more expeditiously and avoid the expense and inefficiency of recording each time a transfer occurs.

The Court’s Analysis

The Appellate Division presented the issue in the case as “whether MERS, as nominee and mortgagee for purposes of recording, can assign the right to foreclose upon a mortgage to a plaintiff in a foreclosure action absent MERS’s right to, or possession of, the actual underlying promissory note.” Generally, “in a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced.” The court noted that while a mortgage typically follows the assignment of a promissory note, the reverse is not true. A transfer of a mortgage does not automatically transfer the note, and the underlying debt will be a nullity if not transferred along with the mortgage.

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http://www.lexology.com/library/detail.aspx?g=1e8c3ad0-0e48-480d-92be-3a9dc7d44607

Bank of America to pay whistle-blower $930,000 9-13-11

The Labor Department ordered Bank of America (BAC: 7.23 -1.36%) to reinstate and pay $930,000 to an employee, who was fired after reporting instances of possible fraud among Countrywide Financial Corp. employees.

The Labor Department's Occupational Safety and Health Administration division in San Francisco launched an investigation after a Los Angeles-based employee filed a complaint, claiming the lender violated a federal whistle-blower protection law.

"It's clear from our investigation that Bank of America used illegal retaliatory tactics against this employee," said OSHA Assistant Secretary David Michaels. "This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same."

The employee worked for Countrywide, which Bank of America acquired in July 2008. The Labor Department claims the employee uncovered widespread fraud and tried to report it to the lender's employee relations department only to face retaliation and firing shortly after the two firms merged.

"This case highlights the importance of defending employees against retaliation when they try to protect the public from the consequences of an employer's illegal activities," said Michaels.

Deal on foreclosures stalls over New York inquiry into banks 8-25-11

Investors' hopes that US banks could be close to ending years of legal uncertainty, and billions of dollars of legal liability, over their mortgage operations have been dealt a setback, after splits emerged between state officials negotiating a potential court settlement.

New York's attorney general, Eric Schneiderman, has been thrown off the committee of state prosecutors which has been negotiating a deal for the past 10 months, after he refused to agree to give banks broad immunity from future prosecutions.

Numerous state attorneys general had launched investigations into banks' foreclosure practices after revelations in 2009 and 2010 that banks were often signing off on repossessions without properly examining the paperwork, using so-called "robo-signers". It turned out that paperwork was often lost or incomplete, raising doubt over the legal basis for many of the foreclosures.

The chaos was partly the result of lax lending practices in the run-up to the credit crisis, in which mortgage companies encouraged or turned a blind eye to fraud by borrowers, and the complexity of the securitisation process, by which these sub-prime loans were sliced and diced into new investments for sale on Wall Street.

Bank investors are resigned to years of expensive litigation between different companies in the mortgage chain and from regulators, federal agencies and state prosecutors.
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http://www.independent.co.uk/news/business/news/deal-on-foreclosures-stalls-over-new-york-inquiry-into-banks-2343366.html

More on the Opacity of Bank of America’s Financial Statements 8-24-11

Yesterday, I made a basic point about the financial statements of banks and other financial firms, citing Steve Waldman, who said it better than I could:

Bank capital cannot be measured. Think about that until you really get it. “Large complex financial institutions” report leverage ratios and “tier one” capital and all kinds of aromatic stuff. But those numbers are meaningless. For any large complex financial institution levered at the House-proposed limit of 15×, a reasonable confidence interval surrounding its estimate of bank capital would be greater than 100% of the reported value. In English, we cannot distinguish “well capitalized” from insolvent banks, even in good times, and regardless of their formal statements.
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Mass. Bankruptcy Judge Voids Foreclosure Of MERS Mortgage 8-23-11

Judge Tells Lenders You Can’t Have Your MERS Cake & Eat It Too

“The sophisticated financial minds who wrought the MERS regime sought to simplify the process of repeatedly transferring mortgage loans by obviating the need and expense of recording mortgage assignments with each transfer. No doubt they failed to consider the possibility of a collapse of the residential real estate market, the ensuing flood of foreclosures and the intervention of state and federal courts.”

–Judge Melvin S. Hoffman, U.S. Bankruptcy Court Judge for Massachusetts, In Re. Schwartz, Aug. 22, 2011
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http://www.massrealestatelawblog.com/2011/08/23/breaking-news-mass-bankruptcy-judge-voids-foreclosure-of-mers-mortgage/

FDIC has to face $10 billion WaMu-related lawsuit 8-23-11

(Reuters) - A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.

The judge refused the FDIC's request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.

Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.

The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.

The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.

A Senate committee report this year said WaMu's mortgage securitization was "polluting the financial system" with bad home loans and partly to blame for the 2008 financial crisis.
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http://www.reuters.com/article/2011/08/23/us-fdic-deutschebank-lawsuit-idUSTRE77M8H820110823

New York Attorney General Kicked Off Government Group Leading Foreclosure Probe 8-24-11

WASHINGTON -- New York Attorney General Eric Schneiderman on Tuesday was kicked off the committee leading the 50-state task force charged with probing foreclosure abuses and negotiating a possible settlement agreement with the nation's five largest mortgage firms, according to an email reviewed by The Huffington Post.

Schneiderman was one of roughly a dozen state attorneys general leading the talks with the five companies, alongside representatives of the U.S. Department of Justice, the Department of Housing and Urban Development and other federal agencies. The government launched the negotiations in the spring after widespread reports of foreclosure irregularities, such as so-called "robo-signing" and illegal home seizures, emerged.

But state prosecutors and federal officials are pressing to complete a proposed settlement with the five companies even though they've initiated only a limited investigation that hasn't examined the full extent of the alleged wrongdoing, The Huffington Post reported last month. Elizabeth Warren, who until recently was a senior adviser to President Barack Obama and Treasury Secretary Timothy Geithner, told a congressional panel last month that government agencies may not have sufficiently investigated claims that borrowers' homes were illegally seized.

Schneiderman, a Democrat who's in his first term as New York's top law enforcer, has been among a group of state legal officers who has also questioned the desire for a speedy resolution. He's leading his own investigation into mortgage improprieties, subpoenaing documents from the nation's largest financial institutions and reviewing court records for possible illegal home repossessions.

The Obama administration officials -- in particular, Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan -- have publicly stated on numerous occasions that they want a quick resolution to the 50-state mortgage probe.

Sources said attorneys general like Schneiderman, along with the top legal officers from Massachusetts, Delaware and Nevada, among others, were complicating that goal by questioning the plan to scuttle the state and federal investigations in exchange for a settlement.

These attorneys general have said they're reluctant to sign on to an agreement that effectively kills their ongoing investigations or prevents new ones from being launched. Beau Biden, Delaware's top law enforcer, remains on the states' executive committee.
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http://www.huffingtonpost.com/2011/08/23/new-york-attorney-general-eric-schneiderman_n_934517.html

Lender Processing Services, Inc. Responds to American Home's Press Release 8-23-11

JACKSONVILLE, Fla., Aug. 23, 2011 /PRNewswire via COMTEX/ --

Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, noted that it was surprised to learn that American Home Mortgage Servicing, Inc. ("AHMSI") announced earlier today the filing of a lawsuit against LPS and its subsidiary DOCX, LLC concerning issues related to the surrogate signing practice at DOCX. As LPS has previously disclosed, when it discovered the practice at DOCX, LPS immediately notified AHMSI of its discovery of the practice; immediately discontinued the practice; and voluntarily reviewed and remediated assignments of mortgage executed by DOCX using this practice. Upon completion of the remediation in January 2010, and at AHMSI's direction, LPS returned the remediated documents to the attorneys who had originally requested them on AHMSI's behalf.

Since that time, LPS has engaged in several discussions with AHMSI concerning the impact of the surrogate signing practice and has offered to reimburse AHMSI for fees and costs associated with AHMSI's evaluation and re-recording of the remediated assignments of mortgage. During those discussions, LPS also offered to address any additional claims by AHMSI for any other actual losses resulting directly from the assignments of mortgage executed on AHMSI's behalf using the surrogate signing practice. Unfortunately, to date, AHMSI has refused to provide information evidencing such actual losses.

Although LPS regrets AHMSI has resorted to litigation, LPS remains ready to review any demands made by AHMSI to the extent AHMSI is willing to provide evidence supporting those claims. Notwithstanding LPS's willingness to resolve these issues amicably, LPS disagrees with the allegations contained in the complaint and is prepared to vigorously defend against them.

About Lender Processing Services

Lender Processing Services, Inc. (LPS) is a leading provider of integrated technology, services and loan performance data and analytics to the mortgage, consumer lending, capital markets and real estate industries. LPS offers solutions that span the mortgage continuum, including lead generation, origination, servicing, workflow automation, portfolio retention and default, augmented by the company's award-winning customer support and professional services. Almost half of all U.S. mortgages are serviced using LPS' Mortgage Servicing Package (MSP). For more information about LPS, visit www.lpsvcs.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: our ability to adapt our services to changes in technology or the marketplace; the impact of adverse changes in the level of real estate activity (including among others, loan originations and foreclosures) on demand for certain of our services; our ability to maintain and grow our relationships with our customers; the effects of our substantial leverage on our ability to make acquisitions and invest in our business; the level of scrutiny being placed on participants in the foreclosure process; risks associated with federal and state inquiries and examinations currently underway or that may be commenced in the future with respect to our default management operations, and with civil litigation related to these matters; changes to the laws, rules and regulations that regulate our businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on our business and reputation; risks associated with protecting information security and privacy; and other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K, the Company's subsequent reports on Form 10-Q and other filings with the Securities and Exchange Commission.

SOURCE Lender Processing Services, Inc.

American Home Mortgage Servicing, Inc. Files Lawsuit – Seeks Recovery from Lender Processing Services, Inc. and DocX, LLC 8-23-11

Remediation of Improperly Executed Foreclosure-related Documents Costing AHMSI Millions

COPPELL, Texas, Aug. 23, 2011
/PRNewswire/ — American Home Mortgage Servicing, Inc. (AHMSI) today announced that it has filed a lawsuit against Lender Processing Services, Inc. (LPS) and its affiliate, DocX, LLC (DocX), seeking redress for the millions of dollars in losses that AHMSI has suffered, and continues to suffer, as a result of LPS and DocX’s improper execution, notarization, and recording of assignments of mortgage affecting more than 30,000 residential mortgages across the country.

The lawsuit, filed today in District Court in Dallas County, Texas, follows AHMSI’s unsuccessful attempt to recover its losses during more than a year of discussion among the parties.

The AHMSI lawsuit seeks:

a declaratory judgment that the contract between the parties, as amended, is binding and effective;
an order compelling defendants to arbitrate AHMSI’s claims for breach of contract and indemnification; and
an award of damages relating to non-arbitrable claims sufficient to reimburse AHMSI for the millions of dollars in losses stemming from defendants executing, notarizing, and recording improper assignments on behalf of AHMSI.

DocX prepared, executed and recorded lien releases, assignments of mortgage and related documents for AHMSI from April 2008 through November 2009. During this time certain DocX and LPS employees were duly appointed by AHMSI’s board of directors as “Special Officers” of AHMSI, with powers limited to executing mortgage-related documents. However, in late November 2009, LPS informed AHMSI that from March 2009 through October 2009, a substantial number of assignments of mortgage were executed by “surrogate signers,” that is, by individuals who were not designated as Special Officers, but who signed in the name of one or more of the designated Special Officers. At no time did AHMSI sanction or know of the “surrogate signing” practices of LPS and DocX.

Jordan Dorchuck, chief legal officer – AHMSI, said, “Upon learning of this unauthorized use of surrogates, we terminated the services of DocX and promptly conducted an extensive, 50-state remediation effort to address any issues caused by this problem. Our remediation efforts are, and have been, focused on correcting affected assignments of mortgage to ensure they comply with all local, state and federal laws. This has been a vast undertaking, necessitating coordination with local counsel in each state.”

Based in Coppell, Texas, AHMSI is the 15th largest mortgage servicer in the country, managing nearly $72.5 billion in loan servicing, representing approximately 384,000 customers. Since its inception in April 2008, AHMSI has modified over 175,000 mortgage loans, including over 27,000 under the U.S. government’s Home Affordable Modification Program (HAMP). AHMSI’s more than 3,000 associates work each day with the mission of helping families preserve their dream of home ownership. AHMSI is a privately-held company owned by equity funds managed by WL Ross & Co., a financial management company with over $8 billion in assets under management.

SOURCE American Home Mortgage Servicing, Inc.

Mirabile Dictu! New York Times Tells Obama Administration Off, Backs Schneiderman on Mortgage Settlement 8-22-11

The editorial in today’s New York Times may be a sign that the tide is turning. The elites are starting to break ranks with the mortgage industrial complex.
Gretchen Morgenson reported yesterday that the Obama Administration was pressuring the New York Attorney General Eric Schneiderman to drop his opposition to the so-called 50 state attorney general mortgage settlement. The short form is the banks want a “get out of liability for almost free” card, which is patently absurd. Not only have they caused a colossal economic train wreck, but sadly, they remain such central actors that they need to be involved in remediation. Letting them off cheaply would be tantamount to putting a band-aid on gangrene.
As much as having Morgenson reveal this heavy-handed effort to undermine an investigation in progress was important, Morgenson is an outlier at the Times. She is the only writer in the business section who routinely exposes bad conduct in the corporate and financial arena. Too many of the other writers there engage in stenography, punctuated by random acts journalism. In fact, I’ve thought the only reason the Times keeps her is her Pulitzer prizes make it impossible for them to get rid of her.
As much as Morgenson’s expose was key, the editorial page of the New York Times throwing its weight behind Schneiderman gives him real political cover. From “It’s a Flawed Settlement”:
The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices. Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs….
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http://www.nakedcapitalism.com/2011/08/mirabile-dictu-new-york-times-tells-obama-administration-off-backs-schneiderman-on-mortgage-settlement.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Lender Processing Services Law Firm Targeting April Charney, Foreclosure Defense Pioneer 8-22-11

You know the powers that be are pretty desperate when they feel compelled to go after a Legal Aid attorney.
Admittedly, April Charney is no ordinary Legal Aid attorney. She was one of the first lawyers to focus on the question of whether party showing up in court really was the right party and whether it could demonstrate that it had the right to foreclose. Most judges (as in the non-captured-by-corporations kind) regard these as threshold issues. If someone shows up in court claiming that you owe them money and they want the judge to garnish your wages, I’m sure you’d want the judge to listen if the person who wanted your money couldn’t prove he had gotten your IOU from the chap who had made a loan to you years ago.
Charney has helped lawyers in Florida and around the US with these types of arguments, and has also been active in the group of lawyers working with Max Gardiner in North Carolina. She’s a diligent researcher and keeps on top of the rulings in her arena.
In some ways I’m surprised this hasn’t happened sooner, but pro bank members of the Florida bar are apparently orchestrating an effort to get Charney fired from Legal Services of Jacksonville, which on its face is absurd. If you want to help April, 4ClosureFraud has provided names and contact information of the JALA (I assume Jacksonville Area Legal Aid) board members. I hope you tell them (nicely) that getting rid of Charney, given her track record, would raise a lot of questions and likely very unfavorable press for JALA.
By way of background, Lender Processing Services, a firm that provides various software platforms and other services to mortgage servicers, is in a great deal of hot water. Its stock is down over 50% despite buybacks to prop it up, largely as a result of litigation taking aim at its dubious business model (see here and here for background).
Here are the details from FolioWeekly:
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http://www.nakedcapitalism.com/2011/08/lender-processing-services-law-firm-targeting-april-charney-foreclosure-defense-pioneer.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

In re: SIMA SCHWARTZ, Chapter 7, Debtor.SIMA SCHWARTZ, Plaintiff,v.HOMEQ SERVICING, AGENT FOR DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE and DEUTSCHE BANK NATIONAL COMPANY, AS TRUSTEE, Defendants.

Case No. 06-42476-MSH, Adversary Proceeding No. 07-04098.

United States Bankruptcy Court, D. Massachusetts, Central Division.

August 22, 2011.



The Defendants’ Case

It is undisputed that Deutsche was not the original mortgagee of the mortgage on Ms. Schwartz’s home, so it must prove that the mortgage was assigned to it prior to the date when the first foreclosure notice was published. As discussed in the memorandum and order on the plaintiff’s motion for a new trial, while the evidence established that an assignment of the mortgage from Mortgage Electronic Registration Systems, Inc. (“MERS”) to Deutsche was executed on May 23, 2006, the day before the foreclosure sale, this assignment, being well after the notice of foreclosure sale was first published, did not confer on Deutsche the power to foreclose on May 24. The Supreme Judicial Court in Ibanez,however, offered an alternative method for a party to acquire sufficient rights in a mortgage to qualify to foreclose:

Where a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder.

Ibanez, 458 Mass. at 651.

With this in mind, the defendants introduced into evidence at trial all of the agreements tracking the transfer of Ms. Schwartz’s mortgage loan from its originator, First NLC Financial Services, LLC (“First NLC”), to Deutsche, complete with the necessary schedules of the pooled mortgage loans specifically identifying her mortgage as being among those transferred. The defendants argue that these agreements, together with other evidence introduced by them, establish that Deutsche was the holder of the mortgage well in advance of the first publication of the notice of sale.

At trial, Ronaldo Reyes, a Deutsche vice president, testified that he had management responsibility over the administration of the Morgan Stanley Home Equity Loan Trust 2005-4 (the “Trust”) and that Deutsche had always been the trustee of the Trust. He testified that in his capacity as vice president he had access to the books and records of the Trust and was qualified to authenticate and testify about the documents admitted into evidence by the defendants. During the course of his testimony, Mr. Reyes authenticated executed copies of each of the agreements discussed below, and demonstrated that Ms. Schwartz’s mortgage loan was included on the mortgage loan schedules attached as exhibits to several of the agreements. Mr. Reyes testified that each was used in the ordinary course of Deutsche’s business as trustee of the Trust.

The following documents were admitted into evidence: (i) the mortgage on Ms. Schwartz’s home; (ii) the original promissory note executed by Ms. Schwartz, which Mr. Reyes noted was endorsed in blank by First NLC; (iii) the Amended and Restated Mortgage Loan Purchase Agreement (the “Loan Purchase Agreement”) dated as of September 1, 2005 by and between Morgan Stanley Mortgage Capital, Inc. (“MS Mortgage Capital”) and First NLC; (iv) the Assignment and Conveyance Agreement dated September 29, 2005, by and between First NLC and MS Mortgage Capital; (v) the Bill of Sale dated November 29, 2005 by and between MS Mortgage Capital and Morgan Stanley ABS Capital I Inc. (“MS ABS Capital”); and (vi) the Pooling and Servicing Agreement (the “PSA”) dated as of November 1, 2005 by and among MS ABS Capital, HomEq Servicing Corporation, JPMorgan Chase Bank, National Association, First NLC, LaSalle Bank National Association and Deutsche. Mr. Reyes also testified regarding a custodial log that was admitted into evidence for the purpose of proving that Ms. Schwartz’s loan documents were in Deutsche’s custody prior to the date when the first notice of foreclosure sale was published.
Conclusions of Law

Having determined that MERS, and not Deutsche, held legal title to the mortgage on Ms. Schwartz’s home mortgage as of May 3, 2006, when the notice of the foreclosure sale of her home was first published, it follows that Deutsche did not have the right to exercise the statutory power of sale and to foreclose the mortgage. See, e.g., Novastar Mortgage, Inc. v. Safran, 79 Mass.App.Ct. 1124, 948 N.E.2d 917 (2011) (finding, in a post-foreclosure eviction proceeding, that the foreclosing entity had the burden to prove its title to the property by establishing that the mortgage had been assigned to it by MERS “at the critical stages of the foreclosure process.”). By publishing notice of the foreclosure sale when it was not the mortgagee, Deutsche failed to comply with Mass. Gen. Laws ch. 244, § 14, and thus its foreclosure sale is void. Ibanez, 438 Mass. at 646-47.5 A declaratory judgment to that effect shall enter on count I of the complaint.

SO ORDERED.

Foreclosure Talks Snag on Bank Liability 8-22-11

Efforts to reach a settlement that would end the long-running probe of foreclosure practices are snagged over whether banks will get broad legal immunity from state officials for mortgage-related claims.

Federal and state officials are seeking penalties of $20 billion to $25 billion from Bank of America Corp., J.P. Morgan Chase & Co. and other financial firms under investigation since last fall. The banks are pushing hard for a deal, but they have insisted on a wide-ranging legal release from state attorneys general.

"They wanted to be released from everything, including original sin," said a U.S. official involved in the ...

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http://online.wsj.com/article/SB10001424053111904070604576521282894534152.html

R.I. Foreclosure Cases Put on Hold

Judge McConnell orders banks, struggling borrowers to talk it out 8-20-11

PROVIDENCE, R.I. (WPRI) - Rhode Island's new federal judge makes a decision that could affect dozens of Rhode Islanders facing foreclosure.

Judge John McConnell, Junior has ordered the bulk of mortgage foreclosure cases in before Rhode Island's U.S. District Court to be put on hold, and for banks to try and negotiate with homeowners.

63 foreclosure cases in Rhode Island are affected.

One of the homeowners taking interest in the ruling is Philip Aceto, whose Cranston home is in foreclosure.

"I feel vindicated," Aceto said, "I feel this judge has made a fair decision."

Aceto blames a title issue for landing his home in foreclosure.

"It stops the banks and the services in their tracks," said George Babcock, a Pawtucket attorney who is handling the majority of the foreclosure cases.

"It gives them opportunity to sit with the magistrate," Babcock said, "and with the bank or servicer to try and work out a reasonable deal."

The idea Babcock says is to keep Rhode Islanders in their homes.

US banks haven't turned away from robo-signing shortcuts 8-20-11

NEW YORK – America’s leading mortgage lenders vowed in March to end the dubious foreclosure practices that caused a bruising scandal last year.

But a Reuters investigation finds that many are still taking the same shortcuts they promised to shun, from sketchy paperwork to the use of “robo-signers.”

In its effort to seize the two-bedroom ranch house of 87-year-old Margery Gunter in this down-on-its-luck Florida town, OneWest Bank recently filed a court document that appears riddled with discrepancies. Mrs. Gunter, who has lived in the house for 40 years and gets around with the aid of a walker, stopped paying her loan back in 2009, her lawyer concedes. To foreclose, the bank submitted to the Collier County clerk’s office on March 3 a “mortgage assignment,” a document essential to proving who owns a mortgage once the original lender sells it off.

But OneWest’s paperwork is problematic. Among the snags: State law permits lenders to file to foreclose only if they already legally own a mortgage. Yet the key document establishing ownership wasn’t signed and officially recorded until months after OneWest filed to foreclose on Mrs. Gunter. OneWest declined to comment on the case.

Reuters has found that some of the biggest U.S. banks and other “loan servicers” continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.

In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.

Read more: http://www.montrealgazette.com/business/banks+haven+turned+away+from+robo+signing+shortcuts/5283835/story.html#ixzz1VgARFv3M

Lawsuit vs Deutsche Bank can proceed - judge 8-19-11

(Reuters) - A U.S. judge left largely intact a securities lawsuit alleging Deutsche Bank (DBKGn.DE) misrepresented its exposure to mortgage-backed securities, according to a ruling.

Deutsche Bank was hit with several proposed class actions in 2009 relating to six offerings of preferred securities that had raised over $6.2 billion.

Investors claim that between 2005 and 2007, the bank significantly increased its dealings in residential MBS and collateralized debt obligations, which it failed to disclose.

In the ruling on Friday, U.S. District Judge Deborah Batts in Manhattan dismissed plaintiff claims relating to a stock offering from October 2006.

However, Batts left intact claims relating to five other offerings, or gave the plaintiffs a chance to refashion their allegations.

Representatives for Deutsche Bank and the plaintiffs were not immediately available for comment.

The case in U.S. District Court, Southern District of New York is In re Deutsche Bank AG Securities Litigation, 09-cv-1714.

New mortgage program assists borrowers and investors 8-19-11

Ocwen Financial Corp.'s program for troubled underwater borrowers will affect only a select pool of customers, but it's the first effort of its kind to reward mortgage investors willing to write down the value of homeowners' mortgages.

Principal reduction is an idea that has gained traction among consumer advocates as property values continue to decline and financially strapped homeowners question the upside of paying for a home with growing negative equity. Opponents of the notion raise the "moral hazard" argument, that offering principal reductions will encourage homeowners who can afford to pay to stop doing so in order to see their loan balances trimmed.
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http://www.chicagotribune.com/classified/realestate/ct-mre-0821-podmolik-homefront-20110819,0,1475056.column

Protesters invade bank headquarters to demonstrate against foreclosure practices 8-18-11

PASADENA - A group of about 50 protesters Thursday overwhelmed security, jumped turnstiles and briefly commandeered the corporate headquarters of OneWest Bank.

Members of Alliance of Californians for Community Empowerment and Service Employees International Union set up tents and blocked the narrow corridor in front of the employee elevators for several minutes as they chanted loudly in support of Rose Gudiel, who is on the brink of being evicted from her La Puente home.

"I'm here because they refuse to meet with me," Gudiel said. "I believe I qualify for a loan modification, and they refuse to explain to me why I do not."

Read more: http://www.pasadenastarnews.com/news/ci_18714513#ixzz1VcKjT1hH

Lake Worth places two on leave after false testimony leads to lawsuit's dismissal 8-18-11

Two Lake Worth employees - an attorney and a code enforcement secretary - were placed on administrative leave Thursday after a Palm Beach County circuit judge blasted the city for lying to the court in an attempt to foreclose on land owned by two longtime business owners.

Faced with the fraudulent documents and false testimony, Circuit Judge Glenn Kelley said he had to throw out a lawsuit the city filed to foreclose on code enforcement liens filed against C&E Holdings, a hauling business operated by two brothers on North A Street.

Citing bogus documents the city filed, he compared the city's actions to those of unscrupulous bankers who used robo-signers to push people out of their homes unjustly, fueling the nation's foreclosure crisis.

"The lack of control over affidavits filed with the court in this case is not unlike the so-called 'robo' signed affidavits in the foreclosure division," Kelley wrote. "More disturbing to the court is the fact that testimony was offered that was false and this testimony caused the court to enter an erroneous judgment which could have deprived C&E of its property."

Attorney John Bryan, who represented business owners Carl and Ed Deveaux, said it appears the fraud has been going on for years.

rest here
http://www.palmbeachpost.com/news/lake-worth-places-two-on-leave-after-false-1760851.html

Attorney General Kamala D. Harris Sues Law Firms Engaged in National "Mass Joinder" Mortgage Fraud 8-18-11

SAN FRANCISCO --- Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Attorney General Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of "mass joinder" lawsuits. "Mass joinder" lawsuits are lawsuits with hundreds, or more, individually named plaintiffs. This is the first consumer action by the Attorney General's Mortgage Fraud Strike Force.

Kramer's firm and other defendants were placed into receivership on Monday, Aug. 15. The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders. Defendants also had their assets seized and were enjoined from continuing their operations. Nineteen DOJ special agents participated as the firms were taken over Wednesday, Aug. 17, along with 42 agents and other personnel from HUD's Office of Inspector General, the California State Bar, and the Office of Receiver Thomas McNamara at 14 locations in Los Angeles and Orange Counties. Sixteen bank accounts were seized.

"The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country," said Attorney General Harris. "Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress."

"The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking," said State Bar President William Hebert. "By taking over the practices of four attorneys accused of fraudulent marketing practices, the State Bar can put a stop to their deplorable conduct as part of our ongoing effort to protect the public."

It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants' revenue from this scam is estimated to be in the millions of dollars.

As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

Consumers who paid to join the mass joinder lawsuits were frequently unable to receive answers to simple questions, such as whether they had been added to the lawsuit, or even to establish contact with defendants. Some consumers lost their homes shortly after paying the retainer fees demanded by defendants.

This mass joinder scam began with deceptive mass mailers, the lawsuit alleges. Some mailers, designed to appear as official settlement notices or government documents, informed homeowners that they were potential plaintiffs in a "national litigation settlement" against their lender. No settlements existed and in many cases no lawsuit had even been filed. Defendants also advertised through their web sites.

When consumers contacted the defendants, they were given legal advice by sales agents, not attorneys, who made additional deceptive statements and provided (often inaccurate) legal advice about the supposedly "likely" results of joining the lawsuits. Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as "running and capping."

Defendants' alleged misconduct violates the following laws:
-False advertising, in violation of section 17500 of the Business and Professions Code
-Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
-Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
-Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
-Failing to register with the Department of Justice as a telephonic seller.

Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance.

The Department of Justice has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

The State Bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants' alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington

The complaint, temporary restraining order, examples of marketing documents and photos of the enforcement action are available with the electronic version of this release at
http://oag.ca.gov/news.

Bill seeks to add judges to foreclosure process 8-17-11

Plan would require judicial review in most Michigan cases
Most foreclosures in Michigan never cross a judge's desk. Bill Donahue's didn't - or not until it almost was too late.

He and his wife got their first foreclosure notice from Fannie Mae last summer. It took most of a year before the eviction notice came, telling them they had just days to leave the home they'd lived in for 25 years.

But Fannie Mae never owned Donahue's mortgage. It was held by Bank of America, which was in the process of working out a modification with Donahue and his wife when the foreclosure process began.

Still, it took the intervention of a lawyer and Ingham County Register of Deeds Curtis Hertel Jr. and a day in court to resolve the situation.

"I still wonder how in the world they thought they had our mortgage," Donahue said.

The 61-year-old Haslett man was standing next to Hertel and state Rep. Jim Ananich on a Lansing street corner Wednesday morning. It was a news conference held to talk about a bill that would bring judges into the loop on most foreclosures.

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http://www.lansingstatejournal.com/article/20110818/NEWS04/108180327/Bill-seeks-add-judges-foreclosure-process?odyssey=mod%7Cnewswell%7Ctext%7CLocal%20News%7Cp

Case against MERS reaches Supreme Court 8-17-11

A controversial case challenging the ability of Mortgage Electronic Registration Systems to foreclose on a California man was filed with the Supreme Court Monday, making it the first major MERS case to reach the nation's highest court.

If the Supreme Court agrees to hear Gomes v. Countrywide, Gomes' attorney, Ehud Gersten, says the court will have to decide whether a lower court stripped his client, Jose Gomes, of due process by allowing MERS to foreclose without ensuring the registry had the noteholder's authority to foreclose.

"I believe this to be the first case in the country to take MERS to our Supreme Court," Gersten told HousingWire. His claim could not be immediately verified.

"Ultimately, what this case is saying is if you are going to be taking someone's home away from them, do you have the proof or the right to do so?" Gersten said. "If the Supreme Court starts to question MERS, and its business structure, it is going to have an effect on every MERS case in the country."

MERS, the electronic registry at the center of the foreclosure crisis, has been under fire nationwide as foreclosure attorneys purport the firm, and its parent company Merscorp Inc., illegally foreclosed on properties.

Gersten, meanwhile, said MERS has a brief period of time to respond before the Supreme Court decides whether it will accept the case (click here for the filing).

Attorneys familiar with the Gomes case are not optimistic about its chances of being heard by the Supreme Court.

"While recent statistics show that the Supreme Court takes on average less than 3% of cases on certiorari, it takes even a smaller percentage of those advanced by private litigants, as opposed to the government," said Patton Boggs attorney Anthony Laura. "Also it takes fewer cases out of the state court system than it does out of the federal Courts of Appeals."

"So, the likelihood that this case will be taken is slim indeed," Laura adds. "I believe those slim odds are even slimmer because the argument Gomes is making to the U.S. Supreme Court is one he did not previously raise."

Laura said that, as a premise for invoking the jurisdiction of the Supreme Court, Gomes claims that the court below abridged his 14th Amendment rights.

"My recollection is that Gomes never made a Constitutional argument below, neither in the California Court of Appeals nor in the petition for review to the California Supreme Court," he said. "In my view, the U.S. Supreme Court will look skeptically on his just raising that argument now."


The original plaintiff, Jose Gomes, appealed to the nation's highest court after California's Supreme Court decided not to review the 4th Appellate District Court of California's decision in favor of MERS.

Gomes' petition says he's challenging the foreclosure because MERS "did not have the current noteholder's authority to foreclose."

Gersten argues his client "was entitled to proof that the loan servicer, trustee or an entity such as MERS, either named in the deed of trust or acting through assignments of interest, had legal authority on behalf of the promissory note's current holder to foreclose."

The 4th Appellate District Court's decision, which Gomes wants overturned, held MERS had the authority to initiate a foreclosure on Gomes because the deed of trust "explicitly provided MERS with the authority to do so," according to court records.

The state appellate court also ruled in favor of MERS after finding the deed of trust contained no language to suggest the "lender or its successors and assigns must provide Gomes with an assurance that MERS is authorized to proceed with a foreclosure," according to court records.

MERS chose not to comment on the case, but a spokeswoman said the company is aware of the filing with the Supreme Court.

the SEC Covering Up Wall Street Crimes? 8-17-11

whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations
, whitewashing the files of some of the nation's worst financial criminals.
Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.
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http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

Ritz Carlton In Lake Tahoe Sold In Foreclosure 8-17-11

Some might say that the economy has picked up for the best, but for others—that might not be the same story, especially in the world of luxurious travel and tourism industries. The Ritz Carlton in northern California (Lake Tahoe) is suffering tremendously, due to the effects of the recession that took place in America during the late 2000’s. The Ritz Carlton—recently went into foreclosure, proving that places like Lake Tahoe aren’t doing enough business as predicted.

The Ritz Carlton unfortunately didn’t make the right moves, when it decided to open its door’s back in 2009 (the peak of the economic meltdown). The space, which was located in the base of Northstar-at-Tahoe, was created by a local company—East West Partners, and in March of 2010, they defaulted on a $157M loan (currently owned by Bank of America), that all ended in an auction by the end of June 2010.

The hotel will follow with the Ritz label for a bit longer (duration of the management contracts), presently; the hotel has a staff of 300 plus. The problem that drove the area was the net-worth of $9M to Northstar-at-Tahoe, taking them to the edge of bankruptcy. Yet, this isn’t the only black hole in the region. The Chateau at Heavenly Village has been at a halt with business for almost 4-years now.

Before all this mess, East West developed numerous projects like, Eagle Ranch, Avon’s Westin Riverfront Resort, and the Manor Vail penthouses. East West is associated with projects in all major cities—Vail, Beaver Creek, Summit County, Denver, Lake Tahoe, and Deer Valley in Utah.

Burt Reynolds' Florida Mansion Faces Foreclosure 8-17-11

Actor Burt Reynolds' mansion in Hobe Sound, Florida is facing foreclosure, according to CNN Money.

Merrill Lynch Credit Corporation issued a foreclosure summons to the actor in a lawsuit issued August 9 after he stopped making mortgage payments on his estate, CNN reports.

The lawsuit claims Reynolds has not made a mortgage payment since August 2010 and owes the bank nearly $1.2 million.

"No subsequent payments have been made," noted the lawsuit, as reported by NBC Miami. "Plaintiff must be paid $1,193,808 in principal on the mortgage note and mortgage, together with interest from Aug. 1, 2010, and all costs ... and reasonable attorney's fees."

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http://onlinejournal.com/artman/publish/article_10896.shtml

Banks Block Obama’s Mortgage Stimulus Plan 8-15-11

A U.S. program to help as many as 5 million homeowners refinance their mortgages is being hindered by reluctant lenders, suffering a similar fate to the government’s main foreclosure-prevention effort.

The Obama administration introduced the plan in April 2009 in a bid to prevent defaults among borrowers who were current on their payments but had little or no equity after the average home price had tumbled 33 percent since the July 2006 peak. The Home Affordable Refinance Program, known as HARP, was designed to allow these homeowners, who usually can’t qualify for new loans, to benefit from the lower rates engineered by the Federal Reserve to help stimulate the economy.

About 810,000 homeowners refinanced through HARP as of May, according to the Federal Housing Finance Agency, far short of the administration’s goal. The program’s limited impact threatens to prolong the nation’s foreclosure crisis while keeping billions of dollars out of consumers’ hands -- money that could flow into the economy in the form of additional spending or investment.

“Of all the policy ideas to help the housing market in the very near term, juicing up HARP has the most potential for success,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in an e-mail.

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http://www.bloomberg.com/news/2011-08-16/banks-block-obama-on-mortgage-stimulus-plan.html

Wells Fargo Sued in Reverse Mortgage Dispute 8-15-11

SAN FRANCISCO – A California resident has become yet another victim of the reverse mortgage program that is making it difficult for him to stay in the home he grew up in.

When Robert Chandler’s mother died last year, Chandler got saddled with a reverse mortgage loan that his mother had taken out five years earlier on the Elk Grove, Calif. home he inherited. When he was unable to pay the full loan balance, Wells Fargo initiated foreclosure proceedings on his home.

The bank didn’t tell him that he could have purchased his home for the current market value, as per the contract.

On Aug. 3, AARP Foundation Litigation, along with two law firms, filed a class action suit against both Wells Fargo and Fannie Mae on behalf of Chandler and other reverse mortgage heirs for foreclosing on their homes without giving them notice of the right to purchase their homes for the market value.

Chandler, who is in his 60s, believes that he should not have been told by Wells Fargo that he had to pay the approximately $338,000 outstanding balance on his mother’s reverse mortgage loan. His lawyers say he should have been allowed to pay just the $194,000 market value at the time of her death, and get clear title to it.

“What Wells Fargo did doesn’t make sense,” asserted Kelly Corcoran of the San Francisco-based law firm Kerr and Wagstaff, which co-filed the lawsuit. In fact, “it was wrongful and irrational.”

rest here
http://www.thehartfordguardian.com/2011/08/15/wells-fargo-sued-in-reverse-mortgage-dispute/

NY judge stops Christmas Eve foreclosure 8-15-11 same bank who has my LOAN!!

NEW YORK — Shouting "Bah, humbug!," a New York judge threw out the planned foreclosure against a Brooklyn man based on an alleged fraudulent Christmas Eve phone call confirming the paperwork was in place to take his home away.

The judge, Arthur Schack, said US Bancorp's US Bank NA unit cannot foreclose on the Brooklyn home of Dario Trujillo, who faced foreclosure proceedings begun in July 2008 by Downey Savings and Loan. Downey failed four months later and was bought by Minneapolis-based US Bancorp.

Schack is a state Supreme Court justice in Brooklyn known for criticizing perceived abuses in mortgage servicing.

He was angered after lawyer Margaret Carucci said in a sworn affidavit that a Downey officer on Dec. 24, 2010 claimed to have personally reviewed and could vouch for the accuracy of the paperwork underlying Trujillo's foreclosure — although Downey had long ceased to exist.

"Ms. Carucci affirmed under the penalties of perjury that she communicated on Christmas Eve 2010 with the officer of a defunct financial institution," Schack wrote. "This is a deceptive trick and fraud upon the court. It cannot be tolerated. This Christmas Eve conduct, in the words of Ebenezer Scrooge, is 'Bah, humbug!"'

Schack directed Carucci and her law firm at the time, Westbury, New York-based Druckman Law Group, to explain at a hearing on Sept. 12 why they should not be sanctioned.

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http://www.msnbc.msn.com/id/44150571/ns/business-real_estate/#.TkwkuYKwXLM

MERS ruling should mean back to mortgage basics 7-12-11

Put yourself in the hot seat of any mortgaged homeowner. You have defaulted on your payments, and your bank is ready to take action. But what is this? Foreclosure is initiated against you, not by the bank, but by a third party — some acronymic entity called MERS.

In fact, MERS — Mortgage Electronic Registration Systems — is at the heart of the latest crisis to hit the the banking industry. Created in 1993, MERS is a private company that enables banks to buy and sell mortgages without registering the transfer with the home county.

Why would banks want to do that? MERS saves them huge expenses in the paperwork and minutia of mortgage management. And foreclosure is the key issue in a recent Michigan Appeals Court ruling and dozens of other similar rulings across the nation.

The problem in Michigan stems from a state law that requires a foreclosing party to have a stake in the mortgage. However, MERS has no ownership stake in the mortgages it handles.

One Jackson homeowner — Corey Messner of Summit Township — defaulted on his mortgage in 2008. He sued when he learned that MERS began foreclosing on behalf of his bank. And now the state appellate court has ruled in his favor. The court ruled that MERS has no standing to foreclose unless it owns the debt, which it doesn’t. It merely acts as agent for the banks.

The ruling has created havoc in the real estate market, halting some home sales and further stalling foreclosures in which MERS had been involved. MERS initiated 744 foreclosures in Jackson County in the past five years, and hundreds of others elsewhere in Michigan. That’s a major problem for the banks.

In Ingham County, where MERS initiated 469 foreclosures, Register of Deeds Curtis Hertel was blunt in his assessment: “People were robbed of due process and time. It would have taken more money and more time to foreclose on the citizens and that’s what [banks] avoided by using MERS.”

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http://www.mlive.com/opinion/jackson/index.ssf/2011/07/editorial_mers_ruling_should_m.html

Orlans robo-signing allegations draw concerns from lawmakers, activists 7-12-11

Allegations that an attorney working for Troy-based Orlans Associates foreclosure giant is allegedly involved in robo-signing drew immediate concerns from lawmakers and activists.

“This ‘robo-signing’ practice is degrading our communities and undercutting the integrity of our justice system,” said Congressman Hansen Clarke (D-Detroit), responding to a Michigan Messenger report. “I’m working right now on federal legislation to help struggling homeowners gain additional time to negotiate settlements with their lenders. Part of this legislation will aim to help overcome the issue of fraud in foreclosure cases by setting clearer standards as to who can legally call proceedings against homeowners.”

Robo-signing is when a bank, mortgage company or foreclosure company has multiple people sign documents with the name of the person who is supposed to sign those documents and then has them notarized as having been signed by that person. In the case of Orlans, the signer was supposed to be attorney Marshall Isaacs, but he has now been implicated in two states for having had others sign his name and notarize that he did so.

Clarke has been a long time advocate for restraining the foreclosure crisis and examining foreclosure practices. While in the state Senate he authored a bill that would institute a moratorium for two years on foreclosure.

Ari Adler, spokesman for Michigan Speaker of the House Jase Bolger (R-Marshall) released the following statement upon learning of the allegations:

The Speaker has respect for and demands compliance with all statutory requirements. It’s not just about following the law, but also providing confidence in legal proceedings and the judicial branch as a whole. No one wants anyone to lose their house and every effort should be made to require compliance with all laws. Beyond that, however, there is a much larger issue here. We need to improve Michigan’s economic climate for people to continue paying on their homes and avoiding a foreclosure in the first place. The lack of the right signature does not necessarily mean the property is not in foreclosure or that people no longer need to make good on their mortgage. We continually say that the number one issue facing Michigan is jobs, and these cases prove that yet again. If we could make Michigan more competitive for job providers we would have more Michiganders working, the economy would improve and the constant headlines about home foreclosures would finally subside.

In an interview with Michigan Messenger, Sen. Steve Bieda (D-Warren) said the revelations were “shocking.”

“This is shocking news, and the citizens of this state deserve a thorough investigation of this matter,” Bieda said. He says that Attorney General Bill Schuette, a Republican, Oakland County Prosecutor Jessica Cooper, a Democrat, and Secretary of State Ruth Johnson, also a Republican, should hold separate investigations.

Michigan Messenger’s story on Friday revealed that Orlans attorney Marshall Isaacs has been placed on a robo-signers registry with the South Essex County Clerk’s Office in Massachusetts. Steve Harvey, first assistant clerk for the office, told Messenger that the decision was made after an independent fraud investigator concluded foreclosure documents filed in that county were likely robo-signed. Harvey says the investigation was initiated based on information provided by Steve Dibert, owner of MFI-Miami a foreclosure investigation company with offices in Michigan and Florida.

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Carnie Wilson: Facing Foreclosure, Trying to Hold on For Many More Days  7-11-11

Carnie Wilson has no one to blame for her unhappiness.

She likely purchased a home during her musical heyday, watched it tripled in value during the boom years of 1990-2006, and then borrowed against it to support a lifestyle beyond her means. In other words: She got herself into her own mess.

Coming off her random, hilarious appearance in Bridesmaids, this member of iconic 1990s trio Wilson Phillips is facing a serious situation: foreclosure.

As first reported by TMZ, Wilson has defaulted on her California home loan and has until July 21 to fork over the $1.6 million owed on the residence. Otherwise, the house goes up for auction.

Due to what may have been an impulsive purchase by the artist, the home-owning dream is no longer alive. The bank won't release her from the contract, no matter how many song-related puns we come up with.

Carnie and the property will likely go their own ways.

FDIC sues former IndyMac CEO in $600 million negligence case 7-11-11

The Federal Deposit Insurance Corp. filed a negligence lawsuit against former IndyMac CEO Michael Perry last week, accusing the executive of producing risky home mortgages that eventually soured, causing more than $600 million in losses.

Perry's attorney Jean Veta responded to the complaint Monday saying, "The lawsuit filed by the FDIC against Michael Perry is baseless. Mr. Perry led IndyMac with integrity and intelligence. The FDIC’s belated claim that Mr. Perry was somehow 'negligent' is dead wrong."

In the complaint, the federal regulator, which took over IndyMac after the bank's failure in 2008, accuses Perry of putting the bank at risk by failing to end the "production of a pool of more than $10 billion in risky, residential loans intended for sale into a secondary market." The FDIC claims Perry knew production of the loans was occurring at a time when the secondary market was becoming unstable and illiquid due to ongoing concerns over credit quality.

"Instead of enforcing credit standards, Perry chose to roll the dice in an aggressive gamble to increase market share while sacrificing credit standards, even though a reasonable banker of a depository institution would have suspended, limited, or stopped the production of these risky loans during this time of known, unprecedented, and escalating risks," according to the FDIC.

The complaint also said Perry failed to gain traction with the loans and was later forced to transfer the loans to IndyMac's investment portfolio where they caused more than $600 million in losses.

The FDIC claims Perry knew his actions were risky, quoting him in the lawsuit saying, "Clearly, our risk offices are not to blame for the situation INIB finds itself in. This time the losses are 1000/0 operating management's fault (from me on down), there is no substitute for experience, good common sense and business judgment."

The suit cites another quote from Perry where he allegedly states, "Look, we've had lousy performance and the buck stops with the CEO … I'm a big believer in being held to account."

Attorneys for Perry object to the way he is being portrayed in the suit and claim the FDIC is wasting taxpayer dollars by attempting to deflect the blame from its own failures leading up to the crisis.

Benjamin Razi, one of Perry attorneys wrote in a statement, "the FDIC’s claim is that Mr. Perry should have foreseen the financial crisis — even though nobody else did. Not the FDIC. And not any of the other regulators responsible for supervising IndyMac. Of course, the complaint neglects to mention that the FDIC’s own Chairman, Sheila Bair, acknowledged that 'few saw all the risks' in the conditions leading up to the crisis."

Wells Fargo to Pay $125 Million to Settle Mortgage-Backed Securities Case 7-10-11

Wells Fargo & Co. (WFC) agreed to pay $125 million to settle accusations by investors that the bank misled them about the risks of mortgage-backed securities it sold.

The plaintiffs in the consolidated group case, or class action, include the General Retirement System of Detroit, New Orleans Employees’ Retirement System and other public pensions, according to the proposed settlement filed yesterday in federal court in San Jose, California.

Wells Fargo, the largest U.S. home lender, and several investment banks that underwrote the securities were sued in 2009 over alleged violations of securities laws in connection with sales of $36 billion in mortgage pass-through certificates in 2005 and 2006.

The securities were backed by pools of mortgage loans that Wells Fargo or its affiliates originated or purchased. In 28 offerings, the bank misrepresented the quality of the loans, failing to disclose that it hadn’t followed appropriate underwriting standards and loans were made based on inflated appraisals, investors said in a complaint.

The bank and the underwriters deny wrongdoing, according to the proposed accord, which is subject to a judge’s approval.

“The proposed settlement agreement is a negotiated resolution as to all named defendants and is intended to avoid the distraction and expense of litigation,” Ancel Martinez, a Wells Fargo spokesman, said in a telephone interview.

rest here

http://www.bloomberg.com/news/2011-07-07/wells-fargo-to-pay-125-million-to-settle-mortgage-backed-securities-case.html

NY judge wants HSBC CEO to explain bank's foreclosure actions 7-8-11

The courtroom battle over a Brooklyn home foreclosure reached the executive suite this past week, with New York Supreme Court Judge Arthur Schack calling out HSBC's (HBC: 48.11 -1.76%) attorneys and CEO and President Irene Dorner for potentially violating foreclosure guidelines in New York state.

The original case — HSBC Bank USA, N.A. v  Taher — involved a Brooklyn homeowner who protested a foreclosure action in court. The loan tied to the property was held in trust, with HSBC serving as trustee.

A spokesperson for HSBC responded to the allegations, saying "HSBC did not service the loan in question and neither prepared or filed any of the legal documents presented to the court. HSBC's role in the case is limited to that of Trustee."

Furthermore, the company said, "All references in the ruling to the servicing of this loan – including assertions of robo-signing – relate to the servicer, not HSBC as Trustee. We will address all matters related to the ruling directly with the court."

According to court documents, Ocwen is the servicer for HSBC.

Judge Schack, scheduled a July 15 hearing to follow up with HSBC attorneys and Dorner on the grounds that he believes both parties should have to answer questions raised about the bank's handling of foreclosure documents and potential robo-signing. Robo-signing involves the mass signing of foreclosure documents without the signatory actually reviewing the documents and their content. It became an issue last fall and resulted in several large servicers instituting foreclosure moratoria as they worked to correct the problems.

While executives generally are not the players who are called into court on foreclosure issues, Judge Schack said the inquiry should go beyond the lawyers, writing in his order that Dorner, as CEO and President of HSBC, is "captain of the ship" and "must bear responsibility for its (the company's) defeats and mistakes."

In court filings, Judge Schack said the company's  counsel  was warned about submitting materials with "defects in foreclosure filings," including issues stemming from robo-signing concerns, late last year.

Goldman to defend Liberty Mutual securities fraud case vigorously 7-7-11

Goldman Sachs (GS: 130.31 -1.30%) will vigorously defend itself against a lawsuit filed by Liberty Mutual Insurance Co. and several other investors who claim the investment bank misrepresented the financial condition of Freddie Mac when serving as underwriter for Freddie's offering of Series Z preferred stock in late 2007.

Liberty Mutual and the other plaintiffs — which include Peerless Insurance Co., Employers Insurance Co., Safeco and Liberty Life Assurance Co. — claim they invested $37.5 billion in the offering "upon misrepresentations" Goldman made as the transaction's underwriter, according to court dockets.

"The lawsuit is without merit," Goldman spokesman Michael DuVally said after the case was filed in a U.S. District Court in Massachusetts.

Freddie Mac is not named as a defendant in the complaint. Instead, the case focuses solely on Goldman's role as underwriter to the transaction.

The plaintiffs claim concerns over Freddie's capitalization level were already known at the time of the offering and that Freddie was exposed to risky subprime and Alt-A mortgages.

"The Series Z preferred stock offering circular written by Goldman claimed that Freddie Mac already met its regulatory capital requirements, and that the purpose of the Series Z preferred stock offering was to bolster Freddie Mac’s capital base," the plaintiffs contended in their complaint.

"As plaintiffs have learned, the stated purpose for the offering was false. Goldman knew or recklessly ignored that Freddie Mac did not meet its regulatory capital requirements, and Freddie Mac remained severely undercapitalized even after the sale of the preferred stock," according to the complaint.

The plaintiffs claim the misrepresentation of the risks Freddie actually faced prompted them to take part in investments that are now "worthless."

Goldman has defended itself and its role in the mortgage marketplace in the past few years. A few months ago, the investment bank responded directly to a Senate report that criticized Goldman and Deutsche Bank (DB: 52.91 -1.32%) for selling "RMBS and CDO securities to clients without disclosing its own net short positions against the subprime market or its purchase of CDS contracts."

Goldman, at the time, said it disagreed with most of the report. The firm defended itself again in an interview with BusinessWeek earlier this year.

OCC to release foreclosure review results without naming banks 7-7-11

Federal regulators will release findings from the upcoming mortgage servicer reviews along with the amount of financial remediation needed, leaving bank-specific information under wraps.

When 14 major mortgage servicers signed consent orders to settle an investigation into their foreclosure practices, the companies were required to hire third-party auditors to conduct a review. The goal is to find how widespread the robo-signing and other mishandled foreclosure practices had become and determine the amount of remediation needed.

The Office of the Comptroller of the Currency previously said the report would not be made public. But Julie Williams, the first senior deputy comptroller and chief counsel to the OCC told the House Finance Services Committee Thursday at least some of the reports will be released.

"What we anticipate is two public-type reports," Williams said. "One, an interim report to describe the structures and the details of how the whole process will be conducted, then a report at the end of the process that will be similar to the interagency horizontal report. The agencies would put out reports about the look back process, describing the findings, describing the financial remediation that would be provided. What we would not anticipate doing is disclosing bank-specific information because that is confidential bank supervisory information."

The agencies included the OCC, the Federal Reserve, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. studied a sample of 2,800 foreclosure cases at the 14 servicers – 200 per servicer – and found possibilities of widespread problems.

Mark Pearce, director of the consumer protection division at the FDIC, said it will be important how these third-party firms establish which files to sample and suggested a more encompassing review of more high-risk loan files.

Obama administration pressures banks to reduce mortgage principal 7-6-11

The Obama administration is putting more pressure on banks to help underwater borrowers by reducing the principal on current home loans.

"We are continuing work with the issuers of the mortgage, the bank or service company to convince them to work with homeowners who are paying to see if they can modify the loan and possibly lower principal so that they are not burdened by these huge debts," President Obama said during the Twitter town hall meeting Wednesday.

With national home prices falling 33% from the peak before the housing crisis, many borrowers are now left with properties worth less than the amount owed on the mortgage.

Nearly 30% of current mortgages are in negative equity, according to Lender Processing Services (LPS: 20.18 +1.25%).

The administration's Home Affordable Modification Program has done little so far to address negative equity. Servicers participating in HAMP reduced the principal on roughly 5,000 mortgages since the program launched in March 2009.

"We are going back to the drawing board to put more pressure on banks to see if we can help more homeowners through modification and see where reducing principal is possible," Obama said.

David Motley, president of the Dallas-based servicer Colonial National Mortgage, said any expanded program that gives homeowners a chance at principal reduction could promote a wave of strategic default.

"In such 'one-on-one' situations, principal reductions might work, but codifying them as part of a large scale program would be disastrous to the future of mortgage lending. Moral hazard would drive MBS buyers away in droves," Motley said.

Obama did admit the process is difficult but that there is room for banks and homeowners to both benefit from a principal reduction in lieu of foreclosure or strategic default. He also added no federal program will ever be large enough to solve the housing problems and he will lean on private companies to make the commitment.

Washington Mutual settles class-action case for $208.5 million 7-1-11

Washington Mutual and several co-defendants settled a class-action lawsuit for $208.5 million filed by shareholders who lost money in the 2008 financial crisis.

To end the suit, which became a few shareholder class-action complaints combined into one, the defendant agreed to pay $105 million. In addition, the co-defendant underwriters, including Goldman Sachs (GS: 130.31 -1.30%) and Morgan Stanley (MS: 21.22 -1.67%), agreed to pay $85 million alongside an $18.5 million payment from co-defendant Deloitte.

In exchange, the lead plaintiff, the Ontario Teachers’ Pension Plan Board, agreed to drop all claims on behalf of the fund and similarly situated co-plaintiffs.

The settlement agreement was filed in the United States District Court Western District of Washington at Seattle.

The original case was filed three years ago after shareholders sued Washington Mutual for losses in the wake of the housing market collapse, claiming executives and the company caused stock prices to inflate by making "materially false and misleading statements about the effectiveness of WMI’s risk management procedures, the fairness and reliability of the appraisals received in connection with WMI’s loans, the quality of WMI’s underwriting practices and WMI’s financial results, including the appropriate allowances for its loan losses."

WaMu, one of the nation's largest subprime lenders, became the largest bank failure in U.S. history three years ago, resulting in the Office of Thrift Supervision's takeover of the bank and subsequent sale to JPMorgan Chase (JPM: 39.39 -0.10%).

Ex-TBW Chief Farkas sentenced to 30 years in prison 6-30-11

Lee Farkas, the former chairman of failed mortgage lender Taylor, Bean & Whitaker, was sentenced to 30 years in prison and forced to forfeit $38.5 million Thursday for orchestrating a $2.9 billion fraud scheme over the last decade.

The U.S. District Court for the Eastern District of Virginia convicted Farkas of 14 counts of bank, wire and securities fraud in April. But the sentencing was a fraction of the 385 years requested by the Justice Department.

Based in Ocala, Fla., TBW originated, serviced and sold mortgages in pools to Freddie Mac. Once the 12th largest mortgage lender in the U.S., TBW relied on financing from Colonial Bank and the TBW subsidiary Ocala Funding to fund the loans.

From 2002 through August 2009, Farkas and a group of six other conspirators swept funds and covered overdrafts between TBW and its funding facilities at Colonial and Ocala.

When the sweeping became too complex and the hole became too large, growing to more than $500 million at one point, the conspirators began selling mortgages that didn't exist. According to court documents, previously foreclosed homes and nonexistent loans served as the collateral on the majority of securities issued.

When Colonial put Farkas in charge of obtaining a Troubled Asset Relief Program funds during the financial crisis, the Special Inspector General for TARP caught on to the scheme when Farkas filed a false application for $553 million in bailouts.

All three companies failed in 2009.

The co-conspirators plead guilty to their charges, and they will serve significantly less time in prison.

Paul Allen, former chief executive of TBW and head of Ocala, was sentenced to 40 months. TBW Treasurer Desiree Brown was sentenced to 72 months and former TBW President Raymond Bowman faces 30 months in prison.

Colonial Vice President Catherine Kissick, who ran the facility that funded TBW loans, was sentenced to eight years. The Colonial facility's former operations supervisor was sentenced to three months in prison.

Freddie Mac entered into an agreement with TBW creditors this week to settle the mess.

Regulators subpoena Ally Financial in mortgage probe 6-29-11

Federal regulators subpoenaed Ally Financial Inc. this month, asking the lender for documents tied to mortgage deals and information related to a Justice Department investigation.

Detroit-based Ally, a mortgage and auto lender, said in a Securities and Exchange Commission filing that it made payments of $152 million into a securitization trust during the second quarter to cover any losses related to mortgage insurance rescissions.

Ally said mortgage loan rescissions occur when mortgage insurers rescind a mortgage insurance contract after discovering misrepresentations were made during the securitization process. A rescission by a mortgage insurer essentially "triggers our obligation to repurchase the associated loans, or provide loss reimbursement to the securitization trust," Ally wrote in a public filing.

The firm said it expects to record a $100 million charge in the second quarter.

In June, the Securities and Exchange Commission asked Ally to submit documents related to some of the bulk settlements it made with loan originators over bad loans packed into securitization trusts. In some of the agreements, Ally said it received compensation in lieu of having the mortgage originators repurchase bad loans.

The Justice Department submitted a separate subpoena. Ally describes their filing as "a broad request for documentation and other information in connection with its investigation of potential fraud related to the origination and/or underwriting of mortgage loans."

Tom Adams: How Treasury’s “Kick the Can” Strategy Exacerbates Mortgage Market Woes (Mortgage Insurer Edition)  6-27-11

By Tom Adams, an attorney and former monoline executive

Barron’s published a detailed take down of the mortgage insurance industry weekend that highlights how Treasury’s approach to the mortgage mess will ultimately make matters worse. As the article points out, in the fairly likely scenario that mortgage claims exceed the amount of capital the insurers have available to pay them, the parties taking the biggest hit will be Fannie Mae and Freddie Mac. That means taxpayers are probably on the hook for more bailouts.

Despite having questionable capital reserves for the future claims they face, mortgage insurers are still continuing to write significant insurance business. Why would anybody want to continue to buy insurance from such shaky companies?

The continuing business of the mortgage insurers help shed light on the fact that virtually the entire mortgage industry is run through zombie companies that ought to have expired years ago. Mortgage insurers are yet another example of the failure of the Treasury Department’s “kick the can down the road strategy” to address the collapse of the real estate market. Despite their underwriting failures, the mortgage insurers, and their tied-at-the-hip companions, Fannie and Freddie, continue to play a dominant role in the mortgage markets and, by their continued existence, prevent any real resolution to the problems facing the market.

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Foreclosure adds insult to tragedy 6-26-11

After learning his mom had been murdered and his dad was missing, a Brooklyn man returned to their California home to deal with the tragedy -- only to see a bank foreclose on the house the next day.

Robert Klein, 32, got the horrific news that his mom, Renata, who went missing on June 11, had been found dead along a highway near their home in the Los Angeles suburb of Canyon Country on June 15. Police called the death a homicide.

His dad, Dusan, also went missing and has yet to be found, cops said.

The couple, both 59, had been having financial troubles before they vanished. Their son learned how bad the money problems were shortly after he got back home.

"When they went missing, he flew in from New York. And the next morning, after he got into town, the deputies actually served eviction papers," said Sgt. Robert Martindale of the LA Sheriff's Department.

Cops were still looking for Dusan, a travel agent, yesterday. Robert Klein said the eviction was another brutal blow.

Bank Errors Continue to Cause Wrongful Foreclosures 6-24-11

Four years into the foreclosure crisis, banks say they've made major improvements in how they handle struggling homeowners. They've promised, for example, not to foreclose on homeowners who are being considered for mortgage modifications. But that's still happening.

Consider the cases of Laurie Pinkerton and Lisa Peterson. The two women, both Californians and Bank of America customers, had been assured by the bank that they wouldn't lose their homes before they'd been evaluated for a possible modification. Both had their homes sold last month.

Such cases are particularly senseless, because simply modifying the mortgage by reducing the monthly payment might be in the interest not only of the homeowner, but also of the investor who owns the mortgage. Both Pinkerton and Peterson said their homes were sold after foreclosure for far less than they're worth.

Regulators have done little to stop the practice, and the "problem appears to be getting worse," said Kevin Stein, associate director of the nonprofit California Reinvestment Coalition.

Last month, the coalition surveyed 55 foreclosure-avoidance counselors throughout the state. Collectively they serve thousands of borrowers every month. Almost all of the counselors, 94 percent, reported having worked with clients who'd lost their homes while under review for a modification. About half of the counselors reported this happened "often." This year's totals, which are due to be publicly released next week, are higher than those in the group's survey last year.

Regulators have acknowledged the problem but have so far stopped short of solving it, say borrower advocates. More than a year ago, ProPublica reported extensively on how the banks' inadequate systems were causing wrongful foreclosures.

This past April, the federal banking regulators released "consent orders" with 14 of the largest banks requiring various improvements in their handling of mortgages and foreclosures. Prior to the orders, the regulators had not had clear rules on how the banks should handle modification applications. Among the new requirements, banks will now be forbidden from actually selling a home before a final decision is made on a modification. Also, if a homeowner is approved for a modification, the foreclosure process is supposed to stop. The new requirements will go into effect later this summer.

While those are necessary requirements, regulators took a "huge step backward" by not explicitly forbidding banks from pursuing foreclosure at all until a final decision has been made on a mortgage modification application, said Alys Cohen of the National Consumer Law Center.

The administration's mortgage modification program, which offers incentives to encourage modifications, has that requirement. But that program is voluntary for the banks and has been hobbled by lax oversight. What's more, over two-thirds of modifications occur outside of the program.

Federal regulators have the power to require all banks to make a decision on a modification application before moving to foreclose, but they've simply chosen not to.

Allowing the banks to pursue foreclosure while the modification process plays out hurts homeowners in multiple ways. First and foremost, there's the hazard of actually losing the home to foreclosure because of bank error. The two homeowners featured in this story show that this continues to be a real danger, especially in states like California where the bank doesn't need to go to court to foreclose. It's also just confusing and unnecessarily stressful for homeowners. Finally, in a foreclosure homeowners actually get billed for bank costs, such as paying for a bank's lawyers.

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http://www.propublica.org/article/bank-errors-continue-to-cause-wrongful-foreclosures

Two Michigan Counties Sue Fannie and Freddie for Nonpayment of Mortgage Transfer Fees  6-24-11

I’ll be brief because this article from the Michigan Messenger (hat tip furzy mouse) stands on its own. Readers may recall that some registers of deeds (the county officials responsible for recording mortgage transfers) are less than happy at the way MERS has deprived their governments of income by skipping recording fees for some mortgage transfers (that was the point, after all) and making a mess of title records.

Two counties in MIchigan, Oakland and Ingham, have decided to do something about it. To my knowledge, this is the first litigation of this type:

Oakland County Treasurer Andy Meisner is suing mortgage giants Freddie Mac and Fannie Mae in the nation’s first federal lawsuit seeking to recoup tax payments never paid on properties that were transferred several times during the height of and during the foreclosure crisis that has gripped the nation over the last few years,

“I do think it’s fraudulent and I do think there is strong evidence to suggest there has been fraud. I do think it is a fraudulent conspiracy,” Meisner said. “We are identfying the people involved and we are systematically working to hold them accountable.”

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Pension funds sue Wells Fargo, alleging executives breached fiduciary duties 6-22-11

Two pension funds filed a shareholder derivative lawsuit against Wells Fargo (WFC: 27.59 +1.21%) this week, claiming the bank and its leaders failed to properly address mortgage documentation issues, leaving Wells exposed to $15 billion in potential liabilities.

A spokesman for San Francisco-based Wells Fargo declined comment on the suit, which was filed in the U.S. Northern District of California by the Oakland County Employees Retirement System and the Laborers' District Council and Contractors Pension Fund of Ohio.

The pension funds claim the bank's leadership failed to promptly address robo-signing and documentation issues tied to the mortgage securitization process, resulting in a situation where "liabilities appear to be hanging like the sword of Damocles over Wells Fargo and its shareholders."

The plaintiffs specifically named Wells Fargo CEO and Chairman John Stumpf a defendant, along with other board members and officers.

Investors in the pension funds claim Wells Fargo's leadership ignored early reports that robo-signing and issues with the Mortgage Electronic Registration System during the securitization process tainted some foreclosures and property titles.

The plaintiffs, who own a combined 169,000 shares of the banking giant's 5.3 billion shares outstanding, said in court papers the leadership continued "to prolong the illusion of Wells Fargo's success, concealing the adverse facts concerning Wells Fargo's actual financial condition, its lack of ownership over real estate debt that had been securitized through the MERS system, and the company's lack of clean title to real property, in judicial foreclosure states."

"This wrongful conduct exposed the company to billions of dollars of liability to investors in the secondary securitized debt markets, and hundreds of millions of dollars in litigation related expense and liability stemming from wrongful foreclosure and related litigation arising in judicial foreclosure jurisdictions," the pension funds allege.

New York State Appellate Court MERS Smackdown: Another Nail in the Coffin 6-14-11

There has been a lot of buzz about a strongly worded decision by the New York Second Appellate Division in the Bank of New York v. Silverberg. This is yet another ruling against MERS, but its implications are narrower than some commentators have suggested.
It is critical to note that MERS in theory is a mortgage registry, which means whatever authority it has (a matter still being sorted out), it extends to the lien only. MERS has repeatedly said in depositions it was not a lender and has no rights to the note, the borrower IOU. Thus since in most states the note is the critical instrument (the lien is a “mere accessory”), the party foreclosing needs to be a holder of the note (that actually means more than mere possession, you need to be a party of interest, in some states).
MERS advised last year that servicers stop filing foreclosures in the name of MERS. However, there appear to be quite a few foreclosures undertaken in the name of MERS grinding their way through the system; this was one of them (I’m a bit puzzled that more in states with MERS-unfavorable precedents have not been withdraw and refiled, but that is over my pay grade).
You have to love New York judges. The ruling begins: “This matter involves the enforcement of the rules that govern real property and whether such rules should be bent to accommodate a system that has taken on a life of its own.” It’s not hard to guess where this one is going.
The ruling is short and worth reading. This is the first ruling in New York to consider the question of whether MERS “can assign the right to foreclose” when it has neither rights in or possession of the note. Most courts that have considered whether MERS can make assignments of its rights have taken a dim view of the idea (note that courts that have made MERS favorable rulings in similar circumstances have typically ignored the issue). Note that this court said explicitly that if MERS had had possession of the note, it could have initiated foreclosed in its name (as suggested above, other states have ruled that possession alone does not confer the right to foreclose). But getting its hands on the note after foreclose was in motion was an impermissible fix.
Rest here
http://www.nakedcapitalism.com/2011/06/new-york-state-appellate-court-mers-smackdown-another-nail-in-the-coffin.html

HUD: Bank of America “Significantly Hindered” Mortgage Probe (Updated) 6-14-11

We said Bank of America would rue its purchase of Countrywide shortly after it took at stake in the troubled subprime originator:
Even though the financial press has almost universally hailed Bank of America’s investment in Countrywide as a bold and savvy stroke, the market has remained singularly unimpressed.
I will confess I haven’t studied the details of the deal for a simple reason: I’m appalled that B of A would even consider it. The two banks had reportedly been talking for six years. That means B of A knew, or ought to have known, Countrywide very well. An article by Gretchen Morgenson in Sunday’s New York Times paints Countrywide is, at least in spirit if not the letter of the law, a criminal enterprise…. But I know lawyers who have Countrywide in their crosshairs, and I am certain they have plenty of company.
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Alley faces foreclosure on home 6-12-11

Actress Kirstie Alley is facing the loss of her Florida home if she fails to settle a big bill for outstanding property taxes, according to a U.S. report.

The former Cheers star allegedly owes more than $ 41,000 on her mansion in Clearwater, and, according to the National Enquirer, Alley had until 31 March to hand over the cash to Pinellas County officials – but she missed the deadline and the five bedroom, four bathroom house is now listed as a “delinquent real estate tax” property.

If the actress fails to pay up, the home, which was previously owned by Lisa Marie Presley, will go into foreclosure.

Alley has been staying in a rented apartment in New York’s trendy Tribeca district since finishing in second place on U.S. TV competition Dancing With the Stars last month.

Two States Ask if Paperwork in Mortgage Bundling Was Complete(now were talking) 6-12-11

Opening a new line of inquiry into the problems that have beset the mortgage loan process, two state attorneys general are investigating Wall Street’s bundling of these loans into securities to determine whether they were properly documented and valid.

The investigation is being led by Eric T. Schneiderman, the attorney general of New York, who has teamed with Joseph R. Biden III, his counterpart from Delaware. Their effort centers on the back end of the mortgage assembly lines — where big banks serve as trustees overseeing the securities for investors — according to two people briefed on the inquiry but who were not authorized to speak publicly about it.

The attorneys general have requested information from Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees. Trustee banks have not been a focus of other investigations because they are administrators of the securities and did not originate the loans or service them. But as administrators they were required to ensure that the documentation was proper and complete.

Both attorneys general are investigating other practices that fueled the mortgage boom and subsequent bust. The latest inquiry represents another avenue of scrutiny of the inner workings of Wall Street’s mortgage securitization machine, which transformed individual home loans into bundles of loans that were then sold to investors.

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http://www.nytimes.com/2011/06/13/business/13mortgage.html?_r=1&nl=todaysheadlines&emc=tha25

California Bankruptcy Court Judge Edward Zellen Says Repeatedly He Doesn’t Care if the Creditor Asking to be Paid is Really Owed the Money   6-12-11

Per Georgetown Law Professor and bankruptcy specialist Adam Levitin and Tara Twomey of the National Association of Consumer Bankruptcy Attorneys in a Yale Journal on Regulation article:

The trustee will then typically convey the mortgage notes and security instruments to a “master document custodian,” who manages the loan documentation, while the servicer handles the collection of the loans. Increasingly, there are concerns that in many cases the loan documents have not been properly transferred to the trust, which raises issues about whether the trust has title to the loans and hence standing to bring foreclosure actions on defaulted loans…. In these cases, there is a set of far-reaching systemic implications from clouded title to the property and from litigation against trustees and securitization sponsors for either violating trust duties or violating representations and warranties about the sale and transfer of the mortgage loans to the trust.

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American Banks 'High' On Drug Money: How a Whistleblower Blew the Lid Off Wachovia-Drug Cartel Money Laundering Scheme 6-10-11

A fraud investigator helped expose the shocking world of multi-billion dollar drug laundering by American banks and the surprising lack of oversight by the Feds.

June 10, 2011    

 Martin Woods, an Englishman in his mid-40s, is blessed with a Sherlock Holmes instinct and demeanor. Woods is an expert at sniffing out "dirty" money passing through International Banking Systems.

A police officer for 18 years and later a detective with London Metro Police Agency, Woods capitalized on his unique expertise as a fraud expert by joining Wachovia's London-based Bank in March 2005 as an anti-money laundering officer.

It wasn't long after taking the job that he discovered that his own employer, one of America's leading banks, was a major player in aiding the "bloodthirsty" Mexico drug cartels to launder billions of dollars in drug money through Wachovia banks. Woods traced and identified a "number of suspicious transactions" related to Mexico-based Casa de Cambios (CDC).

Rest here

Foreclosed From Iraq: Father Seeks To Preserve Home As Son Fights Abroad  6-10-11

WASHINGTON -- In August, Tim Collette's son Aaron will spend 15 days on leave from Iraq.

Aaron is 20 years old, and he's been in the Army for about a year and a half. A few weeks ago, his squad was hit with an improvised explosive device. Everybody survived, but it frightened both the soldier and his family. The Army told Aaron he could go anywhere he wanted. And of all the places in the world he could visit, Aaron wants to go home.

But Aaron might not have a home to come home to. Collette has been defending his house from foreclosure since 2008. It's currently scheduled to be auctioned off on June 20.

"I just want him to come home and know he can be safe for 15 days," Collette told HuffPost. "I don't want him thinking about coming home and having it not be there."

Tim said negotiating with his bank, JPMorgan Chase, has been a living nightmare.

When he first asked for help in 2008, he had not missed any payments. At the time, his mortgage was being handled by Washington Mutual, a subprime lending specialist Chase purchased in the fall of 2008. Collette said WaMu told him he would only qualify for a loan modification if he missed two of his $1,100 monthly mortgage payments. So he missed the payments. And the bank began trying to foreclose on him.

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http://www.huffingtonpost.com/2011/06/09/foreclosed-from-iraq-chase-bank_n_874534.html?utm_source=DailyBrief&utm_campaign=061011&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief

3 big banks lose mortgage modification incentives 6-10-11

Bank of America, JPMorgan and Wells Fargo must make 'substantial improvements' if they want Obama's Home Affordable Modification Program to start paying them again.

The Obama administration has punished three of the nation's largest banks, judging them unworthy of receiving financial incentives through its signature foreclosure relief program until they improve their practices.

Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. were found to be in need of "substantial improvement" under the $75-billion Home Affordable Modification Program, officials said. It was the first time that the administration had taken any major punitive action against the banks in its program, which has been criticized by consumer advocates and Republicans as ineffective and falling short of its goals.

The three banks received $24 million in payments through the program last month, the Treasury Department said. No more payments will be made to the three banks until the mortgage servicers improve their performance.

"It's about time," said Paul Leonard, California director for the Center for Responsible Lending. "We're two years into the modification program and only now is the Treasury Department taking action to enforce its own program rules. Unfortunately, it comes too late for all the thousands of borrowers who have already passed through the program into foreclosure."

The reaction by the three banks was mixed. Bank of America conceded that it needed to improve its practices; meanwhile, both JPMorgan Chase and Wells Fargo said they disagreed with their evaluations. Wells Fargo was the only one of the three banks that said it would contest the evaluation.

"It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury," spokeswoman Vickee J. Adams said in a statement. "The report reviews activities that date back a year or more and in no way reflects the improvements Wells Fargo has made in our processes and the work we have done to help homeowners."

Rest here

http://www.latimes.com/business/realestate/la-fi-banks-foreclosures-20110610,0,3866789.story

Michigan Court Relies on New York Trust Theory, Rules Loan Never Made it to Trust  6-10-11

A June 6 trial court decision in Michigan, Hendricks v. US Bank, has not gotten the attention it warrants because to the extent it has been noticed, it has been depicted as invalidating an effort to effect a note (the borrower IOU) transfer via MERS. While that was one of the grounds for a ruling favorable to the borrower, the court also considered and gave a thumbs’ up to what we call the New York trust theory. That has far more significance, as readers will see shortly (hat tip to Foreclosure Fraud for this sighting).

This legal argument, which so far has been tested in a very few cases (primarily in Alabama, since it was perfected by Alabama attorney Nick Wooten) was the basis of a favorable ruling in Alabama trial court. The reason it bears watching is that if the New York trust theory continues to be validated in court, it has devastating consequences for most post 2004 vintage residential mortgage backed securities. it has been the subject of a long-running argument among legal experts, with the Congressional Oversight Panel, Adam Levitin, as well as consumer lawyers like respected bankruptcy attorney Max Gardner on one side, and securitization industry incumbents like the American Securitization Forum and SNR Denton.

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http://feedproxy.google.com/~r/NakedCapitalism/~3/80QvlIbpbnM/michigan-court-relies-on-new-york-trust-theory-rules-loan-never-made-it-to-trust.html?utm_source=feedburner&utm_medium=email

Mortgage mess victim: Sarah Palin? 6-10-11

(NECN: Peter Howe, Salem, Mass.) In the three years since the U.S. real-estate bubble burst, something we've learned is what a mess investment banks and mega-banks made as they took millions of shoddily documented mortgages and sliced and diced them into arcane Wall Street mortgage-backed securities in the 2000s.

Among the millions now apparently caught in the fallout: Republican icon Sarah Palin, the former Alaska governor and 2008 vice-presidential candidate turned media celebrity.

"The worst thing that could happen to Sarah Palin is she has a cloud on her title. She's going to have to go out, retain an attorney, and try to clean up the mess that the banks caused,'' John L. O'Brien Jr., the Salem-based Register of Deeds for Southern Essex County, sand in an interview with NECN Thursday. In a worst-case scenario, a prior owner could challenge whether Palin now legally holds title to the property -- or Palin could be stuck with a legal headache trying to resell the house years down the road.

Working with forensic investigator Marie McDonnell, president of McDonnell Property Analytics Inc. www.mcdonnellanalytics.com, O'Brien has found abundant evidence that the home a Palin trust bought in Scottsdale, Ariz., suffers from the same wretched Wall Street paper trail as millions of other U.S. homes where mortgages were converted into collateralized debt obligations and sold worldwide.

As Wells Fargo and JPMorgan Chase processed the mortgages, foreclosed on a previous lender, and resold the house to an investor who sold it to the Palin family, McDonnell said, at least two critical documents didn't get signed and three did get signed by "robo-signers" -- people apparently using fake names who churned out thousands of purported affidavits every day vouching for the bank that all the realty and mortgage paperwork was in order.

Two names that showed up on several documents connected to the Palin Arizona home were "Linda Green" and "Deborah Brignac," names used by multiple robo-signers purporting to be officials at multiple bank subsidiaries or business partners at Wells and Chase, O'Brien and McDonnell said. In the case of Brignac signatures on Chase documents, "This is a shell game where Brignac purports to be vice president of three different entities so that she can manufacture the paperwork necessary for JPMorgan Chase Bank to hijack the mortgage and then foreclose on the property,'' McDonnell said.

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Call Your Senators Over Sneak Attack On the Consumer Financial Protection Bureau  6-9-11

Posted: 08 Jun 2011 03:45 PM PDT

The Republicans have threatened to kill the CFPB and they look to have finally pulled out their gun and taken aim. I received this message from Mary Bottari:

In a last minute development, opponents of financial reform are pushing for votes TODAY on amendments to gut the new Consumer Financial Protection Bureau (CFPB) (AMENDMENT NUMBER #391 – Moran), and to repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act entirely (AMENDMENT NUMBER #394 – DeMint) . A vote to delay and try to derail curbs on fees banks charge merchants – and thus the consumer – on debit cards is already scheduled (AMENDMENT NUMBER #392 – Tester).

Call your Senators now and tell them to oppose these proposals to gut the CFPB!

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http://www.nakedcapitalism.com/2011/06/call-your-senators-over-sneak-attack-on-the-consumer-financial-protection-bureau.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Is mortgage finance due to repeat the sins of the past? 6-8-11

My data company, Legalprise, tracks and traces foreclosures, analyzing the substance of the cases rather than just the volume of filings. There are more than 1 million cases in our database, with almost 100 million pieces of supporting public records data.

I'm one of a small group that helped identify the patterns of well known foreclosure fraud. These patterns of fraud point to a deeper problem with the housing finance market. They raise deep public policy concerns, which need to be addressed if we can ever find a genuine bottom to the housing market.

Let me illustrate the problem with a few examples from days where mortgage assignment volume was unusually high.

During the last week of 2007, HomeBanc assigned 1,076 mortgages, in Palm Beach County, Fla., that ended up with Bear-Stearns/EMC. HomeBanc was sold about a week later, at the beginning of 2008. About three months later Bear-Stearns collapsed from the weight of its subprime exposure, leading to the government's $29 billion subsidized sale of the firm, ushering in the era of bank bailouts.

On Oct. 7, 2009, 592 mortgage assignments were recorded in Palm Beach County, Fla. The usual number of assignments, the median, is 75 a day. Most of these assignments involved mortgages from Financial Freedom Senior Funding Corp., a subsidiary of Indymac Bank. Two days later Financial Freedom/Indymac followed up with 579 assignments.

More recently, as the robo-signing controversy has unfolded, servicers have been assigning mortgages at exceptionally high volume to Fannie Mae and Freddie Mac.

This leads to the obvious question: Why is the government bailing out banks and servicers from their toxic mortgages notes first, then making sure they actually own the notes after? Further, when a bank wants to foreclose — or even when they record a satisfaction — are they sure the named bank really owns the mortgage?

Even if the banks owned the loans the government money was used to subsidize losses for, these deals erode the public's trust in government as impartial. They injure the natural working of the credit markets.

For better or worse — at the core of American DNA — we know a free market is a precious natural resource. But our leaders hurt our market, especially the housing market, and spent a fortune of our money to do so.

If the market hadn't been broken, the loans in those high-volume assignments would have been sold for a few cents on the dollar. Buyers could — and presumably would — have renegotiated with borrowers on more sustainable terms. For example, a borrower who owed $400,000 on a subprime note would have received a call from the buyer of that note, who may have purchased it for, say, $20,000, and asked if they are able to pay, say, $60,000..

Allowing the market to function like this would have benefited both the borrower and new lender, while holding prior investors, who knowingly and recklessly lent money on unsustainable terms then refused to renegotiate those terms, accountable for their bad decisions.

Families could have remained in their homes. Vulture investors would have made a fortune. Public confidence in the marketplace and the government would have remained high. Increased consumer liquidity from the lower payments would have offset economic damage. Public debt would be lower. And investors would be more careful the next time lead was marketed as gold.

Olenick is founder and CEO of Legalprise focuses on data aggregation and analysis surrounding consumer debt, with a focus on foreclosure and collection fraud as well as predatory lending and servicing policies.

Embarrassingly Lame Federal/”50″ State Attorneys General Mortgage Negotiations Continue  6-8-11

I’m having trouble understanding why anyone is still treating the Federal/state attorney general mortgage “settlement” negotiations as anything other that a fiasco. The more news reports come out, the more the parties aligned against the banks look like fools.

The latest confirmation comes in an article by Shahien Nasiripour in the Huffington Post that a member of the Department of Justice briefed state attorneys general and reported that the biggest banks in the servicing business had resigned themselves to paying $20 billion:

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Survey: Housing Counselors Describe HAMP Experience as 'Negative 6-8-11

More than three-quarters of foreclosure counselors say the borrower experience when turning to the government’s flagship modification program for relief is sub-par.

The Government Accountability Office (GAO) recently released the results of a survey it conducted among housing counselors to assess the Home Affordable Modification Program (HAMP) from the point of view of those on the “in-need” end of the spectrum.

Roughly 76 percent of the nearly 400 counselors polled characterized borrowers’ overall experiences with HAMP as “negative” or “very negative.” Less than 9 percent described the experience as “positive” or “very positive.”

Many counselors responding to the GAO survey cited concerns about HAMP trial modification denials, including long waiting periods and miscalculations of borrowers’ income.

A large share of housing counselors reported difficulties working with servicers. Some 39 percent said paperwork had been lost or needed to be resubmitted.

The GAO noted that Treasury has reported one of the most common reasons for canceling trial modifications is insufficient documentation. However, Treasury has been unable to determine whether borrowers had not submitted the required paperwork or servicers had lost or misplaced it, according to the report.

“[I]n the first two years of the…Home Affordable Modification Program (HAMP), more borrowers were denied or canceled from trial loan modifications than were given permanent modifications,” the government agency pointed out.

Nearly 46 percent of counselors said it typically takes seven months or more to receive a decision on whether a borrower has been approved or denied a HAMP trial, although Treasury guidelines set a timeline of 30 days from submission of the application.

In response to the GAO findings, Treasury officials stressed that they have taken actions to address some of these concerns and that the survey was conducted in October and November of 2010, prior to the implementation of new compliance guidelines.

For example, a new complaint escalation process was put in place in February of this year, and in the coming months, Treasury intends to release compliance assessments for each of the 10 largest HAMP servicers in order to make individual servicer performance more transparent.

However, Treasury noted that many of the concerns raised – for instance about lost documentation – were still issues and agreed with many of the specific actions identified for improvement.

Treasury officials and analysts have credited the Home Affordable Modification Program (HAMP) with providing a greater focus on modifications and standardizing payment reductions, but it has faced a slew of criticism from homeowners, consumer advocates, and lawmakers. The U.S. House of Representatives went so far as to pass a measure in late March to terminate the federal mod program.

But a separate poll conducted by Housing Predictor found that most of the American public believes it’s Congress that should do more to help struggling homeowners by forcing lenders to modify mortgages.

Sixty-two percent of those polled by the online market resource said banks and mortgage companies should be required by the U.S. Congress to modify mortgages for homeowners at risk of foreclosure, while 38 percent said forced modifications are not the way to go.

The GAO report offered input from the foreclosure counselors working with HAMP on how the program could be improved. The three actions ranked highest included imposing sanctions for servicers’ noncompliance, enforcing requirements for response times, and ensuring servicers work with borrowers not yet 60 days delinquent.

Is Foreclosure Via Facebook Coming to the US?   6-7-11

I’m about to reveal that I am a hopeless Old Fart, but I don’t understand why anyone other that a public figure uses Facebook. It has been demonstrated that anything on Facebook can and probably will be used against you. If you have a dispute or someone took an obsessive romantic interest in them, it would normally take some doing (like hiring a private detective) to try to find dirt. By making what would have been private information pubic, Facebook greatly lowers the cost of people with bad intentions toward you making your life miserable.

One development overseas that may be coming to the US is using Facebook to send legal notices, such as foreclosure notices. As Bloomberg informs us (hat tip reader Buzz Potamkin), this practice has been accepted by courts in Australia, Canada, and the UK.

This article triggered my “planted story” detector, since the piece kept stressing how there were no privacy issues involved (well, that’s close to tautological given how Facebook works) and had virtually no negative views expressed about this practice being adopted in the US.

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http://www.nakedcapitalism.com/2011/06/is-foreclosure-via-facebook-coming-to-the-us.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Bankrupt Lehman Brothers May Face Public Rebuke and Little Else 6-7-11

There are growing indications that federal investigators at the Securities and Exchange Commission will opt to publicly scold the failed firm Lehman Brothers instead of filing fraud charges against former executives. The 2008 bankruptcy of Lehman Brothers, readers may remember, was the largest in U.S. history and sent shock waves through the global financial system spiraling into crisis.

In March, the Wall Street Journal had reported that charges were becoming less likely. Bloomberg came out with a more detailed story Friday that noted the possibility of a public rebuke instead. Securities law professor James Cox of Duke University told Bloomberg that the public rebuke “is about the least harmful sanction anybody could get.” Here's more from Bloomberg:

Instead, the enforcement staff may recommend that the agency take the rare step of publishing a so-called report of investigation, also known as a 21(a) report. The commission would have to vote on whether to issue a report and it’s still possible that the SEC may decide to bring legal claims in court, the people said. The 21(a) reports, which lay out allegations of misconduct without imposing penalties, have only been issued six times in the past decade, according to the SEC’s website.

Rest here

http://www.propublica.org/blog/item/bankrupt-lehman-brothers-may-face-public-rebuke-and-little-else

Goldman Sachs Will Sell Litton Loan Servicing to Ocwen for $264 Million 6-6-11

Goldman Sachs Group Inc. (GS) agreed to sell Litton Loan Servicing LP to Ocwen Financial Corp. (OCN) for $263.7 million in cash, ending the New York-based bank’s 3-1/2 year experiment in processing home-loan payments.

In addition to the cash payment, which may be adjusted at closing, Ocwen will pay about $337.4 million to retire some of Litton’s debt, according to a filing by West Palm Beach, Florida-based Ocwen. The sale of Litton comes two months after Goldman Sachs wrote down the value of the mortgage-servicing business by about $200 million.

“It really makes sense for them to sell it, and better for them to sell it sooner rather than later,” said David B. Hilder, a New York-based analyst at Susquehanna Financial Group LP who has a positive rating on Goldman Sachs. “They bought it at a time when the business was easier and it looked like there might be some insights to be gained in the mortgage market from having a servicer.”

Mortgage servicing firms send out bills, collect payments and handle foreclosures. Goldman Sachs acquired Litton, based in Houston, and 1,000 employees at a time when investors including billionaire Wilbur Ross and Centerbridge Capital Partners LLC purchased mortgage servicers to help them better understand the market, and profit from buying discounted loans. Goldman Sachs said in March that it was considering selling Litton, and a person familiar with the matter said the firm had failed to find enough distressed mortgage loans to buy.

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The Battle Over MERS 6-5-11

It's clear that people don't read every single word in the mortgage documents they sign at closing or have a clear understanding of everything they are signing. Even fewer understand what happens to their mortgage once they take the keys to their new home.

It the homeowner misses a few payments on their loan, they may enter yet another unfamiliar realm: foreclosure.

And when some homeowners facing foreclosure see that the Mortgage Electronic Registration Systems, or MERS, has started the process, some react with a lawsuit alleging MERS doesn't have the authority to foreclose. Or it doesn't own the physical note. Or it didn't properly assign the note through the securitization process.

To date, more than 400 court rulings have been issued across the country the past few years in cases against Reston-Va.-based Merscorp Inc. and its accompanying electronic database, MERS, which tracks roughly two-thirds of all American mortgages.

At Bank of America, more incomplete mortgage docs raise more questions 6-3-11

Fortune examined hundreds of foreclosure documents to determine the validity of mortgage securitizations after Bank of America debunked testimony about them last fall. The results raise more questions than they answer.

By Abigail Field, contributor

FORTUNE -- Are Countrywide mortgage-backed securities really mortgage-backed? Do banks even have the legal right to foreclose on certain homes?

These are just a few of the questions raised since the foreclosure crisis revealed shoddy mortgage servicing practices at many of the big banks – practices that have led to countless investigations and lawsuits. Court testimony by a former Countrywide employee added to the intrigue last fall, because she confessed that many loans there weren't properly handled, bringing into doubt the validity of Countrywide's securitization process. Bank of America, which owns Countrywide, quickly silenced the discussion with firm denials.

But Fortune has examined dozens of court records that corroborate the employee's testimony. And if Countrywide's mortgage securitizations systematically failed as it appears they did, Bank of America's potential liability dwarfs its shareholder equity, as the Congressional Oversight Panel points out.

Last November, a decision in a New Jersey bankruptcy case brought to light the testimony of Linda DeMartini, operational team leader for the litigation management department for Bank of America, which intended to prove the bank had the right to foreclose on a debtor's mortgage. Instead, her testimony was key to the judge's ruling that Bank of America (BAC) couldn't foreclose, and along the way DeMartini made two statements that called into question the securitization of Countrywide loans. She testified that Countrywide didn't deliver the notes to the securitization trustee, and that Countrywide notes weren't endorsed except on a case-by-case basis generally long after securitization ostensibly occurred. Both steps are required, in one form or another, under all securitization contracts.

Only the delivery issue was really scrutinized at the time, because without a doubt the failure to deliver the notes would invalidate the securitization. The other issue, failure to endorse the notes, sparked a debate: the American Securitization Forum argues the notes would still have been securitized without endorsement, while Adam Levitin, associate professor of law at Georgetown Law, convincingly argues that they would not have been.

Rest here

http://finance.fortune.cnn.com/2011/06/03/at-bank-of-america-more-incomplete-mortgage-docs-and-more-questions/

Feds to Ally Bank: Shore up foreclosure practices 6-3-11

Federal regulators have ordered Midvale-based Ally Bank to fix significant deficiencies in its foreclosure practices covering a two-year period in which among other things it submitted bogus legal documents for bankruptcies and other court actions.

The order from the Federal Reserve and the Federal Deposit Insurance Corp. alleges employees of Ally, two sister companies and their parent company, Ally Financial, signed foreclosure documents without reading them ­— a possibly illegal practice known as “robo-signing.”

The Fed and the FDIC issued the order in April. It was made public Friday.

The employees “represented that the assertions in the affidavit(s) were made on personal knowledge or based on a review ... of the relevant books and records, when in many cases, they were not based on such knowledge or review,” according to the order.

The infractions allegedly took place from January 2009 to the end of last year. During that period, Ally Financial, Ally Bank, Residential capital, GMAC Mortgage and a number of affiliated mortgage servicing companies completed almost 90,000 foreclosures.

Ally Financial spokeswoman Gina Proia said the company would not disclose the number of Utah foreclosures. Ally Financial and the subsidiaries intend to comply “fully” with the government’s order, she said Tuesday.

Other than to say Ally Financial companies are still foreclosing on mortgages “when appropriate,” Proia declined to elaborate. She said the company had expressed its reaction to the order in a statement issued in April.

In the statement, Ally Financial said it “deeply regrets the error in processing certain affidavits and has acted with urgency and rigor in addressing and remediating the issue.”

Rest here

http://www.sltrib.com/sltrib/money/51918471-79/ally-bank-financial-order.html.csp

‘Octomom’ and other celebrities to hold bikini carwash to save ‘Octomom’ house  6-3-11

The latest news on ‘Octomom’ Nadya Suleman will hosting a bikini car wash June 18th to raise money to save her California home from foreclosure.  Reportedly other ‘celebrities’ such as Capri Anderson and Tila Tequila will be helping ‘Octomom’ with the ‘celebrity’ charity event carwash in Los Angeles, California.

‘Octomom’ the broke mother of 14 children, shocked the world when she gave birth to octuplets, will charge between $20 and $30 per car wash, SUVs cost extra. Reportedly the car wash idea came about after she was photographed in a bikini on an Orange County beach.

With a large payment due on her house ‘Octomom’ reportedly needs to make a balloon payment of $450,000 on her 4 bedroom 3 bath 2,445 square foot single-family home in La Habre, California which she bought on Aug 21st, 2000.

Continue reading on Examiner.com ‘Octomom’ and other celebrities to hold bikini carwash to save ‘Octomom’ house - National Celebrity Charity Events | Examiner.com http://www.examiner.com/celebrity-charity-events-in-national/octomom-and-other-celebrities-to-hold-bikini-carwash-to-save-octomom-house#ixzz1OhSwJmmV

Goldman Subpoenaed Over Levin Committee Hearing Findings  6-3-11

On the one hand, this is just a subpoena of Goldman from the Manhattan DA’s office, but on the other, after all the crisis investigations, we finally have a prosecutor somewhere deciding to take some abuses during the crisis seriously enough to see if they add up to a legal case. (Yes, the SEC did file a suit against Goldman on one synthetic CDO, one transaction out of 25 in its Abacus program, which Goldman settled for $550 million, but this was litigation on one deal, not on broader patterns of misconduct).

And it came not out of the splashy but designed not to accomplish much FCIC, but the quieter and more tenacious Senate’s Permanent Subcommittee on Investigations. I hardly ever do media briefings, but I was on the blogger call for both reports, and the contrast was night and day. The FCIC briefing was softball PR, with Phil Angelides and Brooksley Born (who by definition had not done the work and therefore were not big on detail) leading the call. The Senate call was led by staffers who demonstrated impressive command of the products and industry economics and transmitted information at a very high bit rate.

Not surprisingly, the information request comes from a local prosecutor. The DoJ continues to be missing in action.

Rest here

http://www.dsnews.com/articles/goldman-sachs-subpoenaed-over-subprime-mortgage-trading-2011-06-02

Even After Mortgage Modification, Shoddy Bank Practices Hurt Homeowners 6-2-11

Chanel Rosario was supposed to be one of the lucky ones. After years of sending and re-sending documents, waiting on hold and attending court hearings to avoid foreclosure on her Staten Island home, she'd finally received a much-needed reduction on her mortgage. Eagerly, she and her husband signed it and mailed it in last September. "We thought it was over."

It wasn't. After months of making payments, Rosario called the bank handling her mortgage, Chase Home Finance, and found out Chase was still reporting her as delinquent, damaging her credit score and putting her home in jeopardy. Despite months of trying to get an explanation with the help of a legal-aid attorney, she still doesn't know why Chase isn't abiding by the agreement.

Rest here

http://www.propublica.org/article/even-after-mortgage-modification-shoddy-bank-practices-continue-to-hurt-hom

John Boehner Fights Foreclosure Relief As Housing Crisis Ravages His District  6-2-11

Regina Moore has lived in her Hamilton, Ohio, home, in the heart of House Speaker John Boehner's district, for 50 years.

Her husband passed away in 2005, and in 2008 she took out a new $72,000 mortgage so she could afford to pay her medical bills. She had a steady job, having worked at the Champion Printing Company in Cincinnati for more than two decades. Her monthly payments on her $86,000 home amounted to about $450.

It was a simple mortgage for a simple home -- no exploding payments or swimming pools.

But last year, at the age of 70, Regina lost her job, and her $1100 a month Social Security payment wasn't enough to make ends meet. She called her son, Jeff, who works three part-time jobs, to ask for help.

"She had a mortgage on her home and just couldn't afford to pay the bills anymore," Jeff said. "She went through a period where she was embarrassed. She didn't want to say that she couldn't get a job or couldn't pay her mortgage. And finally it got to a point where she was facing foreclosure and called me."

While Jeff, a local housing group and a lender ultimately helped Regina modify her mortgage so she could stay in her home, many of her fellow Ohioans haven't been so fortunate.

Hamilton, about 45 minutes outside of Cincinnati, has one of the highest foreclosure rates in Butler County. And Butler County has been a foreclosure hotspot for years. Along with the Cleveland and Columbus areas, Cincinnati and its surroundings have seen the predatory subprime binge come and go and now watch as the crumbling job market pushes more and more homeowners into financial ruin.

Rest here

http://www.huffingtonpost.com/2011/06/02/john-boehner-fights-foreclosure-relief_n_870048.html?utm_source=DailyBrief&utm_campaign=060211&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief

Reviews of Past Foreclosure Cases Called into Question by Lawmaker  6-2-11

Rep. Elijah E. Cummings (D-Maryland) has requested to see copies of the “engagement letters” between 14 mortgage servicers and the private consultants they’ve hired to review foreclosure files for signs of processing errors.

As part of the consent agreements announced in April to settle robo-signing allegations with federal regulators, the servicers are required to retain independent, third parties to review all residential mortgage foreclosure actions processed in 2009 and 2010.

These private consultants are selected and hired by the servicers but must be approved by regulators. They are charged with reporting back to the regulators with the results of the examinations. Federal regulators were to approve the engagement letters submitted by servicers by May 31.

Cummings is ranking member of the House Committee on Oversight and Government Reform. He’s given the regulators until this Friday to provide him with copies of the engagement letters for the third-party consultants.

“After reviewing only a sampling of the banks’ files, the federal regulators found systemic problems, illegal foreclosures, and inflated fees. I’m worried that this is only the tip of the iceberg,” Cummings said.

In his letter to the heads of the Federal Reserve, Office of the Comptroller of the Currency, Office of Thrift Supervision, and FDIC, Cummings said, “Rather than conducting these reviews yourselves… more thorough reviews by private consultants are supposed to ‘identify borrowers that have been financially harmed’ and ‘provide remediation to these borrowers.’”

Cummings notes that some outside groups have criticized regulators’ decision to allow banks to hire their own private consultants and set the terms of the reviews, asserting that their results will be biased and favor the banks.

“There has been a lot of concern with the idea of letting the banks hire their own private consultants to police themselves,” said Cummings. “The regulators say they are approving these agreements and holding banks accountable – we want to make sure.”

FDIC Chairman Sheila Bair said herself in testimony on Capitol Hill last month that her office and the other agencies have fielded concerns regarding the thoroughness and transparency of the foreclosure reviews.

Banker Derangement Syndrome I: Lawyers Offer to Get Rid of Their Profession to Save the TARP Banks  6-2-11

We’ve decided to publicize the rapid rise of a dangerous ailment, Banker Derangement Syndrome, which has become so widespread that the media is publicizing examples on virtually a daily basis.

Banker Derangement Syndrome occurs when someone who might once have been sensible is acting as a mindless mouthpiecs of particularly rancid banking industry propaganda. Note that financial services industry employees by definition do not qualify; they are simply engaging in the time-honored industry practice known as “talking your book” when they say something that is patently ridiculous and self serving. No, Banker Derangement Syndrome occurs when an independent party say something so blatantly and embarrassingly wrong in support of the banking industry, whether to curry favor or via having taken an overdose of its Kool Aid, so as to do severe damage to their credibility. In other words, if the questionable behavior could be explained as an over-zealous effort to win points with our new financial overlords, it backfired big time.

The initial example comes in a Wall Street Journal story which finally caught up with what we have been discussing on this blog for a year, namely, that the originators and packagers of residential mortgage securities on a large scale, perhaps pervasive basis, quit complying with the requirements of their own securitization agreements as far as how the borrower notes (the IOUs) were conveyed to the securitization vehicle (a trust).

Rest here

http://www.nakedcapitalism.com/2011/06/banker-derangement-syndrome-i-lawyers-offer-to-get-rid-of-their-profession-to-save-the-tarp-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Local veteran says VA tried to unfairly foreclose on his home 6-2-11

A local veteran says the State Department of Veteran's Affairs tried to unfairly foreclose on his home.

Arroyo Grande resident Andrew Jenings served in Desert Storm as part of the Army National Guard. He bought his home in February of 2005, thanks to a loan from CalVet. Jenings was laid off last year and decided in February he could no longer pay the mortgage. He wanted to do a short sale, where he would settle on a price with the bank for less than what he owes on the loan, but he says the VA Made that too difficult.

"This is where I wanted to raise my kids, and I was planning on living in here until basically the mortgage was paid for but it didn't work out that way," said Jenings.

In February, Jenings and his realtor listed his home as a short sale and the first offer arrived within 30 days, but they say the VA rejected it without giving a counter offer.

"Typically when an offer is rejected you can still continue to market the property," said Sylvia Lunsford, Jenings' realtor. "In this case, what was unusual was the VA declined to let us continue marketing the property."

Jenings turned to Senator Sam Blakeslee's office for help and the VA eventually countered the original offer, but Jenings says it was so high the original buyer could not qualify. The same happened with a second buyer and the VA decided to go ahead with a foreclosure.

MERS foreclosure amendment dies in Oregon House committee 6-1-11

A late attempt by the finance industry to waive Oregon mortgage recording laws in most foreclosures

is dead.

The Oregon House Judiciary Committee voted today to approve Senate Bill 519 without an amendment sought last week by loan servicers, title companies and credit unions. The amendment would have relieved lenders of ensuring a property’s ownership history is properly recorded in public records before foreclosing outside a courtroom.

The committee voted with no debate to send the bill to a floor vote without the amendment. Afterward, co-chair Jeff Barker cited a public outcry over the amendment as reason for its failure and described an intense back-room negotiations to do so.”There was a lot of opposition,” said Barker, D-Aloha.

“I probably got more emails about this than anything all session.”

Document recording and signing issues have hung up foreclosures across the nation, and many of them have involved the Mortgage Electronic Registration System, or MERS. Federal judges in Oregon have blocked such foreclosures, saying MERS failed to record underlying documents properly as required by Oregon law in out-of-court foreclosures.

An attorney representing servicers said the amendment’s death could prompt lenders to take foreclosure actions into the courtroom, which would take longer and cost more. Oregon law allows so-called non-judicial foreclosures to take place outside of a court.

“There are literally thousands of foreclosures in Oregon that are presently on hold as servicers contemplate the meaning and impact of some of the decisions that have been handed down of late,” said Lance Olsen, an attorney with Routh Crabtree Olsen who represents trustee companies, lenders and servicers throughout the Northwest.

Other actions, he said, are being held up as lenders try to work with borrowers to arrange loan workouts or complete trial modifications.

The financial industry pushed hard for the amendment, prompting Barker to postpone its scheduled hearing Tuesday. The lobbying effort jeopardized Senate Bill 519, already passed by a 28-1 vote by the Senate in April. The bill preserves affordable housing incentives in foreclosures involving subsidized housing.

Sen. Floyd Prozanski, D-Eugene, threatened to hold up bills in the Senate Judiciary Committee he chairs unless Senate Bill 519 passed without the amendment, Barker said.

“That’s how it kinda works down here,“ Barker said.

Ultimately, Barker’s committee members agreed to OK the bill without the contentious amendment and Prozanski agreed to allow his bills to move forward, Barker said. Prozanski could not immediately be reached for comment.

“It was a very difficult morning for me to get this passed,” Barker said. “We got it cleared up and moved it out.”

Banks Hit Hurdle to Foreclosures 6-1-11

Banks trying to foreclose on homeowners are hitting another roadblock, as some delinquent borrowers are successfully arguing that their mortgage companies can't prove they own the loans and therefore don't have the right to foreclose.

These "show me the paper" cases have been winding through the courts for several years. But in recent months, some judges have been siding with borrowers and stopping foreclosures after concluding that banks' paperwork problems are more serious than previously thought and raise broader ethical questions.

This year, cases in California, North Carolina, Alabama, Florida, Maine, New York, New Jersey, Texas, Massachusetts and others have raised questions about whether banks properly demonstrated ownership.

During the fall, banks temporarily suspended foreclosures to address so-called robo-signing problems, where employees were approving legal documents without properly reviewing them. They said that in weeks they could fix what they considered to be simple clerical errors. But borrowers are uncovering new types of document problems, further delaying banks' efforts to get foreclosures back on track.

In some cases, borrowers are showing courts that banks failed to properly assign ownership of mortgages after they were pooled into mortgage-backed securities. In other cases, borrowers say that lenders backdated or fabricated documents to fix those errors.

"Flawed mortgage-banking processes have potentially infected millions of foreclosures, and the damages against these operations could be significant and take years to materialize," said Sheila Bair, chairman of the Federal Deposit Insurance Corp., in testimony to a Senate committee last month .

Last month, the Maine Supreme Court reversed the foreclosure of Dana and Robin Murphy of Auburn, Me., after concluding that the mortgage company, a unit of HSBC Holdings PLC, filed "inherently untrustworthy" documents. An HSBC spokesman declined to comment.

Rest here

http://online.wsj.com/article/SB10001424052702304563104576357462376821094.html

S.E.C. Case Stands Out Because It Stands Alone 6-1-11

At the height of the housing boom, the 26th floor of Goldman Sachs’s former headquarters on Broad Street in Lower Manhattan was the nerve center of Goldman’s fast-growing mortgage trading business.

Hundreds of employees worked closely in teams, devising mortgage-based securities — billions of dollars’ worth — that were examined by lawyers, approved by management, then sold to investors like hedge funds, commercial banks and insurance companies.

At one trading desk sat Fabrice Tourre, a midlevel 28-year-old Frenchman who was little known not just outside Goldman but even inside the firm. That changed three years later, in 2010, when he achieved the dubious distinction of becoming the only individual at Goldman and across Wall Street sued by the Securities and Exchange Commission for helping to sell a mortgage-securities investment, in one of the hundreds of mortgage deals created during the bubble years.

How Mr. Tourre alone came to be the face of mortgage-securities fraud has raised questions among former prosecutors and Congressional officials about how aggressive and thorough the government’s investigations have been into Wall Street’s role in the mortgage crisis.

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http://www.nytimes.com/2011/06/01/business/01prosecute.html?_r=1&nl=todaysheadlines&emc=tha25

Freddie Mac offers mortgage relief to Midwest storm victims  5-31-11

Freddie Mac directed servicers to provide several mortgage relief options to borrowers affected by recent storms in the Midwest.

For borrowers living where President Obama declares major disaster areas, Freddie will give servicers the ability to reduce or suspend mortgage payments for up to 12 months. Each case will be individually evaluated.

Obama toured Joplin, Mo., this weekend to take in the extent of the damage from tornadoes that leveled more than 8,000 buildings and killed more than 130 people.

JPMorgan Chase (JPM: 43.24 +1.05%) committed $225,000 to relief and recovery efforts in Joplin. Of the money, $100,000 will go to the American Red Cross.

Another $25,000 will go to the Convoy of Hope, a nonprofit based in Springfield, Mo.

Chase will also match employee contributions to the American Red Cross, up to $100,000.

In addition to suspended payments, Freddie could also lift foreclosure and eviction proceedings for up to one year. It may also waive assessments of penalties or late fees against borrowers in damaged homes. Freddie could also elect not to report forbearance or delinquencies caused by the disaster to the nation's credit bureaus.

"In the wake of these astonishing storms, Freddie Mac has authorized the nation's mortgage servicers to provide a full range of mortgage relief options to affected borrowers with mortgages owned or guaranteed by Freddie Mac," said Anthony Renzi, executive vice president of single-family operations at Freddie Mac.

Knights of Columbus Targets BofA Foreclosure Actions in Suit 5-27-11

Knights of Columbus, a charitable organization and an investor in mortgage-backed securities, is seeking a court order to learn more about foreclosure practices by Bank of America Corp. (BAC), the biggest U.S. bank.

Bank of America, which services mortgage loans on behalf of investors, may be acting for its own benefit, Knights of Columbus said in a lawsuit filed today in New York State Supreme Court. The bank also may be harming borrowers whose loans were pooled and sold, and “undermining efforts to restore economic prosperity to the country,” the group said.

Mortgage services have come under government scrutiny over their foreclosure and servicing practices. State officials this week told the five largest mortgage servicers, including Bank of America, that they may face lawsuits seeking $17 billion if they don’t settle a nationwide investigation, according to a person familiar with the matter who declined to be named because the talks are private.

Utah Attorney General Mark Shurtleff accused Bank of America of breaking state law, while Connecticut Attorney General George Jepsen said the bank failed to fix “well- documented” problems in its mortgage-servicing business, according to letters released by their offices yesterday.

Rest here

http://www.bloomberg.com/news/2011-05-26/knights-of-columbus-target-bofa-mortgage-servicing-in-lawsuit.html

Oregon Judge Denies Foreclosure, Challenges MERS  5-27-11

A federal judge in Oregon delivered a potential setback to the mortgage industry’s electronic lien-registry system in a ruling issued Wednesday.

Oregon allows lenders to foreclose without going to court, but the state requires banks to record the ownership history of the mortgage with local county governments in those non-judicial foreclosures. The Mortgage Electronic Registration Systems, or MERS, was created by the mortgage industry in the 1990s to facilitate the recording of mortgages that were being bundled and resold as securities.

Wednesday’s ruling says that banks should be required to process foreclosures through the court system in Oregon for loans that are in the MERS system. But it’s not clear whether the ruling by itself will turn Oregon into a judicial foreclosure state for loans assigned to MERS.

A spokeswoman for MERS said the ruling was “inconsistent” with other state decisions, citing two in the past year that found MERS had satisfied state law. The spokeswoman said MERS planned to appeal.

“That’s the problem. We have rulings on both sides, so it’s very difficult to determine what’s going to happen,” said James Stout, the lawyer who represented the homeowners.

The case concerned Ivan and Katherine Hooker of Tigard, Ore., who took out a $260,000 mortgage from GN Mortgage LLC in 2005. The Hookers defaulted on their mortgage in 2009, and Bank of America Corp., which had acquired the loan, went to foreclose on the borrower.

MERS had been named as the nominee for the mortgage in 2005, ostensibly allowing banks to record the assignment electronically, eliminating the step of recording it with the county.

But the court found holes in the chain of title. While the loan had been made by GN, the mortgage had been assigned to MERS by a different entity, Guaranty Bank. “The record is silent as to how or when Guaranty Bank obtained” the mortgage, wrote Judge Owen M. Panner.

The court also concluded that MERS’s use had run afoul of Oregon statutes that require all mortgage assignments to be recorded in county land records in non-judicial foreclosures. “While I recognize that plaintiffs have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure,” wrote Judge Panner.

Rest here

http://blogs.wsj.com/developments/2011/05/26/oregon-judge-denies-foreclosure-challenges-mers/

N.Y. mortgage probe is expanding  5-27-11

NEW YORK — JPMorgan Chase & Co., UBS AG, and Deutsche Bank AG are being probed in an expanded investigation by New York Attorney General Eric Schneiderman into mortgage securitization, a person familiar with the matter said.

Four bond insurers also were subpoenaed: Ambac Financial Group, MBIA Inc., Syncora Holdings Ltd., and Assured Guaranty Ltd., according to the person, who would not be identified because the probe isn’t public.

Schneiderman is seeking information on claims paid out during and after the economic crisis and any information or documents related to litigation or settlements with the banks, the person said. The expanded investigation was first reported by The Wall Street Journal.

Rest here

http://articles.boston.com/2011-05-24/business/29580429_1_mortgage-probe-mortgage-practices-schneiderman

Nevada homeowners join national class-action over B of A foreclosures  5-27-11

A group of Nevada homeowners fighting Bank of America over the threatened foreclosures of their homes has joined a national class-action lawsuit against the bank.

The group of about two dozen plaintiffs, represented by Las Vegas attorney Matthew Callister, initially filed suit April 18 in Clark County District Court in Las Vegas alleging deceptive trade practices.

The suit claimed Bank of America misled the homeowners by promising to respond to requests for mortgage modifications, and assuring them foreclosures would be put on hold while modifications were considered, but then moving ahead with foreclosure proceedings anyway.

These and other allegations are similar to those in a lawsuit filed last year against the bank by Nevada Attorney General Catherine Cortez Masto.

The Cortez Masto lawsuit is pending in federal court, where Bank of America has denied the allegations of wrongdoing.

Callister’s lawsuit on behalf of homeowners, in the meantime, was first transferred to federal court in Las Vegas and was then moved to Massachusetts, where it’s part of the national class-action against the bank.

The lawsuit there complains that after accepting $25 billion from the U.S. government in 2008 as part of the Troubled Asset Relief Program (TARP), and a partial guarantee against losses on $118 billion in mortgage-related assets, "Bank of America agreed that it would participate in one or more programs that TARP authorized the Secretary of the Treasury to establish necessary to minimize foreclosures.’’

One of these programs was the Home Affordable Modification Program (HAMP) aimed at providing affordable mortgage loan modifications and other assistance to struggling homeowners.

The Massachusetts suit says Bank of America agreed in April 2009 to comply with HAMP.

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http://www.vegasinc.com/news/2011/may/25/nevada-homeowners-join-national-class-action-over-/

NY appellate court scrutinizes the MERS standing issue  5-27-11

A decision by New York's 2nd Appellate Division may not have a direct impact on the issue of when Mortgage Electronic Registration Systems has standing in foreclosure cases, but it contains persuasive language that could be a shot across the bow when it comes to jurisdiction relating to MERS.

In Aurora Loan Services v. Steven Weisblum, the appellate court overturned a lower court's decision to dismiss claims the Weisblum family made against Aurora. The appellate court concluded that Aurora's motion for summary judgment should have been denied and said Aurora failed to comply with the Real Property Actions and Proceedings Law under the Home Equity Theft Prevention Act.

While the decision was not directly based on MERS, attorneys say language in the decision could impact later court rulings because it gives an appellate court's view on how MERS operated in this particular transaction.

"We have not seen that from a New York appellate court up to now," said Anthony Laura, an attorney with Patton Boggs. "I would caution, though, that it is commentary on MERS' standing. It is not the holding of the case."

On the MERS standing issue, which is not what the case was decided on, the Weisblums argued that Aurora did not have standing because it failed to provide evidence of MERS' authority to assign the first mortgage note tied to the home.

The court said "Aurora failed to provide a copy of the first note but submitted a copy of the original first mortgage and a series of assignments culminating in the purported assignment of the first note and mortgage to Aurora. The first mortgage was originally held by MERS, as nominee for Credit Suisse; the mortgage document recites that the lender on the first note is Credit Suisse, but there is nothing in this document to establish the authority of MERS to assign the first note."

The court goes on to say MERS later assigned the first mortgage with the underlying note and then made successive mortgage assignments.

"While, in some circumstances, the assignment of a note may effect the transfer of the mortgage as an inseparable incident of the debt, here the assignment instruments purport to do the opposite, without any evidence that MERS initially physically possessed the note or had the authority from the lender to assign it."

The case also outlined what is needed for a foreclosing party to have an equitable interest in a mortgage — namely the plaintiff has to be both "the holder or assignee of the subject mortgage, holder or assignee of the underlying note — either by physical delivery or a written assignment prior to the commencement of the action that led to the plaintiffs filing a complaint."

The court ruled Aurora failed to make this showing.

The case "is an effort to see problems with the MERS structure and how it has operated, so it has some level of importance," Laura said. "A couple of things that everyone needs to take away from this case: It is a clear signal from this appellate court that it is scrutinizing the MERS structure."

At the same time, the decision has no precedential value outside the New York appellate jurisdiction.

Leahy Introduces Bill To Fight Creditor Fraud In Bankruptcy Courts  5-26-11

Senator Patrick Leahy (D-Vt.) introduced legislation Tuesday to strengthen the tools available to U.S. bankruptcy trustees to protect American homeowners from creditor fraud in bankruptcy court. Leahy introduced the Fighting Fraud in Bankruptcy Act, with cosponsors Sheldon Whitehouse (D-R.I.) and Richard Blumenthal (D-Conn.).

The Executive Office of the U.S. Bankruptcy Trustee (EOUST) was established within the Department of Justice in 1978 to protect the integrity of the federal bankruptcy system. The EOUST has recently reviewed thousands of proofs of claim filed by mortgage servicers, and discovered an error rate more than ten times the rate asserted by some in the mortgage servicing industry. In response to increased efforts by the EOUST to hold mortgage services accountable in the bankruptcy process, mortgage servicers have been challenging the legal authority of the trustee and bankruptcy court to take steps to obtain additional documentation or provide sanctions for defective or fraudulent filings. The Fighting Fraud in Bankruptcy Act will bolster the EOUST’s ability to fight creditor fraud and protect homeowners in the bankruptcy process, while preventing needless litigation over its authority to do so.

“The Fighting Fraud in Bankruptcy Act is another step forward in the Judiciary Committee’s important efforts to protect American citizens from fraud,” said Leahy. “As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.”

“It’s inexcusable when big banks hit homeowners with bogus mortgage fees and improper foreclosures,” said Whitehouse. “This bill will help ensure that Rhode Islanders who fall on hard times have access to a fair bankruptcy process and a chance at a fresh start.”

“Homeowners facing foreclosure, including military personnel serving our country far from their homes, are entitled to full legal protection from fraud and misconduct,” said Blumenthal. “This commonsense proposal simply strengthens existing authority for holding creditors accountable for abuses. It will deter needless litigation that is currently wasting resources, clogging the bankruptcy courts, and slowing our economic recovery.”

The Fighting Fraud in Bankruptcy Act includes four key provisions. The legislation will:

* Clarify that U.S. trustee has a duty to take action to remedy creditor abuse of the bankruptcy process;

* Permit the bankruptcy court, either on its own or in response to a motion from the trustee, to correct or sanction misconduct and fraud committed by creditors in the bankruptcy process;

* Empower the trustee to establish audit procedures to ensure that creditors are complying with the law;

* Require a mortgage lender to certify under penalty of perjury that a foreclosure proceeding against active duty members of the military who are deployed is in compliance with the Servicemembers Civil Relief Act (SCRA). The SCRA protects active duty military personnel by requiring a stable, manageable interest rate for military homeowners on active duty, and staying foreclosure actions during their deployment.

The Judiciary Committee has held several hearings in recent years regarding the foreclosure crisis. Earlier this year, the Committee considered and reported to the full Senate the Limiting Investor and Homeowner Loss in Foreclosure Act to authorize bankruptcy courts to establish loss mitigation programs to avoid foreclosures.

States Threaten High-Dollar Lawsuits in Settlement Power Play  5-26-11

Negotiation talks continued this week between state attorneys general and the nation’s largest mortgage servicers to settle robo-signing allegations, and those on the states’ side of the table began throwing out big numbers to convince servicers they should ante up.

Attorneys general advised representatives from the five largest servicing shops that they would be on the hook for at least $17 billion from civil lawsuits alone if the two parties don’t reach a settlement agreement, according to the Wall Street Journal whose reporters cited “people familiar with the matter.”

Add to that figure several more billions of dollars in assessments from the U.S. Justice Department and HUD, both of which are taking part in the states’ negotiations, and a concession from servicers is in their best interest, according to the attorney-general argument.

Although, there is dissension within the attorney-general camp itself, the dollar amount that’s been proposed by the group as part of a settlement for faulty foreclosure documentation is $20 billion.

The servicers have reportedly countered with an offer of $5 billion, largely on the grounds that despite defective paperwork, borrowers were not wrongfully foreclosed on but had failed to fulfill their end of the mortgage contract.

Investigations by federal banking regulators corroborate servicers’ argument. John Walsh, head of the Office of the Comptroller of the Currency (OCC), recently told industry

participants at a conference in D.C. that among the files his examiners had reviewed, “borrowers subject to foreclosure…were indeed seriously delinquent.”

The OCC, along with the Federal Reserve and Office of Thrift Supervision, announced formal enforcement actions in April against 14 mortgage servicers and two firms that provide third-party foreclosure services.

The orders laid out a laundry list of procedural reforms to be implemented surrounding foreclosure processing and mortgage servicing in general, but they did not include any fines or monetary sanctions. Officials from the three federal agencies, however, have repeatedly said that such penalties are coming. They have given no indication as to the amount, but it’s expected to be much lower than the sum state attorneys general are seeking.

Threats of costly lawsuits aren’t the only card attorneys general are holding. According to a recent Huffington Post report, federal audits conducted by HUD’s inspector general accuse the nation’s five largest servicers of violating the False Claims Act and defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans – findings which have been referred to the U.S. Justice Department and could result in formal charges.

Citing anonymous sources, the online news source says state attorneys general are using the confidential documents as leverage in their ongoing negotiations with mortgage servicers in order to force them to agree to pay hefty fines.

Connecticut Attorney General George Jepsen is a member of the National Association of Attorneys General multi-state task force charged with investigating the robo-signing allegations.

“Thus far, the national servicers have been unwilling to step up to the plate with the money necessary to address the full scope of the problems they themselves created,” Jepsen said. “I believe they face substantial legal liability for their clearly illegal behavior should states be forced to sue. After being bailed out by American taxpayers, the banks owe those same taxpayers a real effort to partner with state and federal officials to clean up this mess.”

Fed Investigating Goldman Over Possible HAMP Mortgage Mod Violations   5-26-11

The Financial Times discusses a curious development, namely, that the New York Fed is making an inquiry into allegations that Goldman’s mortgage servicing unit, Litton Loan Services, failed to comply with HAMP guidelines. Readers may recall that HAMP Is the half-baked Do Something About the Mortgage Crisis program designed to give homeowners “permanent” year payment reduction mods, which is a kick the can down the road strategy.

In HAMP, servicers routinely asked borrowers to send the same documentation multiple times and assured borrowers they were likely to get a mod, only to refuse them. The worst is that many homeowners wound up worse off since they were not told that when the reduced payment trial mod ended, they would be asked to fork over the foregone portion of the payments plus late fees, pronto. Servicers often encouraged borrowers to use the savings to pay down other debt, thus assuring the homeowner would be unable to catch up and would lose their home.

The reason the Fed inquiry is curious is not that there were abuses; they were rampant. But HAMP was a voluntary program, and to encourage banks to participate, my understanding is there were no penalties for failure to adhere to its requirements, save Treasury could claw back incentive payments. Last August, when there had been a good deal of unfavorable press about HAMP, Treasury officials acknowledged that banks had gamed the program, but then maintained they had no power to do anything.

In fact, there are ways to pursue bank misconduct under HAMP, but it falls under more conventional notions of consumer protection rather than HAMP program guidelines per se. For instance, when the banks provided statements to consumers about how HAMP worked and then failed to adhere to them, that can probably be characterized as a consumer fraud.

While it is good to see the normally somnambulant Fed rouse itself, this inquiry is….weird. Why is the Fed in charge, as opposed to Treasury or the OCC? Why doe the Fed suddenly think it has a basis for action on HAMP when the Treasury, which had been under pressure to look serious, said it was hamstrung?

Rest here

State Attorneys General Announce New Steps in Foreclosure Probes  5-25-11

The attorneys general of four states including Illinois and California announced new demands in their probes of foreclosure practices by banks and the mortgage- servicing industry.

California Attorney General Kamala Harris said today that she has subpoenaed Lender Processing Services Inc. (LPS) as part of her investigation into so-called robo-signing” the practice of signing documents for foreclosures without verifying their accuracy. Illinois Attorney General Lisa Madigan said today that she was issuing subpoenas to Lender Processing and Nationwide Title Clearing Inc., another Florida-based company.

“Foreclosure became a rubber-stamping operation that robbed many homeowners of the American dream without a fair and accurate process,” Madigan said in a statement. “California homeowners have been exposed to fraud and crime at every step of the mortgage process,” Harris said in a separate statement.

The subpoena announcements come a day after attorneys general in the 50-state investigation of foreclosure practices met with representatives from the five largest U.S. banks. State legal officers at the meeting told the banks they would face an estimated $17 billion in claims if the inquiries result in civil lawsuits, according to a person with knowledge of the talks.

Michelle Kersch, spokeswoman for Lender Processing Services, based in Jacksonville, Florida, didn’t immediately return a call for comment. Rick Grant, a spokesman for Palm Harbor, Florida-based Nationwide Title Clearing, had no immediate response to a call seeking comment.

Negotiators for the banks said they’re prepared to dispute such demands in court, said the person, who asked to remain anonymous because the discussions aren’t public. The attorneys general and federal officials are negotiating with the five largest loan servicers, Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc.

Rest here

http://www.bloomberg.com/news/2011-05-25/state-attorneys-general-announce-new-demands-in-home-foreclosure-probes.html

BofA Unit’s Utah Foreclosures Illegal, State Says as Investigation Expands  5-25-11

A Bank of America Corp. (BAC) unit conducting home foreclosures in Utah is violating the law, the attorney general said in a letter as individual states advanced their investigations of mortgage servicing.

ReconTrust Co. isn’t meeting requirements for carrying out foreclosures in the state, Utah Attorney General Mark Shurtleff said in a letter to Bank of America Chief Executive Officer Brian Moynihan. The letter, dated May 19, was released today by Shurtleff’s office.

“All real estate foreclosures conducted by ReconTrust in the state of Utah are not in compliance with Utah’s statutes, and are hence illegal,” Shurtleff wrote.

Jumana Bauwens, a spokeswoman for Charlotte, North Carolina-based Bank of America, didn’t immediately return a phone message and an e-mail seeking comment.

The move to crack down on ReconTrust comes as federal officials and attorneys general in all 50 states are scrutinizing how the largest mortgage servicers, including Bank of America, handle home loans and conduct foreclosures. New York Attorney General Eric Schneiderman is investigating banks’ mortgage securitizations, and California Attorney General Kamala Harris has announced a mortgage fraud task force.

Lender Processing Services Inc. (LPS) was subpoenaed by California and Illinois as part of an investigation of mortgage- servicing practices, according to statements today. Illinois also subpoenaed Nationwide Title Clearing Inc., according to an e-mailed statement from the office of Attorney General Lisa Madigan.

Rest here

http://www.bloomberg.com/news/2011-05-25/bank-of-america-unit-s-utah-foreclosures-are-illegal-state-says-in-letter.html

Banks Face $17 Billion in Suits Over Foreclosures  5-25-11

State attorneys general told five of the nation's largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn't reached to address improper foreclosure practices, according to people familiar with the matter.

The figure doesn't cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven't proposed a specific comprehensive settlement figure, but Tuesday's discussions represented the first effort to formally quantify potential liability.

Representatives of the nation's largest banks met in individual meetings on Tuesday with state and federal officials designed to highlight the potential costs they will face if a settlement isn't reached.

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http://online.wsj.com/article/SB10001424052702303654804576344052913423390.html

MADIGAN ISSUES SUBPOENAS; WIDENS ‘ROBOSIGNING’ PROBE 5-25-11

Chicago, Ill. —

Attorney General Lisa Madigan today expanded her investigation into “robosigning” practices, issuing subpoenas against two national mortgage servicing support providers. The subpoenas are the latest effort in Madigan’s ongoing probe into the fraudulent practices used by banks and other mortgage institutions that contributed to the collapse of the U.S. housing market and the subsequent global financial crisis.

Madigan issued subpoenas against Lender Processing Services Inc. and Nationwide Title Clearing Inc., two Florida-based corporations that provide “document preparation services” and other loan management services to mortgage lenders for use against borrowers who are in default, foreclosure or bankruptcy.

“Foreclosure became a rubber-stamping operation that robbed many homeowners of the American Dream without a fair and accurate process,” Madigan said.

“I will not relent in my investigation into the fraudulent practices by lenders and others that caused and exacerbated the mortgage crisis and the resulting massive foreclosure crisis.”

Lender Processing Services provides loan servicing support for more than 50 percent of all U.S. mortgages. More than 80 financial institutions use LPS to service more than 30 million loans. These loans have an outstanding principal balance exceeding $4.5 trillion.

Nationwide Title Clearing provides a range of mortgage loan services to eight of the top 10 lenders and mortgage servicers in the country. NTC specializes in creating, processing and recording mortgage assignments, which are often needed for a lender to foreclose on a borrower.

Madigan will investigate reported allegations that LPS and NTC engaged in the practice of “robosigning” legal documents filed with the court to foreclose on borrowers.

Rest here

http://www.mortontimesnews.com/newsnow/x1132535668/Madigan-issues-subpoenas-widens-robosigning-probe

BofA ‘Has Work to Do’ on Future GSE Claims, Moynihan Says  5-25-11

Bank of America Corp. (BAC), the biggest U.S. bank by assets, still faces costs to settle disputes with mortgage firms Fannie Mae and Freddie Mac.

“We still have work to do on future claims, Fannie Mae especially,” Bank of America Chief Executive Officer Brian T. Moynihan said today at a conference in London. “We continue to make adjustments, which in the scheme of the overall cost are relatively minor.”

Bank of America announced $3 billion in settlements with the so-called government-sponsored entities in January, prompting Moynihan to tell investors that he was “pleased to put the GSEs behind us.” Unresolved demands for loan refunds surged $2.9 billion to a record $13.6 billion the quarter after the deals, fueled mostly by claims from Fannie Mae and Freddie Mac.

The bank resolved a “major portion” of its liabilities with the deals, Moynihan, 51, said today. The company’s 2008 takeover of Countrywide Financial Corp. saddled the Charlotte, North Carolina-based bank with demands that it repurchase loans marred by false or missing data about borrowers and properties.

“It will continue to be in front of us as we work for the next couple of years to get the rest of the GSE work behind us,” Moynihan said. “We continue to fight through these issues.”

Bank of America declined 29 percent in New York Stock Exchange composite trading for the year ended yesterday, making it the worst performer in the 24-company KBW Bank Index. The lender was left behind as competitors including JPMorgan Chase & Co. and Wells Fargo & Co. won Federal Reserve approval to increase dividends following a review of their financial health.

Rest here

http://www.bloomberg.com/news/2011-05-24/bofa-has-work-to-do-on-future-gse-claims-moynihan-says-1-.html

Former Treasury Restructuring Official Supports View That Dodd Frank Resolution is Failure Prone  5-25-11

As readers may know, we’ve been engaged in a long-running argument with a persistent Administration defender on the subject of Dodd Frank resolution, which is the one of the big arguments used for not doing much to make the TBTF banks less TBTF (see here for the latest in the series). The argument goes that since they will be allowed to fail, and they can be resolved non-catastrophically, the problem is solved. We’ve gone through the FDIC’s example of how they say they could have used the new powers under Article II of Dodd Frank and pointed out numerous (ahem) unrealistic assumptions, as as well as made more general arguments against its viability with anything other than a purely domestic institution. It’s also worth noting that a number of domestic banking and bankruptcy experts, as well as the BIS Cross-border Bank Resolution Group and the Institute for International Finance have also expressed serious doubts about the viability of Article II resolutions.

The latest critique comes from former Treasury official Jim Millstein who was the chief restructuring officer and headed the AIG rescue. His comment in the Financial Times echoes a concern voiced by some critics, including yours truly, that the Article II procedures not only make unduly optimistic assumptions about the ease and timetable for finding buyers of capital market businesses, but are also likely to accelerate a run. The key section:

Rest here

http://www.nakedcapitalism.com/2011/05/former-treasury-restructuring-official-supports-view-that-dodd-frank-resolution-is-failure-prone.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Attorney General Kamala D. Harris Subpoenas Loan Processor LPS in Wide-Ranging Probe of Mortgage and Foreclosure Practices (finally) 5-25-11

LOS ANGELES - Attorney General Kamala D. Harris today announced she has subpoenaed Lender Processing Services, Inc. (LPS), as part of her continuing probe into "robosigning" of mortgage documents and other illegal activities in the mortgage servicing industry, especially misconduct affecting borrowers facing, or in the midst of, foreclosure.

Robosigning is the practice of signing documents used by banks or mortgage servicing companies to foreclose on borrowers without verifying their accuracy - often thousands of different documents signed by a single individual per day. In many cases, the robosigners don't even read or understand the document they are signing.

"California homeowners have been exposed to fraud and crime at every step of the mortgage process," said Attorney General Harris. "Justice demands we come to their aid and a key step in that is to investigate robosigning and the potential for inaccurate or unjust foreclosures."

Former LPS employees have testified that LPS designees "robosigned" foreclosure documents. LPS prepared and recorded these foreclosure documents on behalf of many of the largest mortgage lenders and servicers in the country.

The Attorney General's investigative subpoena requires LPS to produce documents and provide written answers to questions from the Attorney General's office. The time period covered by the subpoena runs from Jan. 1, 2007, until just before the compliance date, which is no later than June 24 of this year.

LPS, based in Jacksonville, Fla., with several offices in California, provides loan management services to mortgage lenders, including document preparation services and a software platform used by much of the mortgage industry. According to its website, LPS systems are used for servicing over 50% of all mortgages in the United States and more than 80 financial institutions contract with LPS to service more than 30 million loans with an outstanding principal balance exceeding $4.5 trillion.

Attorney General Harris warned that the risks posed by robosigning are particularly dangerous in non-judicial foreclosure states such as California, where the courts typically are not involved in overseeing the foreclosure process.

On Monday, Attorney General Harris announced the creation of a Mortgage Fraud Strike Force, staffed by two dozen Department of Justice attorneys and investigators to monitor and prosecute violations at every step of the mortgage process, from the origination of mortgage loans to the marketing of mortgage-backed securities to the investing public.

Cheat Sheet on Bank Investigations and the Probes That Have Petered Out 5-24-11

As we and many others have noted, no top banking executives have been successfully prosecuted in connection with the financial crisis: not for making the bad loans that fed the mortgage machine, not for lying about the quality of the mortgages, and not for foreclosing improperly when homeowners struggled to make loan payments.

But there have been many investigations. Some are still pending, others seem to have fallen by the wayside. Here’s our overview of what the banks have been accused of doing at each stage of the mortgage machine.

Let us know in the comments section if we’ve left off any significant investigations that have died quiet deaths or are still ongoing.

The First Step in the Machine: Risky Lending and Underwriting

Regulatory action against the major lenders has been relatively rare. In one of the few cases, the FDIC filed a civil suit in March against three former executives at Washington Mutual for risky lending. The executives at the failed bank were accused of taking “extreme and historically unprecedented risks” in their lending practices in order to maximize their compensation. The executives have denied the charges. Federal authorities have been investigating the bank since it failed and was sold to JPMorgan Chase in 2008.

Earlier this year, the Justice Department ended its criminal investigation of Angelo Mozilo, the former CEO of Countrywide Financial, a major subprime lender. It did not bring charges. Mozilo had settled civil charges with the SEC for $67.5 million—though that was for insider trading, not bad lending.

And when the Justice Department did get a conviction of a mortgage company CEO in April, the executive, Lee Farkas of Taylor, Bean & Whitaker, was found guilty of bank fraud, wire fraud, securities fraud and conspiracy—offenses not specific to the company’s mortgage operations. It was nonetheless touted as “the most significant criminal prosecution to date rising out of the financial crisis.”

Rest here

http://www.propublica.org/blog/item/cheat-sheet-on-bank-investigations-and-the-probes-that-have-petered-out

Foreclosure Defense: Dead Man Served with Foreclosure Papers 5-24-11

Foreclosure defense attorneys have long alleged that process servers occasionally file false affidavits in support of personal service in foreclosure matters.  Some homeowners are defending themselves stating that mortgage lenders did not serve them properly.

Contrary to the sworn affidavit of process server Robin Lucas-Peters in one local foreclosure case, the homeowner was not served at all.  Having died on August 4, 2010 “personal service” upon him on April 21, 2011 was simply not possible. 

"It's equivalent to perjury," said Andrew Dinnerstein, the Sunrise attorney representing the family of the deceased.  "The system is being abused to such an extent that people aren't even being served properly."

The homeowner has not been identified to protect the family’s privacy.

Foreclosure defense attorneys have documented a number of cases where process servers allegedly filed false affidavits.  While investigating the law firms that employed "robo-signers," state investigators are closely examining the service of process in a number of cases.

The process server in this case said she attempted to serve the homeowner on five separate occasions.   On the fifth attempt, the person answering the door said he was the homeowner being sought and accepted the foreclosure papers.

Several recent foreclosure cases allege homeowners never received foreclosure papers even though they still occupied their home.  Others allege that process servers did not take the required steps to locate them or filed false affidavits about whom or when they delivered papers.   

This is the first reported case of a deceased homeowner being served with foreclosure papers.

Continue reading on Examiner.com Foreclosure Defense: Dead Man Served with Foreclosure Papers - Fort Lauderdale City Buzz | Examiner.com http://www.examiner.com/city-buzz-in-fort-lauderdale/foreclosure-defense-dead-man-served-with-foreclosure-papers#ixzz1NOeWY9mA

Treasury Unveils Do-It-Yourself NPV Assessment  5-24-11

The U.S. Treasury on Monday announced the launch of a Web-based tool that allows homeowners themselves to conduct a net present value (NPV) assessment of their mortgage.

As part of a borrower’s evaluation for the Home Affordable Modification Program (HAMP), servicers perform an NPV test to determine if modification is a more financially sound route to take than allowing the loan to proceed to foreclosure.

Oftentimes, the reason a homeowner is denied a HAMP modification is cited as “failed NPV.”

Treasury says homeowners who are turned down for the federal modification program can use the new tool – available at CheckMyNPV.com — to compare their own result against that of their servicer.

Homeowners may also use the site, prior to applying for a HAMP modification, to conduct an NPV self-evaluation using the same underlying formula required of HAMP servicers.

Treasury notes, though, that “due to differences in input data and other industry-related data referenced by the formula, users are informed that CheckMyNPV.com provides only an estimate of a servicer’s NPV evaluation and is intended for use only as a guide.”

Homeowners can complete their net present value calculation in around 15 minutes. The website, which also offers a detailed FAQ document, is designed to be a self-service, self-education tool to encourage homeowners to learn more about HAMP and the NPV evaluation process.

Treasury is encouraging homeowners to share the information provided by the site with their servicer and discuss the factors considered in the NPV evaluation to explore all foreclosure prevention options.

Attorney General Kamala D. Harris Announces Creation of Mortgage Fraud Strike Force to Protect Homeowners 5-23-11

LOS ANGELES - Attorney General Kamala D. Harris today announced the creation of the California Attorney General's Mortgage Fraud Strike Force, staffed by Department of Justice attorneys and investigators charged with protecting innocent homeowners and bringing to justice those who defraud them.

Composed of both civil and criminal enforcement teams, the Mortgage Fraud Strike Force will monitor and prosecute violations at every step of the mortgage process, from the origination of mortgage loans to the marketing of mortgage-backed securities to the investing public.

"Californians in search of the American dream all too often found a protracted personal and legal nightmare," said Attorney General Harris. "Families are losing their homes, while those who perpetrated crimes and frauds against them walk free."

At her announcement of the new mortgage fraud unit, Attorney General Harris was joined by Mayor Antonio R. Villaraigosa, representatives from U.S. Department of Housing and Urban Development (HUD) and the Center for Responsible Lending, as well as homeowners harmed by unlawful lending, servicing and foreclosure practices.

"We will work to safeguard the homeowner at every step of the process - from origination of a loan to its securitization, and we will prosecute to the fullest extent of the law those who take advantage of trusting California families," said Attorney General Harris. "We are setting a high bar for other states and we insist that homeowners be protected, respected, and informed."

The Mortgage Fraud Strike Force will operate out of Department of Justice offices in Los Angeles, Fresno, San Francisco and Sacramento. Twenty-five attorneys and investigators will work together in three teams:
- The consumer enforcement team will target scams in the consumer arena, including predatory lending, unfair business practices in originating loans, deceptive marketing, and loan modification and foreclosure consultant scams.
- The criminal enforcement team will prosecute criminal frauds associated with the epidemic of mortgage scams, including fraudulent investment and money laundering schemes related to mortgage lending or foreclosure relief.
- The corporate fraud team will target misconduct involving investments and securities tied to subprime mortgages, as well as false or fraudulent claims made to the state with respect to these securities.

Los Angeles Mayor Antonio R. Villaraigosa offered his support of the new strike force. "With nearly 10,000 foreclosures in the City of Los Angeles last year," he said, "this strike force is certain to help countless residents and families from becoming victimized."

"The Attorney General's authority and attention to this issue brings a critical law enforcement component to the table that will help stop the practice of predatory lending once and for all," said Mayor Villaraigosa. "I applaud Attorney General Harris for her dedication to employing swift justice to the scam artists who prey on the residents of some of our most economically vulnerable neighborhoods."

California has been hit hard by the foreclosure crisis, and by predators who seek to profit from the millions of Californians who are underwater in their mortgages, in foreclosure, or at risk of entering foreclosure.

Last year alone, there were foreclosure filings against 546,669 California homes. It is projected that between 2009 and 2012, a total of 2 million California homes will enter the foreclosure process. In the last year, the California Department of Justice has received thousands of complaints related to foreclosure scams, mortgage fraud, and mortgage servicing practices.

"The fingerprints of illegal activity are all over the foreclosure crisis," said Paul Leonard, director of the California Office, Center for Responsible Lending. "The Attorney General's effort marries the need to punish bad actors for the practices that brought our economy to the brink with the need to eliminate the scam artists who have since attempted to profit from it. Given the economic damage wreaked by foreclosures in California, this initiative is very welcome news."

Attorney General Harris has long been dedicated to prosecuting mortgage fraud. In 2009, as District Attorney of San Francisco, she launched the first stand-alone district attorney's mortgage fraud unit in California with $1.1 million from the U.S. Department of Justice.

If you are a homeowner who has been scammed, you can learn more or file a complaint online with the Attorney General's office at: http://oag.ca.gov/consumers.

California creating task force to investigate mortgage fraud 5-23-11

LOS ANGELES -- A new task force will investigate mortgage fraud in the wake of practices that crushed California's housing industry and led to a wave of foreclosures, state Attorney General Kamala Harris said.

Harris was scheduled Monday to announce creation of the Mortgage Fraud Strike Force, a team of 17 lawyers and eight state Department of Justice special agents that will investigate unscrupulous lending.

"If the evidence leads us there, no case will be too big or too small to pursue," Harris told the Los Angeles Times. "There remain millions of people affected by the mortgage crisis."

The attorney general said the team will investigate everything from phony marketing to loan modification scams and wholesale corporate fraud.

The 2008 financial crisis was triggered by defaults on poor-quality loans that Wall Street financial institutions sold as bundled securities and promoted as safe investments.

Harris said her office plans to prosecute some cases involving sales of such securities to the state or its pension funds if the situations involved false claims.

The wave of foreclosures cost California homeowners up to $640 billion in equity, Harris said.

The task force is distinct from an ongoing investigation into foreclosure practices by the nation's five largest mortgage servicers. The attorneys general of all 50 states are involved in that probe.

American Home's Plan for Principal Reductions 5-23-11

... American Home Mortgage Servicing, one of the largest subprime mortgage servicers, is urging the U.S. Treasury to organize a plan to boost principal reductions for up to 1 million homeowners by unlocking loans from securities. ...

... American Home's plan formalizes an idea it first floated within the industry more than two years ago. It hopes to draw more attention now as the government's efforts to ease payments with loan modifications have had limited impact, foreclosures are still high and home prices have resumed falling.

American Home contends its proposal could provide a boost to the Obama administration's Home Affordable Modification Program, in which many borrowers failed to qualify because a principal reduction would be needed, but not possible if a loan was tied up in a bond.

The plan "should provide a material benefit to borrowers by giving them the one last clear chance that HAMP was intended to provide, but appears unable to deliver to many homeowners," American Home's chief legal officer, Jordan Dorchuck, and others wrote to Treasury on Thursday. ...

Please read the full article on Reuters

Federal Court in Texas Deals a Potentially Serious Blow to MERS  5-23-11

Texas is not exactly a consumer-friendly state, so the Federal court ruling in the Eastern District of Texas against MERS has the potential to have broad ramifications (note a Federal court in Texas will still have to look to Texas law and precedents on real estate matters). Oddly, even though this decision took place last month, it seems to have escaped the notice of most real-estate oriented sites until now. Hat tip to April Charney for highlighting it (literally and figuratively, she marked the filing that I’ve posted below):

Kingman Holdings v. CitiMortgage & MERS April 21, 2011 US Dist. LEXIS Ct ED Tex. April.21

The borrower challenged an assignment from Citimortgage to MERS based on a pretty simple basis: MERS was not authorized to do so and on top of that violated its own procedures:

Plaintiff alleges that the assignment by MERS to CitiMortgage is void for the following reasons: (1) Blackstun was not appointed as vice president by MERS’ board of directors; and (2) MERS was without authority to transfer the Note. Plaintiff claims that the Deed of Trust is a cloud on its title and sues to quiet title in the Property and claims the assignment violates Chapiter 12 of the Texas Civil Practices and Remedies Code. Alternatively, Plaintiff sues to enforce its equity [*3] in re-demption.

Rest here

http://www.nakedcapitalism.com/2011/05/federal-court-in-texas-deals-a-potentially-serious-blow-to-mers.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

As Lenders Hold Homes in Foreclosure, Sales Are Hurt  5-23-11

EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”

Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.

Rest here

http://www.nytimes.com/2011/05/23/business/economy/23glut.html?nl=todaysheadlines&emc=tha25

Lender files mortgage document in wrong Michigan county, loses court case 5-23-11

RAPID CITY, Mich. — It sometimes pays to check a map.

Those are the exact words of a federal appeals court in a decision that bars a mortgage company from being first to put a lien on a property in northern Michigan.

Mortgage Electronic Registration Systems, known as MERS, supplied a $400,000 mortgage to Tammy Church in 2006. The company filed an interest in Church's property with the Kalkaska County recorder of deeds. But there's a problem: The property is in Rapid City in Antrim County.

By the time the mistake was discovered, the Internal Revenue Service had already filed liens for back taxes.

The appeals court says the IRS deserves to stay first in line. The court says MERS is a sophisticated business and there's no basis in law to overlook its error.

Quelle Surprise! SEC Worked Hard to Ignore Warnings of Subprime Fraud  5-22-11

Saying that regulators ignored danger signs in the run up to the financial crisis now verges on being a “dog bites man” account. But the New York Times excerpt from the new book Reckless Endangerment by Gretchen Morgenson and Josh Rosner show that the SEC was not merely asleep at the switch, but apparently peopled with higher ups who were looking hard for reasons not to pursue suspicious conduct.

The extract is about a particularly rancid case, that of subprime originator NovaStar, which was one of the twenty biggest. Not only did it issue the drecky mortgages in impressive volumes, but it engaged in obvious financial misreporting. While the frauds it foisted on borrowers fell largely between regulatory cracks, since NovaStar as a non-bank mortgage broker was regulated only at the state level, and those offices are chronically understaffed, misstatements in public reports reside squarely in the SEC’s beat.

Morgenson’s and Rosner’s account follows the efforts of short seller Marc Cohodes. Admittedly, the SEC has reason to take the claims of short-sellers with a grain of salt, but the evidence that Cohodes provided over time was extensive and troubling, including:

Rest here

http://www.nakedcapitalism.com/2011/05/quelle-surprise-sec-worked-hard-to-ignore-warnings-of-subprime-fraud.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

It Teetered, It Tottered, It Was Bound to Fall Down 5-22-11

MARC COHODES had heard the stories.

Heard how these guys would give a mortgage to anyone — even to a corpse, the joke went. How the place was run like a frat house.

You wouldn’t believe the things that go on there, his brother-in-law had told him.

So Mr. Cohodes, a money manager in Marin County, Calif., decided to bet against one of the big names of the subprime age: NovaStar Financial.

NovaStar was part of a crop of new lenders that had sprung up in the 1990s. It had been founded by two hard-charging entrepreneurs, Scott F. Hartman and W. Lance Anderson.

The two men had complementary skills. Handling the financial operations, working with Wall Street — that was Mr. Hartman’s job. Mr. Anderson, a born salesman, was the glad-hander. From the start, the pair was paid handsomely. Each man received almost $700,000 in 1997, even though their company was losing money.

Like others in the subprime industry, NovaStar used aggressive accounting that obscured its increasingly precarious finances. As far back as the 1990s, it had to underwrite loads of new loans to offset losses on older mortgages.

But unlike many of its peers, NovaStar had already survived at least one brush with death. Now, in 2003, Mr. Cohodes was betting that it would not be so lucky again.

Although NovaStar was not a household name in lending, in 2003 the company boasted 430 offices in 39 states. With headquarters on the third floor of an office building in Kansas City, Mo., it was fast becoming one of the top 20 home lenders in the country.

NovaStar was also becoming a Wall Street darling, its shares trading at $30, up from $9.50 in late 2002. Typing NovaStar’s stock symbol into his Bloomberg machine, Mr. Cohodes did a double take. Thirty dollars? Must have used the wrong stock symbol, he thought.

He hadn’t. NovaStar was on a trajectory that would take the shares above $70. Thanks to aggressive management, unscrupulous brokers, inert regulators and a crowd of Wall Street stock promoters, NovaStar’s stock market value would soon reach $1.6 billion.

A beefy, street-smart man fond of sports and sports metaphors, Mr. Cohodes knows every trick executives use to make their companies look better than they are. He prides himself on being able to spot trouble.

Most investors are optimists and believe that companies will increase in value. Short-sellers are the opposite.

And because they challenge company spin, short-sellers are often criticized and refused access to management.

RARE is the corporate executive with an appreciation for naysayers, and NovaStar’s founders were no different. Mr. Anderson and Mr. Hartman had contempt for short-sellers. A Web site sponsored by NovaStar backers, called NFI-info.net, published a picture of a cockroach next to a discussion about investors who had bet against the company’s stock.

But Mr. Cohodes was relentless, and he often shared his research with regulators at the Securities and Exchange Commission.

He figured that if he was right about NovaStar, and he was certain he was, investors everywhere would be better off if he shared his findings with investigators. The sooner the S.E.C. put a stop to improprieties, the better.

The short-sellers would benefit too, of course, if an S.E.C. investigation and civil suit confirmed what Mr. Cohodes and others had found. Even the simple disclosure that an investigation into a company’s practices had been started could crush its stock.

Rest here

http://www.nytimes.com/2011/05/22/business/22excerpt.html?nl=todaysheadlines&emc=tha25

His boot camps fight foreclosures 5-22-11

Bankruptcy lawyer teaches how to deal with mortgage meltdown

SHELBY When allegations of "robo-signing" by mortgage servicers emerged last fall, Shelby consumer bankruptcy lawyer O. Max Gardner III wasn't surprised.

Since the early 2000s, he had been worried about the deteriorating quality of mortgage loans, many with payments set to recast at unaffordable amounts in future years. And in a 2004 bankruptcy case, he had obtained a mortgage processor newsletter that detailed the outsourced assembly line that was being used to rapidly produce and notarize lending documents.

Gardner's concerns led him to give seminars around the country to other lawyers about problems with the securitization process - the packaging of mortgages, car loans and other assets into securities for investors. In 2006, he shifted to holding "boot camps" for lawyers at his scenic farm in the South Mountains, about 60 miles northwest of Charlotte.

So far, 800 attorneys have passed through the nationally known program. Some of the trainees have been involved in uncovering recent allegations that bank-employed robo-signers had been improperly processing foreclosure documents. Now for the first time, Gardner will hold a boot camp in Charlotte. Running Thursday through Monday at the Blake Hotel, it will allow him to host about 28 lawyers, double the normal class size.

In a bankruptcy case, determining whether a lender actually owns a mortgage note and properly handled the paperwork is critical because a home loan is typically a consumer's biggest debt, Gardner said in an interview last week in his Shelby law office, a historic family home known as Webbley.

Read more: http://www.charlotteobserver.com/2011/05/22/2313246/his-boot-camps-fight-foreclosures.html#ixzz1NONrR4Su

Deutsche Bank Goes After Whistleblower’s Son  5-21-11

In July 2008, Florida lawyer Lynn Szymoniak received foreclosure papers on her home. Szymoniak had encountered financial difficulties after spending several years caring for her ailing mother while simultaneously fighting her own health problems, and failed to re-negotiate her adjustable-rate mortgage with her lender.  
 
But Szymoniak, a former Certified Fraud Examiner with FBI training, noticed something strange on her foreclosure documents. The company servicing her mortgage was located in Dallas, nowhere near Linda Green, the Georgia woman whose signature validated Lynn’s mortgage assignment. So Szymoniak began accumulating and comparing mortgage papers from county recording offices across the country in an attempt to make sense of the bizarre documentation.
 
Her investigation ultimately uncovered the industry-wide practice of robo-signing: employees at document processing companies (also known as signature sweatshops) pretend to be executives at major banks, like Bank of America and Wells Fargo, to sign off on hundreds of thousands of foreclosure affidavits. According to Szymoniak’s calculations, “Linda Green” appeared as an officer of at least 20 different banks and mortgage companies, accounting for almost $128 billion in mortgages. Szymoniak’s work helped blow the “robo-signing” scandal wide open and illuminated the fraud plaguing the foreclosure system. Since then a variety of other illegal practices have come to light and untold thousands of consumers have been affected, generating investigations by 50 state attorneys general, U.S. Justice Department officials and regulatory agencies. Yet so far, no one has been thrown behind bars.

Rest here

http://www.commondreams.org/view/2011/05/20-10

Lawyers Threatened With Sanctions for Talking About Foreclosure Abuses  5-21-11

So much for the idea that the legal profession cares about integrity. While there are no doubt many upstanding attorneys, state bar associations seem vastly more concerned about trying protect the industry’s meal ticket than policing questionable conduct. It’s well known in the profession that to the extent lawyers are ever sanctioned, it’s almost without exception small firm operators. The big boys pay a lot in dues and often have partners in their firms that hold offices in the state bar organization.

One damning illustration: even though Florida has been a virtual cesspool of legal malfeasance, with its biggest foreclosure mill having shuttered its doors and impermissibly not passed open cases on to other lawyers and all of the other big players on the ropes, not a single lawyer has been sanctioned. Yet two lawyers in the state were threatened because they’ve dared to say a candid word or two about the mortgage mess. The bar association’s excuse is investigations take time, but the old state attorney general has been investigating these firms since last August. The state bar’s speed in efforts to silence members who are candid versus the leisurely pace in taking action on rampant abuses smacks of cronyism.

Rest here

http://www.nakedcapitalism.com/2011/05/lawyers-threatened-with-sanctions-for-talking-about-foreclosure-abuses.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Young Vallejo family loses a daughter and likely their home 5-21-11

Michael Kost moves to comfort his wife, Roxana, as she cries while talking about the couple's oldest daughter, Michaela, 6, who died recently after a life-long battle with congenital heart problems. Compounding their difficulties, the family is being evicted from their Vallejo home. (Mike Jory/Times-Herald)

For Roxana Kost, the hardest part was having to pack up her daughter's room just three weeks after her untimely death.

"I don't think I would have been ready for that for quite a while," she said. "But the move has just forced us to suck it up in a way and confront our emotions before, perhaps, we're ready to."

Like many homeowners suffering the effects of the economic crisis, the Kosts are losing their "dream house."

But the eviction couldn't have come at a more deeply emotional time for the Vallejo family -- on the heels of the death of their eldest daughter, Michaela, who succumbed to heart failure on April 27.

A first-grader at Mare Island Elementary School, she lived 1 1/2 years after her second heart transplant, and

Born with a congenital heart defect, Michaela was featured in a July 8, 2008, Times-Herald article about her first transplant surgery at Stanford University's Lucile Packard Children's Hospital. Her second transplant was in August 2009.

Now the family, which has two other daughters, ages 2 and 4, must grieve and move at the same time. The bank has refused their requests -- and those of U.S. Rep. George Miller, D-Martinez -- to postpone the eviction.

Facing an order to appear in court Tuesday, the family says it will vacate their historic Virginia Street house by the end of next week.

Rest here

http://www.timesheraldonline.com/ci_18103061

Appeals court reverses Countrywide suit dismissal  5-21-11

LOS ANGELES – An appeals court has overturned the dismissal of a class-action lawsuit brought by investors against mortgage giant Countrywide Financial Corp.

The move by a panel of the California 2nd District Court of Appeal reverses the decision by a Superior Court judge in Los Angeles last year. That court threw out the complaint on grounds that a state court had no jurisdiction to hear the case, citing the U.S. Securities Act.

In the ruling issued Wednesday, the appeals court disagreed, concluding such a complaint could be heard in state court.

Rest here

http://news.yahoo.com/s/ap/20110519/ap_on_bi_ge/us_countrywide_lawsuit;_ylt=AtK2f1p6ulF14upMGaPruxtu24cA;_ylu=X3oDMTJ0cGVsMnBsBGFzc2V0A2FwLzIwMTEwNTE5L3VzX2NvdW50cnl3aWRlX2xhd3N1aXQEcG9zAzIxBHNlYwN5bl9wYWdpbmF0ZV9zdW1tYXJ5X2xpc3QEc2xrA2FwcGVhbHNjb3VydA--

No Prosecution of Financial Crimes Related to Mortgages  5-21-11

A bizarre meme seems to have popped up recently regarding prosecuting banks for fraud and other crimes. What makes it weird is that its not exclusively coming from the usual collection of asshats and idealogues. Very little that tumbles out of the piehole of Megan McArdle suprises me — her record precedes her. But a few others have surprisingly been picking up on this theme. Even Roger Lowenstein had a Bloomberg column with the unfortunate headline No Jail for Economic Crisis May Mean No Crime.

By that logic, O.J. didn’t kill Nicole Simpson and Ronald Goldman.

Thus, we are forced to interrupt are usual cheery blather for a little schooling about what the rule of law is, why it needs to be protected. ...

Please read the full article on The Big Picture

Attorney General DeWine and Ohio Department of Commerce Announce Settlement with Carrington Mortgage Services 5/20/2011

(COLUMBUS, Ohio) – Ohio Attorney General Mike DeWine and Ohio Department of Commerce Director David Goodman today announced an assurance of voluntary compliance (AVC) with Carrington Mortgage Services, LLC to resolve a 2009 lawsuit and to provide relief to Ohio homeowners facing foreclosure. 

"This agreement will help Ohioans obtain affordable modifications to allow them to stay in their homes," Attorney General DeWine said. "We are pleased that Carrington Mortgage Services has worked with our Office and is committed to helping Ohio homeowners avoid foreclosure."

Ohio Department of Commerce Director Goodman recognized, "Ohio consumers benefit from mortgage servicers that work proactively to avoid foreclosures.  This settlement will allow Ohio homeowners to benefit from higher standards of customer service and responsiveness.  The benefits of this agreement multiply.  Working with homeowners to modify loans instead of foreclosure is a value to the neighborhood and beyond.  Empty, unattended homes are not good for a community."

The Attorney General, the Ohio Department of Commerce and Carrington Mortgage Services agreed to mortgage servicing standards that will apply to all Carrington Mortgage Services-serviced Ohio loans. The servicing standards include:

• Borrowers who complete a loan modification application will be assigned a single point of contact with Carrington Mortgage Services.
• Carrington Mortgage Services will implement a specific timeline for all loan modification requests.
• Carrington Mortgage Services will temporarily suspend foreclosures when a borrower completes a loan modification application and will implement an internal review process for denied loan modifications.

Carrington Mortgage Services also has agreed to provide loan modifications or other relief to 60 Ohio homeowners who had obtained their loans from a non-Carrington Mortgage Services lender, the servicing rights for which Carrington Mortgage Services acquired in 2007. Prior to the AVC, Carrington Mortgage Services had entered into modifications with 31 of those homeowners, and under the AVC, Carrington Mortgage Services has agreed to provide modifications or other relief to the other 29.

The AVC ends litigation that the Ohio Attorney General's Office and the Ohio Department of Commerce filed against Carrington Mortgage Services in Franklin County on July 31, 2009. Carrington Mortgage Services admits to no wrongdoing or liability as part of the AVC.

Ohioans facing foreclosure should contact Save the Dream Ohio at 1-888-404-4674 or www.SavetheDream.ohio.gov. Save the Dream Ohio is a state program that provides free housing counseling and direct referrals for free legal assistance to Ohio homeowners.

View signed agreement.

Treasury Issues New HAMP Rule Requiring Single Point-of-Contact   5-20-11

The U.S. Treasury released updated guidance for the Home Affordable Modification Program (HAMP) this week requiring certain servicers to provide borrowers with a single point-of-contact through the entire default resolution process.

The new directive applies only to the largest servicers – those with a program participation cap of $75 million or more – however Treasury says all servicers participating in HAMP are encouraged to adopt the new guidance for providing borrowers with a single point-of-contact.

In addition to HAMP, the new rule also applies to the Home Affordable Foreclosure Alternatives (HAFA) program and the Home Affordable Unemployment Program (UP). However, it does not encompass second lien mortgage loans that may be eligible for the Second Lien Modification Program (2MP) under the Making Home Affordable umbrella.

According to the new guidance issued, servicers must assign each borrower a dedicated “relationship manager” who is responsible for communicating and working with

the borrower throughout the entire process, including any home retention and non-foreclosure liquidation options, and, if the loan is ultimately referred to foreclosure, that same relationship manager must be available to respond to borrower inquiries regarding the status of the foreclosure.

No later than September 1, servicers must assign a relationship manager to any borrower who is potentially eligible or who requests consideration for HAMP or one of the applicable government programs.

For borrowers who are in the process of being evaluated for HAMP, UP, or HAFA, who are in a trial mod plan or an UP forbearance plan, or who have executed a HAFA short sale or deed-in-lieu agreement, servicers have until November 1 to connect them with a dedicated relationship manager.

Within five business days of the assignment, the relationship manager must provide written notice to the borrower which includes a toll-free telephone number and at least one other method by which the borrower may directly contact the relationship manager, and the relationship manager must attempt to initiate contact with the borrower “promptly following the assignment,” according to Treasury.

The relationship manager is responsible for communicating to the borrower all options available for resolving their delinquency, and for coordinating maintenance and tracking of documents provided by the borrower to ensure the borrower is notified promptly if additional information is needed and to eliminate the need for the borrower to resubmit the same paperwork.

The single point-of-contact supplemental directive, along with specific details on the relationship manager’s responsibilities, can be accessed online.

Former LPS Employees Allege 30% to 78% Error Rate in Borrower Mortgage Records, Contradicting Banker/Regulator Cover-Up  5-20-11

One investor said that every time he looked at corporate misconduct, “No matter how bad you think it is, it’s always worse”. Lender Processing Services is proving to be a classic illustration.

The City of St. Clair Shores Employees’ Retirement System is the lead plaintiff in a class action lawsuit against Lender LPS that was amended and expanded yesterday. The suit is against the company and its three top officers, charing them with violations of Federal securities laws with the intent of inflating the company’s revenues and stock price.

City of St. Clair Shores Employees’ Retirement System v. LPS et al. Amended Complaint May 18, 2011

Even though the filing is very long, the first third, which provides detailed descriptions of LPS’s purported misconduct, makes for gripping reading even for those who have been on this beat a while. Later on, it cites various media sources to track increasing public recognition of what LPS was up to, and NC is quoted at some length.

The filing relies heavily on affidavits by 17 confidential witnesses, all former LPS employees, some of them supervisory level. It is thus able to allege that bad practices were widespread and clearly designed and driven by top management.

Rest here

http://www.nakedcapitalism.com/2011/05/former-lps-employees-allege-30-to-78-error-rate-in-borrower-mortgage-records-contradicting-bankerregulator-cover-up.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Refusing to Give In to Eviction  5-19-11

On Jan. 19, 63-year-old Tanya Dennis hired a locksmith and broke into her South Berkeley home.

A former vice principal of Oakland’s Castlemont High School, Ms. Dennis said she wanted to resume living in her home of 27 years after foreclosure nine months earlier and eviction by Alameda County sheriff’s deputies in December. Ms. Dennis said she wants her lender, Wells Fargo, to reduce the principal she owes, creating affordable monthly payments.

“These banks got billions of dollars of our money. We can’t afford to be complacent,” Ms. Dennis said. 

Tom Goyda, a spokesman for the bank, said Wells Fargo has “worked with Ms. Dennis for more than two years,” but that “there is no option for which Ms. Dennis qualifies.”

She is one of many struggling residents in the Bay Area trying to save their homes by turning up the heat on lenders.

While break-ins are rare, “home defenses” are on the rise, said Anthony Panarese, an organizer with the Alliance of Californians for Community Empowerment, a coalition of community groups. Since its founding in January 2010, the group has organized dozens of defenses in the Bay Area, bringing crowds to properties on the day the sheriff was set to evict.

Rest here

http://www.nytimes.com/2011/05/20/us/20bclocks.html?_r=1

Short Sale Anti-Deficiency Bill May Have Unintended Consequences  5-19-11

This year the California Association of Realtors® (CAR) has sponsored state legislation (SB 458 – Corbett) that would negate the ability of a junior lien holder to collect any deficiency if they have agreed to a short sale. This is a follow-up to legislation (SB 931 – Ducheny) that passed and became law last year. SB 931, however, only applied to first trust deeds or mortgages.

The problem that both bills have intended to rectify is this: When a lender releases a lien – a mortgage or trust deed – that is only a release of a security instrument. It is not a release of the debt obligation itself. Hence, in a short sale situation, a lender might say something like this: “I will agree to the short sale and as long as I receive X dollars, I will discharge the mortgage, thereby allowing a new lender to secure the buyer’s loan”. BUT, the original lender also says, “I reserve the right to pursue the deficiency (i.e. the difference between the amount owed and the amount received)”.

Sometimes the lender doesn’t even say that explicitly, they just do it. Commonly, only later does the seller find out that, legally, they still owe money. (Yet another good reason why a knowledgeable professional should review the lender’s short sale agreement.)

Rest here

http://www.ibtimes.com/articles/147693/20110518/short-sale-anti-deficiency-bill-may-have-unintended-consequences.htm

Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers [EXCLUSIVE]  5-19-11

WASHINGTON -- A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.

The five separate investigations were conducted by the Department of Housing and Urban Development’s inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said.

The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government. The audits were completed between February and March, the sources said. The internal watchdog office at HUD referred its findings to the Department of Justice, which must now decide whether to file charges.

The federal audits mark the latest fallout from the national foreclosure crisis that followed the end of a long-running housing bubble. Amid reports last year that many large lenders improperly accelerated foreclosure proceedings by failing to amass required paperwork, the federal agencies launched their own probes.

The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

Rest here

http://www.huffingtonpost.com/2011/05/16/foreclosure-fraud-audit-false-claims-act_n_862686.html

Attorney General takes on robo-signers  5-19-11

The Minnesota Attorney General's Office filed a complaint Thursday in Hennepin County District Court against the debt buying company Midland Funding LLC. The lawsuit alleges that the St. Cloud company created false and unreliable mass-produced, "robo-signed" affidavits as supposed "proof" of consumer debts in lawsuits against individual citizens.

Minnesota Attorney General Lori Swanson was allowed to proceed with the lawsuit after Ohio Federal District Court Judge David Katz issued an order saying that a tentative class action settlement in that jurisdiction did not prevent Minnesota's legal action.

Swanson's lawsuit alleges that "Midland aggressively filed thousands of lawsuits against individual citizens for collection of old, purchased debt, often supporting those lawsuits with "robo-signed" affidavits generated at its St. Cloud Offices."

Rest here

http://www.startribune.com/business/122234054.html

FDIC study blames mortgage servicing mess on big banks  5-19-11

The Federal Deposit Insurance Corp. took a look into the foreclosure operations at the largest mortgage servicers and found significant breakdowns at almost every stage of the process. However, these issues are largely isolated to the servicers that hold the largest share of the mortgage finance business.

"To date, FDIC reviews of state nonmember banks have not identified instances of 'robo-signing' or other serious deficiencies in mortgage servicing operations," said the FDIC in an email alert Wednesday. "Nevertheless, any bank involved in residential mortgage servicing can benefit from understanding the issues identified in the interagency review."

The FDIC looked into the 14 mortgage servicers that signed consent orders with their regulators in April. The settlements include requirements to fix holes in the process, provide more loss-mitigation efforts and even left the door open for fines. These large companies came under investigation from the agencies and the 50 state attorneys general when news surfaced of faulty documentation processes that are still being corrected.

"Foreclosure governance processes of the servicers were underdeveloped and insufficient to manage and control operational, compliance, legal, and reputational risk associated with an increasing volume of foreclosures," the FDIC said in its report.

Agents interviewed servicer employees and reviewed roughly 2,800 foreclosure files in both judicial and nonjudicial states. The findings match the scope of the problem the Office of the Comptroller of the Currency and the Federal Reserve found in their investigation.

According to the study, the thin policies and procedures at these companies buckled under the record levels of delinquent loans. Monitoring, quality control and audit reviews failed to detect few of the corners cut. The reputational and legal risks of those practices were rarely communicated to the board of directors or senior management, according to the FDIC.

Similar breakdowns occurred at third-party vendors hired by these servicers to handle documentation services. The Mortgage Electronic Registration Systems did not invest enough resources, staff or training to properly handle the caseloads, and Lender Processing Services (LPS: 28.24 -0.42%) failed to establish enough internal controls or risk management to catch documentation issues, according to the FDIC.

Both MERS and LPS are entangled in a variety of lawsuits and face sanctions across the country for allegedly mishandling mortgage documents during foreclosure.

"In addition LPS executed and recorded numerous affidavits, assignments of mortgages, and other mortgage-related documents that contained inaccurate information or were not properly notarized or based on personal knowledge," the FDIC said.

The FDIC reviewed practices at some of the smaller state nonmember banks under its umbrella. These companies collectively service less than 4% of mortgages in the U.S. The study did not find the same problems at the larger firms – not enough to warrant formal enforcement actions, the FDIC said.

"Community banks fared far better than larger institutions in terms of delinquency rates on residential mortgage loans and have undertaken far fewer foreclosures," the FDIC said. "Nevertheless, community banks should be aware of the lessons learned from the horizontal review when assessing their servicing practices."

Foreclosure Task Force Hears Consumer Complaints 5-19-11

Consumer advocates and two legislators criticised  practices by the foreclosure industry before the Va. Task Force on Foreclosure at the state capitol, Tuesday,May 17,2011. The Task Force, headed by Terri Suitt of the Governor's staff, was created by Governor Bob McDonnell to seek solutions to home foreclosure problems. It has represenatives from banks, agencies that deal  with housing and consumer advocates.

In a bi-partisan manner, House Delegates Bob Marshall, R-13th and Robin Abbott D-93, made presentations on behalf of consumer fairness.

Marshall, noted for being a staunch social conservative, explained his legislation that was introduced this year. Marshall wants to expand the time a consumer has presently, 14 days to 45 days for notice of foreclosure.

"This would put Virginia in the middle," said Marshall. The Delegate explained that Virginia had one of the fastest foreclosure times .The expanded time to 45 would put the state closer to the longest state time of 90.

Delegate Abbott  is a an attorney specializing in consumer matters including foreclosure. She said her biggest client problem was "dual tracking by banks." This happens when a bank in one department negotiates to stop the foreclosure while another department or third party hired by the bank or note holder forecloses on the homeowner.

Continue reading on Examiner.com: Foreclosure Task Force Hears Consumer Complaints - Richmond Progressive | Examiner.com http://www.examiner.com/progressive-in-richmond/foreclosure-task-force-hears-consumer-complaints#ixzz1Mp6oD1i0

Levin Optimistic That DoJ Will Act on Goldman Disclosures   5-19-11

The Financial Times interviewed Senator Carl Levin, whose report contained a great deal of information pointing to what at a minimum can be called bad faith dealing by Goldman. Matt Taibbi has argued in his characteristic forceful manner that Goldman execs clearly perjured themselves in their testimony.

Keep your champagne corked. The DoJ has been missing in action for so long I can’t imagine that they will actually put in an appearance, particularly on Goldman, but I’d be delighted to be proven wrong.

From the FT:

Carl Levin, chairman of the Senate investigative subcommittee, said there was “real hope” law enforcement authorities would act on his panel’s report accusing Goldman Sachs of misleading investors and Congress…

Eric Holder, attorney-general, said this month the justice department was looking at the report “that deals with Goldman”.

Rest here

http://www.nakedcapitalism.com/2011/05/levin-optimistic-that-doj-will-act-on-goldman-disclosures.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

OUR VIEW: Banks must follow Utah law  5-19-11

One of the sad lessons of the recent financial meltdown and subsequent severe recession is that investors, families and individuals learned that a large percentage of banks and financial institutions, which had boasted of fiscal values and conservatism, did not in fact exercise those values.

In the rush for short-term payoffs, these financial institutions recklessly pitched unsafe mortgages and derivatives from said mortgages that were bundled into bond funds, credit default swaps, etc.

This greed destroyed a few companies; many more were bailed out with our taxpayer dollars. Hundreds of thousands of home mortgage holders who were naive enough to buy junk mortgages with obligations that became difficult to meet when jobs were lost, credit dried up, and paychecks went stagnant or ceased, were not bailed out.

In their efforts to foreclose on these unlucky homeowners, many banks -- because they sliced and diced mortgages into many different investments -- have minimized contact with buyers under financial water. The buyers, desperate to work with the banks to save their homes, cannot find a human being locally who will discuss their mortgages and their options. Instead, impersonal letters, often contradictory, are the sole means of communication.

Long ago, the Utah Legislature passed a law that mandates that banks and other financial institutions have someone local with whom distressed mortgage holders can discuss their mortgage.

If the mortgage holder fails to provide that service, the holder can sue for damages and a $2,000 penalty can be assessed. Banks fought that law, but it was upheld by the 10th District Court of Appeals.

Rest here

http://www.standard.net/topics/opinion/2011/05/16/our-view-banks-must-follow-utah-law

Treasury establishes single point of contact for HAMP  5-18-11

Mortgage servicers must provide a single relationship manager to borrowers being evaluated for a Home Affordable Modification Program trial by Sept. 1, according to guidance released by the Treasury Department Wednesday.

The guideline is required of the 20 largest servicers participating in HAMP, and it is one of the largest adjustments to the program since its inception in March 2009. Since then, more than 670,000 borrowers received a permanent loan modification, and more than 1.8 million trials have been extended.

"Over the past two years, two of the biggest complaints we received from borrowers were servicers are losing documents and they can't connect with anybody who can actually track them down. Every time they call they can't get a hold of someone with access to their case," Laurie Maggiano, director of policy at the Treasury's homeownership preservation office, said in an interview with HousingWire Wednesday.

The relationship manager must be an employee of the bank and cannot be a contractor. This manager will be assigned when the servicer makes successful contact with the delinquent borrower. The borrower must meet the initial criteria of the program, such as owner-occupancy and a 31% debt-to-income ratio.

During the period of evaluation for loss mitigation option, the relationship manger will contact the borrower with status updates, coordinate the receipt of financial documents and provide options until the delinquency is resolved.

This means the relationship manager will stay with the borrower through HAMP, other forbearance programs, the Home Affordable Foreclosure Alternatives Program, even the bank's own private modification programs.

The manger will also be the single-point of contact with the borrower throughout the foreclosure process, which can sometimes take up to a year. However, the responsibilities become reactive. If the borrower has a question or their financial status changes for a possible re-evaluation, the borrower must call the relationship manager.

Servicers are required to give borrowers already in a trial modification a single point of contact by Nov. 1. The Treasury set a later date for these borrowers so as not to slow the process if they are already nearing a resolution.

The Treasury did not put a cap on the caseloads one manager can handle at one time. Servicers are allowed to assign other employees to do the underwriting or perform other duties.

"This has been percolating for sometime in our consciousness not only at Treasury but within the industry. We gave the servicers enough time, and we told them, 'If you can't figure it out, we have to be prescriptive,'" Maggiano said.

Also, Maggiano said the Treasury worked with other regulators investigating these servicers for foreclosure malpractices uncovered last year. Recent consent orders signed in April require the servicers to submit plans to implement a single-point of contact for borrowers going forward.

"Other regulators told us that this guidance can serve as a model for their plans," Maggiano said. "If a servicer submits these requirements as a plan, they may be approved."

Foreclosure attorney David J. Stern sidesteps Fannie arbitration, GSE alleges  5-18-11

An arbitrator — not the courts — should decide what, if anything, is owed to former foreclosure attorney David J. Stern, the government-sponsored enterprise Fannie Mae alleges in court filings.

The Law Offices of David J. Stern filed more than 25 lawsuits against servicers in recent months alleging they owe the law firm more than $34 million in unpaid invoices. On Monday, it filed its latest case, a suit against Lender Procssing Services (LPS: 28.34 -0.07%), a firm that provides mortgage processing and technology services.

Fannie filed motions to intervene in several of the lawsuits that involve Fannie Mae servicers. It asked the courts to stay the proceedings pending the outcome of an arbitration case between it and the Stern law firm.

The lawsuits were filed after Fannie, Freddie Mac and the nation's largest mortgage servicers unceremoniously dumped the firm last fall in the midst of an attorney's general investigation into foreclosure practices at several Florida default services firms and a national scandal over robo-signing of foreclosure affidavits.

Since then, the Florida AG's investigation began to unravel and the robo-signing controversy faded, but not before Stern's firm was decimated, declining from a high of 1,400 employees last summer to just six attorneys today, according to the attorney representing Stern in his court battles against servicers.

"When the banks and servicers withdrew their files in November 2010, they refused to pay the outstanding invoices," said Stern's attorney, Jeffrey Tew, partner in the Miami law firm of Tew & Cardenas LLP, during an interview with HousingWire last week.

In a followup interview about Fannie Mae's allegations, Tew said the firm opposes Fannie's attempts to intervene and stay cases involving the GSE's servicers.

"The Stern law firm has opposed Fannie's motion on the grounds that Fannie isn't legally entitled to intervene or to stay the court action," Tew told HousingWire.

Tew has filed motions to that effect as well.

"Fannie Mae argues that, somehow, this lawsuit 'interferes with Fannie Mae’s right to arbitrate its claims,' and that Fannie Mae therefore has a significant interest in this lawsuit and satisfies the criteria for intervention. As of the date of the filing of this response, however, this lawsuit has not, in any way, interfered with Fannie Mae’s right to arbitrate its claims," a motion filed May 6 in the Nationstar Mortgage case alleges. "The arbitration is proceeding without interruption."

Fannie claims that Stern shouldn't be allowed to use the courts "to evade its agreement to arbitrate." It made those allegations in a motion to intervene in a case against IBM Lender Business Process Services.

Fannie retained the Law Offices of David J. Stern in some 24,000 foreclosure cases in Florida.  About 45 servicers were servicing Fannie Mae cases through the Stern firm, court documents indicate. Fannie's written agreement with the firm required the firm the arbitrate any disputes, according to court filings in the cases.

"The arbitration proceeding will determine whether the Stern firm's services complied with applicable law and professional standards and what, if anything, the Stern firm is owed as a result of the damages that Fannie Mae has suffered — and will continue to suffer — from the Stern firm's conduct," Fannie's motion to intervene in the LBPS case said.  "The Stern firm is filing lawsuits — such as this one — against Fannie Mae's servicers involving the exact amounts at issue in the arbitration."

Fannie also noted that its servicing guide required servicers to retain a firm listed in Fannie's "retained attorney network" so when Fannie dropped the firm from the network, the servicers also had to drop the firm.

Under the agreement, attorneys in the network bill the servicers who then seek reimbursement from Fannie. Under the agreement with Stern, Fannie reserved the right to review and audit any invoices, even after payment.

Fannie also noted that its servicers might be inclined to pursue "a quick settlement" with the Stern firm, which might not be in the best interest of Fannie.

Servicers, it claims, will have no knowledge of the arbitration case, which is private, but they know that they have a contractual right to seek reimbursement from Fannie for money paid to the Stern firm, Fannie noted. "As such, (servicers) may be less interested than Fannie Mae in pursuing the forensic accounting to determine the damages cause by the Stern firm's conduct," Fannie said in court documents.

In a statement to HousingWire, Fannie said it has "the right and responsibility to protect the interest of Fannie Mae and taxpayers."

New York Investigates Banks’ Role in Financial Crisis  5-17-11

The New York attorney general has requested information and documents in recent weeks from three major Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence of a new investigation into practices that contributed to billions in mortgage losses.

Officials in Eric T. Schneiderman’s office have also requested meetings with representatives from Bank of America, Goldman Sachs and Morgan Stanley, according to people briefed on the matter who were not authorized to speak publicly. The inquiry appears to be quite broad, with the attorney general’s requests for information covering many aspects of the banks’ loan pooling operations. They bundled thousands of home loans into securities that were then sold to investors such as pension funds, mutual funds and insurance companies.

It is unclear which parts of the byzantine securitization process Mr. Schneiderman is focusing on. His spokesman said the attorney general would not comment on the investigation, which is in its early stages.

Rest here

http://www.nytimes.com/2011/05/17/business/17bank.html?_r=1

Appeals Court rules in favor of ratings agencies in securitization cases  5-17-11

The 2nd Circuit Court of Appeals in New York ruled in favor of the nation's largest credit ratings agencies in a recent decision, saying the firms cannot be held liable "as underwriters or control persons" in litigation stemming from the securitization of mortgages.

The case is an important marker for Standard & Poor's, Fitch Ratings and Moody's Investors Service when considering the role the ratings agencies played in the securitization of mortgages has been the subject of much debate.

The circuit court's holding affirmed the findings of the U.S. District Court for the Southern District of New York, which dismissed class-action complaints from several funds that wanted to hold Standard & Poor's, a subsidiary of The McGraw Hill Companies Inc., Moody's and Fitch liable for alleged misstatements and omissions in securities offerings.

The original plaintiffs filed separate suits that were later consolidated and dismissed by the 2nd Circuit. The original plaintiffs included International Union of Operating Engineers-Employers Construction Industry Retirement Trust, the New Jersey Carpenters Health Fund, the Boilermakers-Blacksmith National Pension Trust, the Wyoming State Treasurer and Wyoming Retirement System and Vaszurele Limited.

The plaintiffs alleged the rating agencies violated provisions of securities acts by giving tranches containing mortgage loans triple-A ratings, which generally signifies those batches of securities are the least likely to default, according to court records.

The plaintiffs also claimed ratings agencies are underwriters since they helped structure securities transactions to achieve desired ratings. The 2nd Circuit ruled against this, saying "the plain language of the statute limits liability to persons who participate in the purchase, offer, or sale of securities for distribution. While such participation may be indirect as well as direct, the statute does not reach further to identify as underwriters persons who provide services that facilitate a securities offering, but who do not themselves participate in the statutorily specified distribution-related activities."

Registers of Deeds ask Iowa AG to postpone servicer settlement  5-13-11

Two Registers of Deeds asked Iowa Attorney General Tom Miller Friday to postpone a settlement with the nation's largest mortgage servicers until the cost damage to land records is better understood.

John O'Brien, Register of Deeds of Southern Essex County in Massachusetts, and Jeff Thigpen, Register of Deeds of Guilford County in North Carolina, wrote a letter to the attorney general, stressing the need to appropriately settle terms with servicers based on the amount of damaged practices such as robo-signing caused.

"We need to take a long hard look at the damage that these banks have caused, not only to our economy but also to people's chains of title," O'Brien commented. "There can be no settlement for pennies on the dollar."

Attorney General Miller, who was not available for comment Friday, is leading an investigation by all 50 state attorneys general into the servicing practices that lead to the housing crisis. According to reports this week, a second and less stringent draft of the settlement has been circulating throughout the industry. Miller is maintaining this effort outside the consent orders between the Office of the Comptroller of the Currency, the Federal Reserve, the Office of Thrift Supervision and 14 major servicers.

The OCC reported Friday that it will not make independent reviews required under the consent orders available to the public.

O'Brien believes Mortgage Electronic Registration Systems is to blame for much mortgage fraud surrounding the housing crisis because of "their failure to record documents in the local registry of deeds in order avoid paying billions of dollars in recording fees."

MERS claims O'Brien's statement are unfounded, and attested that all MERS mortgages are recorded in the public land records.

"MERS members pay recording fees when the mortgage is recorded," Janis Smith of MERS said. "The use of MERS is in compliance with the purpose and intent of the state recording acts."

Along with their initial request, O'Brien and Thigpen sent a follow up request to Miller asking for representation and access to settlement talks.

"Why the Registers of Deeds have not been involved in these negotiations is puzzling" according to O'Brien and Thigpen. "We need to bring our knowledge of the land recordation system and consumer's problematic chain of title issues to the table."

Fannie and Freddie unlikely to support principal write-downs  5-13-11

Reducing the principal on troubled mortgages may be a part of a settlement offer proposed by state attorneys general to mortgage servicers, but the industry's largest investors – Fannie Mae and Freddie Mac — say principal reductions are not a part of their plans.

Freddie Mac CEO Charles 'Ed' Haldeman told a crowd at HousingWire's REthink Symposium this week principal write-downs do not make sense for Freddie Mac.

On principal writedowns, Haldeman said the benefit to Freddie Mac would be quite small because its delinquency rate, at 3.6% in the first quarter, is already quite low and far below the national rate of 8.6%.

Fannie Mae had a similar reaction when contacted by HousingWire on the issue of principal write-downs.

"Servicers use a number of tools to get an eligible borrower's mortgage payment down to a level that is affordable and sustainable, including rate reductions, term extensions and principal forbearances," a Fannie Mae spokesman said. "Principal write down is not one of the tools servicers use on Fannie Mae loans."

At the same time, Freddie CEO Ed Haldeman said he favors some type of government backstop in the future mortgage market to help attract private capital, but he's leaving major policy decisions up to government officials and simply focusing on the public-private firm's present-day operations.

The GSEs may not have principal write-downs in their bucket of fix-it tools, but a coalition of state attorneys general recently revised a settlement offer with mortgage servicers who are under investigation for their foreclosure practices and apparently principal write-downs are still an option in those negotiations.

In an interview with HousingWire, a spokesman for Iowa Attorney General Tom Miller said the proposed offer includes a monetary fund that banks would pay into to cover pay-outs to families in the form of restitution or principal reductions on their mortgages.

Reports earlier this week said the AGs dropped their demands for principal reduction from the initial offer, but Miller's office said some families could still receive this type of assistance.

NY Fed takes first step to solve mortgage securitization legal issues  5-13-11

The Federal Reserve Bank of New York met with interested stakeholders recently to address legal questions in the framework for mortgage note transactions.

With the growth in securitization, lenders adjusted business models. Major banks were no longer originating mortgage loans to hold, rather they were writing loans to sell them. Both the note and the mortgage would be sold through the securitization process. The note, according to the N.Y. Fed, is evidence of a promise to repay, and the mortgage securing the loan was often transferred more than once.

Ultimately, the loan and the mortgage end up being owned by an entity created for the purpose of owning many loans with their mortgages, known as pooling. And that entity would then issue rights, or securities, to this pool to investors. These investors would then collect a stream of payments from this pool.

But in a paper the N.Y. Fed released this week, this process requires a method of determining the current owner of each loan and mortgage changing hands. Especially, when it comes time to foreclose on the property.

The banks thought they developed such a solution when they established Mortgage Electronic Registration Systems. The thought was MERS would allow sellers and buyers to follow interests when the loan and mortgage are transferred. Even in some cases, MERS was listed as the mortgagee or as an agent of the initial lender and all of the initial lender's subsequent buyers of the loan and mortgage, the Fed said.

"This division and fractionalization whereby there are entities that are owners of the loan and mortgage, or some part of the loan and mortgage, a servicer for the loan and mortgage, and a named mortgagee that is not necessarily the owner of the loan and mortgage has caused significant confusion," the New York Fed said in the paper.

Reams of state and federal laws that overlap and contradict one another compound the problem. There are state laws that govern the relationship between MERS and the servicer. Others govern the obligation reflected in the loan the mortgage secures. Still more establish requirements for what a mortgage can be, but there are different ones that govern the loan obligation. There are also differing federal and state laws that dictate how payment interests in the mortgage pool are sold.

Hundreds of lawsuits appeared when foreclosures began to mount, challenging the validity of MERS. The company even signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve for shortfalls investigators found in the system. MERS agreed to establish new training and oversight programs as part of the agreements.

But the New York Fed said solutions are on the way. The Uniform Law Commission and the American Law Institute, which facilitated the recent meetings, seek to clarify and update federal and state laws governing the securitization process.

They "have joined forces with various stakeholders, including the Federal Reserve Bank of New York, to deal with the legal complexity and the fact that much of the applicable law no longer adequately reflects modern financial practice and technological developments," the N.Y. Fed said.

The two organizations also drafted a report to guide judges and lawyers involved in the transactions, and, the central bank said, should make the application of present laws more transparent.

The trade groups are also meeting with their members and banks, servicers, brokers, lenders and consumers. They will discuss whether or not to revise the laws or provide regulatory guidance and clarify the documentation and procedures necessary for the process.

NY Fed takes first step to solve mortgage securitization legal issues  5-13-11

The Federal Reserve Bank of New York met with interested stakeholders recently to address legal questions in the framework for mortgage note transactions.

With the growth in securitization, lenders adjusted business models. Major banks were no longer originating mortgage loans to hold, rather they were writing loans to sell them. Both the note and the mortgage would be sold through the securitization process. The note, according to the N.Y. Fed, is evidence of a promise to repay, and the mortgage securing the loan was often transferred more than once.

Ultimately, the loan and the mortgage end up being owned by an entity created for the purpose of owning many loans with their mortgages, known as pooling. And that entity would then issue rights, or securities, to this pool to investors. These investors would then collect a stream of payments from this pool.

But in a paper the N.Y. Fed released this week, this process requires a method of determining the current owner of each loan and mortgage changing hands. Especially, when it comes time to foreclose on the property.

The banks thought they developed such a solution when they established Mortgage Electronic Registration Systems. The thought was MERS would allow sellers and buyers to follow interests when the loan and mortgage are transferred. Even in some cases, MERS was listed as the mortgagee or as an agent of the initial lender and all of the initial lender's subsequent buyers of the loan and mortgage, the Fed said.

"This division and fractionalization whereby there are entities that are owners of the loan and mortgage, or some part of the loan and mortgage, a servicer for the loan and mortgage, and a named mortgagee that is not necessarily the owner of the loan and mortgage has caused significant confusion," the New York Fed said in the paper.

Reams of state and federal laws that overlap and contradict one another compound the problem. There are state laws that govern the relationship between MERS and the servicer. Others govern the obligation reflected in the loan the mortgage secures. Still more establish requirements for what a mortgage can be, but there are different ones that govern the loan obligation. There are also differing federal and state laws that dictate how payment interests in the mortgage pool are sold.

Hundreds of lawsuits appeared when foreclosures began to mount, challenging the validity of MERS. The company even signed consent orders with the Office of the Comptroller of the Currency and the Federal Reserve for shortfalls investigators found in the system. MERS agreed to establish new training and oversight programs as part of the agreements.

But the New York Fed said solutions are on the way. The Uniform Law Commission and the American Law Institute, which facilitated the recent meetings, seek to clarify and update federal and state laws governing the securitization process.

They "have joined forces with various stakeholders, including the Federal Reserve Bank of New York, to deal with the legal complexity and the fact that much of the applicable law no longer adequately reflects modern financial practice and technological developments," the N.Y. Fed said.

The two organizations also drafted a report to guide judges and lawyers involved in the transactions, and, the central bank said, should make the application of present laws more transparent.

The trade groups are also meeting with their members and banks, servicers, brokers, lenders and consumers. They will discuss whether or not to revise the laws or provide regulatory guidance and clarify the documentation and procedures necessary for the process.

"The New York Fed is committed to addressing these issues and will continue to work on identifying potential changes to the legal framework which will better serve the needs of those who are subject to it," said Thomas Baxter, general counsel at the New York Fed.

Tip from Palm Beach Gardens woman spurs wide search for papers 'Linda Green’ OK’d  5-13-11

Officials from several states are pulling court documents bearing the name of the now infamous robo-signer Linda Green following a 60 Minutes exposé on foreclosure fraud that featured a Palm Beach County homeowner.

In Michigan, Massachusetts and North Carolina registers of deeds have combed through filings looking for Green, documenting irregularities in signatures and forwarding their findings to law enforcement, federal regulators and attorneys general.

In Palm Beach County, a spokeswoman for Clerk of Court Sharon Bock said the Linda Green issue does not fall under "our purview to investigate or take action."

"The clerk does not have authority under the statute to question the validity of a signature on a document presented for recording," said spokeswoman Julie Nicholas.

"It is the role of the home­owners and/or attorneys representing homeowners to raise any legal issues that they believe may assist a home­owner in a foreclosure case."

Palm Beach Gardens home­owner Lynn Szymoniak was featured on 60 Minutes on April 3 after uncovering the Linda Green issue in researching her foreclosure.

Green, a former employee of a now-defunct document processing company, signed papers as vice president of at least 14 banks and mortgage companies.

Green's co-workers also acknowledged in interviews with 60 Minutes that they were paid $10 an hour to sign Green's name.

Rest here

http://www.palmbeachpost.com/money/foreclosures/tip-from-palm-beach-gardens-woman-spurs-wide-1472760.html

Obama Calls for More Modifications and Principal Reductions  5-13-11

... Calling housing "the biggest headwind on the economy right now," Obama broached two relatively new ideas for the White House: Longer-term mortgage modifications and principal reductions "in some cases."

Both ideas would require Congress to pass laws to force the banks to cooperate.

"If we were there for you [banks] when you got into trouble, then you've got to be there for the American people when they're having a tough time," Obama said during the CBS program which was taped on Wednesday. ...

Please read the full article on CNNMoney.com

H&R Block Faces $12.8bn in Repurchases for Option One Loans  5-13-11

... Three investors that have hired Franklin this week began seeking to rally members of his firm’s RMBS Investors Clearing House to push for repurchases of mortgages that failed to meet Option One’s contractual promises about their quality. H&R Block may face a maximum liability of $12.8 billion from mortgage repurchases, RBS Securities Inc. analysts estimated in an October report, based on data about delinquency and loss rates on its loans.

“It is possible as with any case that legitimate demands for recovery could exceed available funds,” Franklin said. “However, sources of recovery may exist beyond Option One,” including insurers, mortgage guarantors and its parent, he said. ...

Please read the full article on Bloomberg

FDIC’s Bair Says Millions of Mortgages May Be “Infected,” Criticizes Consent Orders   5-12-11

We’ve said repeatedly that findings of the multi-agency Foreclosure Task Force review late last fall, which looked at 2,800 mortgages from 14 servicers, was a worse than stress test type review, with a deliberately narrow focus designed to find very little wrong.

One of its remarkable findings was that that banks were on solid grounds in foreclosing, both in the borrower owing the money (which would inevitably be the finding given the failure to investigate servicer-driven foreclosures) and that banks were able to find the borrowers’ notes, which was taken to be tantamount to them having the legal authority to foreclose. Anyone who has been following this issue here or on specialist legal blogs knows that mere possession of the note is often a not sufficient threshold for successful action if the foreclosure is challenged.

In a gratifying show of candor and independence (or perhaps because she recognizes that the facts on the grounds make the Administration/banking industry party line untenable) Bair took exception to the “nothing to see here” stance of the officialdom and took exception to the findings of the Foreclosure Task Force in Congressional testimony earlier today.

From the Wall Street Journal:

The head of the Federal Deposit Insurance Corp. is warning that flaws may have “infected millions of foreclosures” and questioned whether other regulators’ inquiries into problems at the nation’s mortgage-servicing companies have been thorough enough.

“We do not yet really know the full extent of the problem,” FDIC Chairman Sheila Bair said Thursday in written remarks submitted to a hearing of the Senate Banking Committee. “Flawed mortgage-banking processes have potentially infected millions of foreclosures, and the damages to be assessed against these operations could be significant and take years to materialize.”

Rest here

http://www.nakedcapitalism.com/2011/05/fdics-bair-says-millions-of-mortgages-may-be-infected-criticizes-consent-orders.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Fighting the bank and winning: How these homeowners did it  5-12-11

Stories of homeowners who feel mistreated by their banks are commonplace these days. Hundreds of thousands of people are underwater and behind on their mortgages. As they seek loan modifications or other solutions, they tell of hours on hold, never speaking to the same person twice, reams of lost paperwork and rejections for reasons they don't understand.

Some homeowners actually do get workable solutions, most commonly loan modifications to reduce their payments. Some outlier cases get even more unusual outcomes. Whether it's getting a foreclosure rescinded or reducing the amount owed on a second loan, the odysseys of people who successfully negotiated with their banks provide tips that may help others in similar situations.

Refinance goes awry

All that Brad and Joan Zetterlund wanted was to refinance the mortgage on the home they had owned for 16 years. Instead, they ended up having their Pleasanton four-bedroom Colonial sold in a foreclosure auction at the courthouse steps, even though they had plenty of equity and the means to make their monthly payments.

After months of fighting and pleading with their bank, the couple were able to have the foreclosure rescinded earlier this year.

A couple of years ago they owed $400,000 on a home then worth $700,000. They applied for a refinance of their adjustable mortgage to their lender, Countrywide. The application moved slowly, and then Countrywide was sold to Bank of America. BofA evidently turned their refi application into a loan modification request early last year. Not even sure what a loan mod was, they hired an attorney.

Read more: http://www.seattlepi.com/realestate/article/Fighting-the-bank-and-winning-How-these-1375480.php#ixzz1MHsKWK3n

The Servicing Fraud Settlement: the Real Game   5-12-11

Warning: This is a long blog post. But if you follow mortgage servicing, I think you’ll find it worth reading. Despite lots and lots of media coverage of the servicing fraud settlement, nobody seems to understand the real story that's going on. I think that this post will explain a lot.

Let's start by recapping what we know.  Back in March we started hearing media reports of a proposed penalty for servicers in the $20-$30B range.  Then the American Banker published a 27-page term sheet from the AGs for servicing standards. Next, Huffington Post published a 7-page CFPB powerpoint presentation. Then came the draft C&D orders and then in April, the final C&D orders (which eliminated the ridiculous "single point of contact which need not be a single person" and replaced it with "single point of contact as hereinafter defined" and then failed—quite deliberately—to define it anywhere in the document).

Now there’s another round of activity and conflicting reporting. The American Banker reported that there was a new AG term sheet proposed and that principal reductions were off the table. That turns out to be incorrect, as Shahien Nasiripour reported in the Huffington Post. The new AG term sheet that the American Banker referenced deals only with servicing standards. The American Banker assumed that this mean that principal reductions were off the table because they weren’t referenced in the term sheet. In fact they are still very much in play. They’re just in a second, separate term sheet. So now there are two separate term sheets--one covering servicing standard and another covering monetary issues/principal reductions. (Recall that the original AG term sheet did not cover the monetary issues—that was clearly for a separate document.) We are also hearing news reports that the banks are offering to settle for $5B and won’t go above $10B.

So how do we make sense out of all of this?

REST HERE

http://www.creditslips.org/creditslips/2011/05/the-servicing-fraud-settlement-the-real-game.html

Foreclosures still haunt California; S.J. is No. 3, 5-12-11

Stanislaus and San Joaquin counties in April continued to post among the highest foreclosure rates among major metropolitan areas in the country, RealtyTrac Inc. is reporting today.

One of every 136 Stanislaus housing units was subject to a default notice, scheduled auction or bank repossession on average in April, while the rate in San Joaquin County was one of every 138 housing units, ranking them No. 2 and 3 among the nation's 200 largest metro areas. Only Las Vegas, with one of every 82 housing units affected by a foreclosure filing (more than seven times the national average), was higher.

While foreclosures remain high in San Joaquin County, they are down year over year, RealtyTrac spokesman Daren Blomquist noted.

The county tallied 1,663 filings in April, up 2 percent from 1,630 foreclosure actions in March but down more than 21 percent from April 2010, when 2,111 filings were recorded. Blomquist said April was the 19th straight month that foreclosure actions in San Joaquin County had dropped.

REST HERE

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20110512/A_BIZ/105120316/-1/NEWSMAP

BofA, JPMorgan, in Court News  5-12-11

Bank of America Corp. (BAC) and JPMorgan Chase & Co., along with three other U.S. mortgage servicers, proposed paying $5 billion to settle a probe of their foreclosure practices by state and federal officials, two people familiar with the matter said.

The proposal made by banks yesterday during settlement talks in Washington came after state attorneys general and federal officials offered revised settlement terms and a proposal for banks to fund principal writedowns for homeowners.

The probe by all 50 states was triggered by claims of faulty foreclosure practices after the housing collapse, which state officials said may violate their laws. The original settlement proposal offered by states and federal agencies drew criticism from banks and Republican attorneys general opposed to a deal that would reduce principal amounts for borrowers.

In a new proposal, officials called for a fund, administered by state and federal officials, that would in part pay for principal writedowns, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller. Miller, a Democrat, is leading the negotiations for the states. Attorneys general haven’t made a proposal for a monetary payment by the banks, he said.

State and federal officials have been negotiating with the mortgage servicers, which also include Citigroup Inc., Wells Fargo & Co. (WFC) and Ally Financial Inc. Miller has said the five companies service 59 percent of U.S. home loans.

Rick Simon, a spokesman for Charlotte, North Carolina-based Bank of America, didn’t return a call seeking comment after regular business hours yesterday. Teri Schrettenbrunner of San Francisco-based Wells Fargo and Mark Rodgers, a spokesman for New York-based Citigroup, didn’t return e-mails seeking comment.

Gina Proia, a spokeswoman for Detroit-based Ally Financial, and New York-based JPMorgan Chase spokesman Thomas Kelly, declined to comment.

Hong Kong securities watchdog fines Bank of America-Merrill Lynch unit over client sales  5-12-11

HONG KONG — Hong Kong’s securities watchdog said Thursday it fined a unit of Bank of America Corp. 3 million Hong Kong dollars ($386,000) over the sales of some financial products to clients in 2007.

The Securities and Futures Commission said Thursday it also issued a reprimand to Merrill Lynch (Asia Pacific) Ltd. over the sales of the index-linked notes to 72 clients.

The SFC said an investigation found Merrill Lynch failed to “properly assess the financial situation and investment objectives” of 40 clients.

The watchdog was also concerned that key product information wasn’t given to clients until after they had agreed to invest.

The company has agreed to buy back the notes from clients who still own them or make top-up payments to those who redeemed them for less than they invested. A total of $3.7 million will be spent on buying back the notes, which are structured investment products linked to Japanese stock indexes.

Merrill Lynch declined comment. It was bought by Bank of America in 2009.

Regulators Inch Forward on Investigations, Settlements of Dubious CDO Dealings  5-12-11

Regulators and prosecutors have been notoriously slow [1]at taking action against the dubious dealings during the financial crisis, but it seems they’ve inching forward on investigations of certain mortgage-backed securities deals bundled, packaged, and sold by major financial firms.

As Bloomberg has reported, JPMorgan said in regulatory filings that it is in “advanced” talks with regulators to resolve investigations of its CDO deals [2]. And Goldman Sachs—which paid $550 million last year [3] to settle a Securities and Exchange Commission lawsuit over a CDO deal called Abacus—also said in filings [4] that it’s still being scrutinized for that deal as well as others.

Which other Goldman CDOs have caught the attention of regulators? The language in the filing [5] is pretty vague:

Group Inc. and certain of its affiliates have received subpoenas and requests for information from other regulators, regarding CDO offerings, including the ABACUS 2007-AC1 transaction, and related matters.

It’s worth noting that Goldman has been publicly criticized for some of its other CDO deals aside from Abacus. One such deal is Timberwolf, which a senior Goldman executive [6] once referred to in an email as a “shitty deal”—a phrase that was repeatedly quoted by Sen. Carl Levin in a Senate hearing last April.

REST HERE

http://www.propublica.org/blog/item/regulators-inch-forward-on-investigations-settlements-of-dubious-cdo-dealin

No Jail for Economic Crisis May Mean No Crime: Roger Lowenstein  5-12-11

“Forgive me,” began Charles Ferguson, the director of “Inside Job,” while accepting his 2011 Oscar for best documentary. “I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that’s wrong.”

The audience erupted in applause.

Ferguson isn’t the first to express outrage over the lack of criminal cases to spring from the financial crisis, and his speech triggered a wave of similarly prosecutorial sentiments, Bloomberg Businessweek reports in May 16 issue.

Since that February night, financial journalists, bloggers and who knows how many dinner party guests have debated the trillion-dollar question: When will a Wall Street executive be sent to jail?

There are those who have implied that prosecutors are either too cozy with Wall Street or too incompetent to bring cases to court.

Thus, in a measured piece that assessed the guilt of various financial executives, New York Times columnist Joe Nocera lamented that “Wall Street bigwigs whose firms took unconscionable risks . . . aren’t even on Justice’s radar screen.”

A news story in the Times about a mortgage executive who was convicted of criminal fraud observed, “The Justice Department has yet to bring charges against an executive who ran a major Wall Street firm leading up to the disaster.”

REST HERE

http://www.bloomberg.com/news/2011-05-12/no-jail-for-economic-crisis-may-mean-no-crime-roger-lowenstein.html

Merscorp Electronic Mortgage Registry Is Sued Over Michigan Foreclosures  5-11-11

Mortgage Electronic Registration Systems Inc. “illegally prosecuted” non-judicial foreclosures in Michigan and owes more than $100 million to people who lost their homes, lawyers for three homeowners said in a lawsuit.

The homeowners said Merscorp Inc.’s MERS, which runs an electronic registry of mortgages, used Michigan’s so-called foreclosure by advertisement process illegally and “misappropriated” their homes. Any foreclosures by MERS using this process in Michigan should be voided, they said in their complaint filed in federal court in Detroit.

Michigan is one of 27 states where banks don’t have to get a court’s permission to seize a property, meaning homeowners have to bring their own lawsuit to halt a foreclosure. Michigan law lets mortgage lenders or servicers foreclose after advertising a default in a newspaper for four consecutive weeks.

MERS “lacked the authority to foreclose by advertisement” because it didn’t own or have any interest in the underlying debt and “was not the servicing agent of the mortgage,” Maryla Depauw and Sharon and Terrance Lafrance, the homeowners said, in their complaint filed yesterday. MERS “knowingly, fraudulently and illegally” foreclosed on homes for years using a law it “had no authority or right to utilize,” they claim.

MERS is required to take foreclosures to court, their lawyers said, citing an April 21 decision by Michigan’s Court of Appeals. The decision, which voided two property seizures, said state law requires a foreclosing party to own the legal title to the debt.

Janis Smith, a Merscorp spokeswoman, didn’t immediately return a call seeking comment today.

REST HERE

http://www.bloomberg.com/news/2011-05-10/merscorp-mortgage-registry-sued-over-non-judicial-foreclosures-in-michigan.html

Why CEOs Get a "Get Out of Jail Free" Card  5-11-11

... In the Texas “Rent-a-Bank” scandal of the 1970s, for example, two ringleaders created a fraud network of 50 lenders that caused billions of dollars in losses. The watchdogs removed and sanctioned one of the main culprits, but because the crimes weren’t prosecuted, the same crooks reappeared in the 1980s to do it all over again, only on a bigger scale. Unless you imprison the fraudsters, sophisticated financial scams grow ever more destructive.

It seems as if we have forgotten this lesson.

Take the seven senior officials convicted in the failure of one of the lenders that drove the 2008 credit crunch. All of the cases arose from an investigation of Taylor Bean & Whitaker Mortgage Corp. The first trial occurred last month -- 6 1/2 years after the Federal Bureau of Investigation warned publicly that there was an “epidemic” of mortgage fraud and predicted that it would cause a financial crisis if it weren’t contained. The trial and conviction of Taylor Bean’s former chairman, Lee Farkas, occurred nine years after his crimes were suspected.

Taylor Bean was a small Florida mortgage broker before the fraud began as the housing boom took off. Fannie Mae had cited Farkas for multiple violations, but never filed a criminal referral, which would have triggered an investigation. Had it done so, Farkas might have been prosecuted and Taylor Bean shut long before it caused so much damage. Instead, it expanded, then failed, pulling down a bank with it at a cost of $2.8 billion to the Federal Deposit Insurance Corp. Farkas plans to appeal the verdict. ...

Please read the full article on Bloomberg

Attorneys General in Settlement Talks with Mortgage Servicers 5-11-11

State attorneys general are holding meetings with the nation’s largest mortgage servicers this week to negotiate a settlement agreement for the robo-signing issues that surfaced last fall.
The most controversial piece of the AGs initial proposal – mandated principal write-downs – has reportedly been dropped from the discussions.

The primary issue now is the amount of fines to be levied, which according to a Washington Post report, the states want to use to help struggling homeowners avoid foreclosure.

The paper says one option being floated is to distribute the penalty money to various state-run programs, including mediation initiatives and foreclosure prevention hotlines.

A separate report by American Banker says attorneys general are considering using the money to start a “cash for keys” program to help delinquent borrowers relocate while speeding up the foreclosure process.

Speculation on the combined fine amount ranges from $5 billion to $20 billion.

The latter was the sum widely reported to be part of the initial settlement terms proposed by the states back in early March and still the figure to hit in the minds of some state counsels.

However, the Wall Street Journal reports that servicers say they are only willing to pay up to $5 billion.

Beyond the penalties expected, Bloomberg, citing “people familiar with the talks,” says the AGs’ revised settlement proposal reflects earlier discussions with servicers, in which they said they are open to other types of loan modifications, including changing interest payments, but will not agree to a principal write-down plan.

Federal agencies, including HUD and the Department of Justice, are reportedly taking part in the attorneys general’s settlement negotiations.

However, the primary federal banking regulators – including the Office of the Comptroller of the Currency (OCC), Federal Reserve, and the Office of Thrift Supervision (OTS), with the support of the FDIC – broke ranks last month to pursue their own deal with the servicers. Consent orders were handed down outlining reforms for handling foreclosures and loss mitigation efforts.

At the time, no monetary sanctions were announced, but the regulators said they do plan to impose penalties at a later date.

FDIC Filed Suit Against Lender Processing Services for $154 Million   5-11-11

Ooh, this is getting fun. Peter W found this tidbit in the May 10 Lender Processing Services 8K:

The Federal Deposit Insurance Corporation, in its capacity as Receiver for Washington Mutual Bank, filed a complaint on May 9, in the U.S. District Court for the Central District of California to recover alleged losses of approximately $154,519,000. The FDIC contends these losses were a direct and proximate result of the defendants’ alleged breach of contract with WAMU and alleged gross negligence of the defendants with respect to the provision of certain services by LPS’s subsidiary LSI Appraisal, an appraisal management company. In particular, the FDIC claims that the services provided failed to conform with federal and state law, regulatory guidelines and other industry standards, including specifically the provisions of the Uniform Standards of Professional Appraisal Practice. LPS previously described the possibility of this suit in its Form 10-Q filed May 5. In its complaint, the FDIC cites, as the cause of the damages claimed, 220 appraisals performed between June 2006 and May 2008. However, for more than 75% of the appraisals identified by the FDIC, LSI was contracted only to provide reviews of appraisals, not to conduct the initial, full appraisals. For these properties, the full appraisals were provided by other entities, unrelated to LSI. For all appraisals subject to this complaint, LPS believes there is no basis for a claim that LSI engaged in “gross negligence” or breach of contract related to these appraisal services.

Let us state the obvious: LPS is not set up to do anything on a one-off basis. If the FDIC’s case pans out with WaMu, you can rest assured that other parties have grounds for similar litigation.

Hawaii Passes U.S. Toughest Foreclosure Law(COME ON CALIFORNIA)  5-10-11

Hawaii lawmakers followed hard hit Nevada to become only the second state in the nation to approve one of the toughest foreclosure consumer aid laws in the U.S., passing the bill as the legislature closed its latest session.

Senate Bill 651 is touted as a windfall for consumers, requiring mortgage lenders to conduct mitigation with loan borrowers who feel they are being dealt with unfairly. Roughly 30 legislative proposals were made during the session by state lawmakers trying to come up with a solution for the foreclosure crisis in Hawaii.

Community out-reach organizations, including Faith Action for Community Equity lobbied for the law to be adopted as banks and mortgage companies opposed the legislation, which affects mortgages that are handled through non-judicial foreclosure laws in the Aloha-state.

“Amazing job on this bill and your fight will inspire other groups across the country,” California Faith Action organizer Adam Kruggel told the Hawaii group. The new law, modeled after a similar state law in Nevada is intended to have lenders and homeowners work out a compromise on a mortgage modification.

Mitigation will be held in front of a court appointed mediator before any home or other real estate foreclosure can be finalized and officially repossessed by lenders. The law is a clear indication that the foreclosure crisis has impacted the state widely and came about after thousands of Hawaii homeowners complained to lawmakers and bankers that they are being dealt with unfairly by mortgage servicing companies and bankers.

REST HERE

http://www.housingpredictor.com/2011/foreclosure-law.html

Protesters will target Bank of America loan issues  5-11-11

Demonstrators at Bank of America Corp.'s annual meeting today plan to highlight an investigation that found thousands of questionable loan documents filed in Guilford County.

The county's register of deeds, Jeff Thigpen, said last week his office found about 4,500 documents that carried apparently fraudulent signatures. The banks involved included Bank of America and Wells Fargo & Co.

Gerald Taylor, leader of a coalition of religious leaders called N.C. United Power, said the findings will be part of a protest outside and inside the bank's shareholder meeting in Charlotte. The group has been targeting the Charlotte-based bank's handling of foreclosures.

"If you have 4,500 documents in Guilford County, we believe there are hundreds of thousands around North Carolina and the country," Taylor said. "We are calling for other recording clerks to do a similar investigation."

Read more: http://www.charlotteobserver.com/2011/05/11/2287367/protesters-will-target-loan-issues.html#ixzz1MHmpl5I7

They are awakening... MSNBC Foreclosure Crisis Reports You can view/read the main text article for the special report here:

 http://www.msnbc.msn.com/id/42881365/ns/business-personal_finance/

 Foreclosure Crisis: The Mortgage Loan Modification Trap http://www.msnbc.msn.com/id/21134540/vp/42938007#42938007

 Foreclosure Crisis: The Whistleblowers http://www.msnbc.msn.com/id/21134540/vp/42938009#42938009

 Foreclosure Crisis: Manufactured Loan Documents http://www.msnbc.msn.com/id/21134540/vp/42938017#42938017

F.D.I.C. Chairwoman to Leave in July  5-9-11

Sheila C. Bair, one of the top banking regulators during the financial crisis, said on Monday that she was planning to step down as chairwoman of the Federal Deposit Insurance Corporation on July 8.

Ms. Bair presided over the agency during perhaps its most challenging period, sounding early alarms over the nation’s worsening mortgage problems during the housing boom. She helped orchestrate the rescues and seizures of hundreds of troubled banks when the markets collapsed. She has also been a fierce advocate of a controversial federal loan modification program, and a prominent voice on the need to rein in too-big-to-fail banks.

Ms. Bair, a Bush administration appointee who was named the F.D.I.C. chairwoman in 2006, had been openly discussing her plans to step down when her term expires this summer for more than a year. Martin Gruenberg, the F.D.I.C.’s vice chairman, is widely expected to replace her, although he will need to be confirmed by the Senate first.

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http://www.nytimes.com/2011/05/10/business/10bair.html?_r=1&nl=afternoonupdate&emc=aua22

Half of Fannie Mae mortgages registered in MERS name  5-9-11

Roughly half of the mortgages owned or guaranteed by Fannie Mae are registered in the Mortgage Electronic Registration Systems name, according to a filing by the government-sponsored enterprise last week.

Fannie's guaranty book of business totaled $2.9 trillion at the end of the first quarter, meaning about $1.45 trillion of loans are registered in MERS' name. The connection, Fannie said, poses a significant risk.

Privately held MERS, which was built by the GSEs and the nation's major lenders in the 1990s, is an electronic registry that tracks servicing rights and ownership of loans from origination through securitization. MERS serves as a nominee for the owner of a mortgage and therefore becomes the mortgagee of record for the loan in local land records.

Along with other organizations in the mortgage finance industry, Fannie Mae is a shareholder in Reston, Va.-based Merscorp Inc., the parent company.

Several legal challenges emerged during the foreclosure crisis, finding holes in the system that includes mishandled securitization transfers and foreclosure affidavits. Fannie, Freddie Mac and a few other lenders prohibited its servicers from initiating foreclosures in MERS' name, guidance MERS also issued to its members.

"These challenges could negatively affect MERS' ability to serve as the mortgagee of record in some jurisdictions," Fannie said in its quarterly filing with the Securities and Exchange Commission. "Failures by MERS to apply prudent and effective process controls and to comply with legal and other requirements could pose counterparty, operational, reputational and legal risks for us."

Federal regulators found several problems in the MERS system during their investigation last year. The company did not invest enough resources, staff or training to properly handle rising caseloads and failed to implement the needed oversight, according to a study. MERS signed consent orders with regulators in April pledging to make corrections.

But the real risks to Fannie come from potential new rules regulators or lawmakers may enact. Foreclosure costs increased dramatically in the first quarter as home values continued to fall, pushing loss severities at the already struggling mortgage giant up higher.

"If investigations or new regulation or legislation restricts servicers’ use of MERS, our counterparties may be required to record all mortgage transfers in land records, incurring additional costs and time in the recordation process," Fannie said in its filing.

In Fine Print, Banks Require Struggling Homeowners to Waive Rights 5-9-11

A few months ago, Bank of America offered Sergio Cortez of Staten Island, N.Y., the help he desperately needed to stay in his home: a break on his mortgage. Like millions of others, he was facing foreclosure. But there was a catch buried in the fine print. Cortez had to waive any possibility of ever suing the bank for anything relating to the loan.

Cortez isn't alone. While regulators have banned the practice, some banks and others who handle mortgages have still been forcing homeowners into a corner: You want a chance at saving your home? Then you'll have to waive your rights.

"It's just unfair," said Jane Azia, director of consumer protection for the New York State Banking Department. "It puts borrowers in a very vulnerable situation."

We identified eight banks and other mortgage servicers who offer help that limits homeowners' ability to sue or fight foreclosure. When we contacted them, they offered a variety of responses. Some said the inclusion of the waivers had been a mistake and would stop. Some argued that language that seemed to waive the homeowner's rights didn't actually do so. One argued that a loophole in a rule barring the practice meant their inclusion in certain agreements was proper.

Rest here

http://www.propublica.org/article/in-fine-print-banks-require-struggling-homeowners-to-waive-rights

North Carolina Appellate Decision Raises New Chain of Title Issue   5-9-11

A potentially important North Carolina appeals court case, In re Gilbert, has not gotten the attention it warrants.

In very short form, the borrowers, who were unable to obtain a loan modification, tried to halt a foreclosure by arguing that the lenders had failed to make required disclosures under the Truth in Lending Act (which they hoped would allow for recission of the loan, and that the party seeking to foreclose had not proved that it was the holder of the Note with the right to foreclose under the instrument. The judges nixed the TILA argument, affirming lower court decisions, but reversed the superior court on the question of the standing of the petitioner.

In Re Gilbert May 3, 2011 North Carolina Appeals Court Decision

What is interesting is the logic of the decision, which blows a hole in one of the pet arguments of the American Securitization Forum, that possession of a note will suffice. We have argued that the contracts that govern the securitization, the pooling and servicing agreement, sets the requirements for conveyance as is contemplated in the Uniform Commercial Code (its Article 1 allows for parties to make their own arrangements as long as certain conditions are met). But if the parties to a case do not argue that the PSA trumps the UCC (and many do not), most judges will reason from the UCC, and securitization attorneys have blithely assumed this will get them out of trouble. This is the position asserted in the ASF’s white paper last fall:

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http://www.nakedcapitalism.com/2011/05/north-carolina-appellate-decision-raises-new-chain-of-title-issue.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

A New Zombie Lumbers On: The Mortgage Settlement Negotiations   5-8-11

The kindest thing that can be said about the 50 state attorneys’ general negotiations over foreclosure abuses is that it is increasingly obvious that there will not be a deal. The leader of the effort, Iowa’s Tom Miller, has completely botched the effort. There was no way to have any negotiating leverage with intransigent banks in the absence of investigations. Miller has changed his story enough times on this and other fronts so as to have no credibility left. But whether there were no investigations (as other AGs maintain) or whether they did some (as Miller, contrary to a staffer’s remarks, now insists), they were clearly inadequate.

We’ve found the rumor, that Miller was angling to head the Consumer Financial Protection Bureau, credible. It would explain his unduly cozy relationship with Federal banking regulators, as well as his efforts to wrap up negotiations quickly, which reduced what little bargaining power he had (time pressure means a party that drags its feet can extract concessions).

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http://www.nakedcapitalism.com/2011/05/a-new-zombie-lumbers-on-the-mortgage-settlement-negotiations.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Court looks at status of foreclosures handled by Stern office  5-7-11

The ninth floor of the Palm Beach County courthouse was thick with attorneys Friday as the first case management hearings to determine the status of thousands of former David J. Stern foreclosures began.

Lawyers for the banks, lawyers for the homeowners, and even lawyers handling the transfer of files from Stern's firm to new firms huddled around a large easel set up outside Circuit Court Judge Meenu Sasser's courtroom.

About 500 hearings were set for Friday, and despite a bit of chaos as people searched for their file numbers on the easel, operations inside the courtroom ran mostly smoothly.

If homeowners hoped foreclosures would be dismissed because no one would appear to represent the banks, they were disappointed.

"I didn't think they would be this organized," said Boca Raton foreclosure defense attorney Ron Kaniuk, of Ricardo, Wasylik & Kaniuk. "I thought we'd have more dismissals."

The collapse of the Law Offices of David J. Stern in Plantation, once the largest "foreclosure mill" in Florida, left 100,000 cases statewide in question, including nearly 9,000 in Palm Beach County.

Stern told judges earlier this year he would shut down his foreclosure practice after losing most of his business in the fall when he was fired by federal mortgage backers Fannie Mae and Freddie Mac.

After laying off much of his staff, he said he no longer had the manpower to officially withdraw from cases as required by Florida's rules of civil procedure.

To deal with the cases, Palm Beach County Chief Judge Peter Blanc set the case management hearings, saying in March, "We're going to test the water and see who shows up."

On Friday, two attorneys representing Stern's firm sat at a table behind several stacks of foreclosure paperwork as thick as phone books.

Rest here

http://www.sun-sentinel.com/business/pb-stern-foreclosure-cases-hearing-20110506,0,7219460.story

If Mortgage Fraud Was Rampant, Why Aren't Criminal Charges?  5-7-11

Federal officials this week revealed alleged fraud on a massive scale at Deutsche Bank (DB: 42.23, -0.94, -2.18%) and its MortgageIT unit, but once again they have refrained from using their most potent weapon: criminal charges.

The civil complaint filed by the U.S. accuses the German banking titan and its subsidiary of defrauding the government of up to $1.27 billion by engaging in reckless lending practices, lying about certain low-income mortgages and turning a blind eye to red flags.

Yet by choosing to bring a civil case, instead of a criminal one, the feds have assured that more alleged fraud on Wall Street during the housing bubble will be met with fines rather than more serious sanctions. 

The reasons for the reluctance to charge Deutsche Bank or its employees with criminal charges are diverse, but likely come down to the higher burden of proof and collateral damage that go hand-in-hand with criminal charges.

“Firms can do significant damage to themselves, to taxpayers and their customers without committing crimes. Negligence, recklessness and stupidity can go a long way,” said Dan Richman, a law professor at Columbia.

Read more: http://www.foxbusiness.com/industries/2011/05/05/fraud-claims-grow-feds-forgo-criminal-charges/#ixzz1LtcUB0ZB

Wells warns of higher foreclosure suit costs  4-7-11

(Reuters) - Wells Fargo & Co (WFC.N) on Friday raised its worst-case estimate for litigation losses by 42 percent to $1.7 billion because of its exposure to foreclosure-related legal issues.

The San Francisco-based bank's latest loss projection, disclosed in its first-quarter financial report filed with the Securities and Exchange Commission, increased by $500 million from $1.2 billion in the previous quarter.

A company spokeswoman said the increase was due to foreclosure-related matters. She declined to elaborate.

Wells Fargo said in the filing it does not expect these losses to hurt the bank's financial position. But it acknowledged that unexpected developments "if unfavorable, may be material to Wells Fargo's results."

The disclosure is the latest by a large U.S. mortgage lender that the costs associated with foreclosure litigation are rising.

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http://www.reuters.com/article/2011/05/06/us-wellsfargo-idUSTRE7453KA20110506

Real Housewives of Orange County star Peggy Tanous faces foreclosure on $1.3m mansion  5-7-11

On her hit reality show, Peggy Tanous seems to have it all and is described as a 'wealthy Orange County party girl'.

But the stay at home mother-of-two is facing losing her million dollar home to foreclosure.

The Real Housewives of Orange County star is in dispute with three banks to try and keep her $1.3million home in Irvine, California.

BAC Home Loans Servicing, U.S. Bank National and PNC Mortgage are trying bring the home into foreclosure and have Tanous and her family removed - but the former model has hit back with a lawsuit.

Tanous, 41, is claiming that the banks did not honour a loan modification agreement she says she had with them.

She and her internet entrepreneur husband Micah made payments on time for two years after buying the property in 2006.

But they started to experience financial trouble and fell behind on their payments.

Read more: http://www.dailymail.co.uk/tvshowbiz/article-1384424/Real-Housewives-Orange-County-star-Peggy-Tanous-faces-foreclosure-1-3m-mansion.html#ixzz1LtXHaa6u

Firms With Pillar Ties Get Subpoena   5-6-11

New York Attorney General Eric Schneiderman has issued subpoenas to two investment firms that own stakes in a paperwork-processing firm under investigation regarding questionable foreclosure practices, according to people familiar with the situation.

Mr. Schneiderman, who took office in January, recently sought information from Tailwind Capital and Ares Capital Corp., these people said. The subpoenas are "very thorough" and "broad-ranging," said one person familiar the matter, who declined to be more specific.

Recipients of subpoenas must produce testimony or documents, typically sought as part of an investigation. Mr. Schneiderman's move is a sign that investment ...

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http://online.wsj.com/article/SB10001424052748704740604576301370056617698.html

JPMorgan Said to Face SEC Subpoena Along With Credit Suisse  5-6-11

JPMorgan Chase & Co. (JPM) received a subpoena from the U.S. Securities and Exchange Commission over failed mortgages, a person familiar with the investigation said, as the agency probes banks including Credit Suisse Group AG (CS) for allegedly failing to share refunds from sellers of faulty debt.

Credit Suisse received a subpoena from the SEC last week, bond insurer MBIA Insurance Corp. said in a filing yesterday in a lawsuit against three of that Zurich-based bank’s units. The agency asked New York-based JPMorgan for information after a court in January unsealed allegations made about Bear Stearns Cos.’ practices in another suit, said the person, who declined to be identified because the matter isn’t public.

U.S. investigators have been scrutinizing companies involved in the mortgage business after the worst collapse in home prices since the Great Depression.

Bond insurers MBIA and Ambac Assurance Corp. have said Credit Suisse and Bear Stearns, which JPMorgan bought in 2008, demanded refunds from originators that sold the banks the loans that they packaged into bonds, and then failed to use those settlement amounts to fulfill their own contractual promises on the debt.

“We’re really starting to finally get into evidence that suggests blatant fraud,” said Isaac Gradman, a San Francisco- based litigation consultant and formerly a lawyer at Howard Rice Nemerovski Canady Falk & Rabkin.

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http://www.bloomberg.com/news/2011-05-06/jpmorgan-chase-said-to-be-subpoenaed-by-sec-over-mortgage-debt-documents.html

GAO Report Confirms Our Criticism of “Foreclosure Task Force” Review   5-6-11

We’ve taken a dim view of the “worse than stress tests” review by Federal regulators of foreclosure practices late last fall. This was an obvious effort to alleviate concerns in the wake of the robosigning scandal. When the bank-friendly OCC released the results of the review, the guts of which was a look at 2800 seriously delinquent loans from all the major servicers, it confirmed our reservations:

Can you see what a garbage in, garbage out exercise this was? This is all a limited review of the servicers’ internal records, with no external validation. This process is inherently incapable of capturing numerous abuses flagged in the media and in this and other blogs, including document forgeries (production of allonges to cover for the failure to convey notes correctly), loss or deliberate late application of payments; the application of “junk fees” and impermissible fee pyramiding; notes held at the originator rather than the trust (notice the failure to audit trustees), lack of cross checking of servicer claims re servicing with borrower experiences. The HAMP fiascoes alone, with repeated servicer false claims of document losses, should lead to serious skepticism about servicer claims about the integrity of their internal processes.

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http://www.nakedcapitalism.com/2011/05/gao-report-confirms-our-criticism-of-foreclosure-task-force-review.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Carmen's Would-be Deutsche Bank Debacle  4-6-11

Carmen Trutanich is taking his ambulance chaser mindset to a new level in a wistful, wishful suit with which he hopes