Title: An act relating to protecting short sale sellers from payment of forgiven home loan debt if
such debt forgiveness is reported to the internal revenue service.

Brief Description: Protecting short sale sellers from payment of forgiven home loan debt if
such debt forgiveness is reported to the internal revenue service.

Sponsors: Senators Frockt, Fain, Haugen and Litzow.

Brief History:

Committee Activity: Financial Institutions, Housing & Insurance: 1/24/12.

Scribd

REUTERS LEGAL REPORTER ALISON FRANKEL -

I follow mortgage-backed securities litigation closely enough to be disgusted at the greed that fueled the securitization of insufficiently underwritten mortgages issued to homeowners who had no hope of paying them off. Sure, MBS investors and the bond insurers that backed MBS trusts were sophisticated and, to some extent, forewarned about the timebombs lurking in those mortgage pools. But you can’t read the voluminous MBS filings by monolines and investors — including the federal agency that oversees Fannie Mae and Freddie Mac — without wishing that someone be held accountable for sending the housing market on a slide, and dragging down the rest of the economy with it.

To date, accountability has been an elusive goal. I’m not talking about private suits or breach-of-contract put-back claims, in which MBS issuers are beginning to acknowledge billions of dollars of exposure to investors and insurers. But state and federal regulators and prosecutors have lagged behind the private plaintiffs bar (and the Federal Housing Finance Agency). As best I can tell, there have been no criminal prosecutions of people or institutions involved in mortgage-backed securitizations. On the civil side, the U.S. Attorney for the Southern District of New York, Preet Bharara, brought an MBS-based suit against Deutsche Bank last May. This summer, the New York Attorney General, Eric Schneiderman, filed Martin Act claims against Bank of New York Mellon for its conduct as Countrywide MBS securitization trustee. In October, the Delaware AG, Joseph Biden III, filed a civil suit against the Mortgage Electronic Registry System that accuses the banks that established MERS of using it as a vehicle to bundle mortgages they didn’t actually own. And last week, the Illinois AG, Lisa Madigan, sued Standard & Poor‘s for giving undeserved AAA ratings to overly risky mortgage-backed notes.

[REUTERS LEGAL]

I posted the quoted text below back on Nov ’10… I wonder who exactly signs off for MERS, if this is so?

The standard modification agreement
is between the Borrower and
the Lender. The agreement amends
and supplements (1) the Mortgage,
Deed of Trust or Deed to Secure
Debt (Security Instrument) and (2)
the Note bearing the same date as,
and secured by, the Security
Instrument. Prior to MERS, the
standard agreement worked
because the Lender was the mortgagee
of record and could modify
the mortgage and also had the
authority to modify the Note.

However, if MERS is the mortgagee
of record, the Lender can’t
modify the mortgage without the
“mortgagee’s” consent.

MNINEWS-

The Obama Administration Friday announced it is expanding its flagship mortgage modification program and will now encourage lenders to reduce the principal loan balance for Fannie Mae and Freddie Mac loans.

The announcement comes just three days after President Obama said he would do more to support the struggling housing market and two days after Federal Reserve Chairman Ben Bernanke said housing is holding back the economic recovery.

Assistant Secretary for Financial Stability Timothy Massad in a blog post Friday outlined the changes to HAMP — including extending the end-date by one year and refocusing on principal reductions.

Massad said Treasury notified the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, that they will pay principal reduction incentives to the GSEs if they allow servicers to forgive principal — if done in conjunction with a HAMP modification.

Massad also said Treasury will triple the incentives for HAMP principal reduction modifications by paying from 18 to 63 cents on the dollar, depending on how much the loan-to-value ratio is reduced.

[MNINEWS]

Unit Announced By President Obama In 2012 State Of The Union Address

Panel Charged With Investigating Mortgage Crisis, Resulting Damage To Homeowners And Investors

Schneiderman: Comprehensive Investigation Will Help Restore Americans’ Trust In Financial Sector And Government

[En Español]

WASHINGTON – New York Attorney General Eric T. Schneiderman, U.S. Attorney General Eric H. Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami today detailed the core mission of the new Residential Mortgage-Backed Securities Working Group announced by President Obama in the State of the Union address. This collaboration brings together the Department of Justice (DOJ), several state law enforcement officials – led by Attorney General Schneiderman – and other federal entities to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. It builds upon ongoing state and federal investigations, while also launching new ones.

The goals of this joint investigation will be to:

• Hold accountable any institutions that violated the law;
• Compensate victims and help provide relief for homeowners struggling from the collapse of the housing market, caused in part by this wrongdoing; and
• To help us finally turn the page on this destructive period in our nation’s history.

“I would like to thank President Obama and Attorney General Holder for launching this comprehensive investigation, and I look forward to co-chairing this effort that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis,” said Attorney General Schneiderman. “In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the mortgage crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again. The American people deserve nothing less than a thorough investigation into the global financial meltdown to ensure nothing like it ever happens again, and this effort is a major step in the right direction.”

Attorney General Schneiderman and Attorney General Holder announced that the new working group will include 55 Department of Justice attorneys, analysts, agents and investigators. As it begins its work, 15 attorneys – civil and criminal – and 10 FBI agents and analysts will be initially assigned to the working group. An additional 30 attorneys, investigators and other staff from U.S. Attorney’s Offices around the country will join the working group’s efforts, in addition to existing state and federal investigations into similar misconduct under those authorities.

“This Working Group brings together federal and state partners to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market,” said Attorney General Holder. “With this focus on collaboration – and by bringing our government’s full enforcement resources to bear – I have no doubt that we will improve our ability to recover losses, to prevent fraud, to bring abuses to light, and to hold those who violate the law accountable: That’s what the challenge before us demands, and that’s what the American people deserve.” 
…

[AG.NY]

‘Kafkaesque’ nightmares plague homeowners facing foreclosure

iWATCH NEWS-

Like millions of stories from the great recession, this one begins with homeowners struggling to keep up with a mortgage payment they simply couldn’t afford.

By 2009, the adjustable interest rate for Cassandra and Bernard Gray’s Durham, N.C., home loan had spiked to more than 12 percent. “I didn’t know if we were going to be on the street or in a shelter,” Cassandra recalls. “We couldn’t afford groceries. It got pretty bad.”

They were thrilled to sign up for a modification plan with their loan servicer, GMAC Home Mortgage, Cassandra Gray said…

[iWATCH NEWS]

You simply cannot make this stuff up!

HW-

The new federal task force led by New York Attorney General Eric Schneiderman sent subpoenas to the 11 largest financial institutions in the past few days as part of its investigation in possible residential mortgage-backed securities fraud.

President Obama formed the task group and announced it in his State of the Union address Tuesday.

Schneiderman said in a press conference Friday that he will be joined by Delaware AG Beau Biden, Massachusetts AG Martha Coakley and Nevada AG Catherin Cortez Masto, California AG Kamala Harris and Illinois AG Lisa Madigan.

[HOUSING WIRE]

HuffPO-

The Obama administration, state attorneys general, and the nation’s largest banks are close to a final settlement on the years-long struggle over allegations of massive foreclosure fraud, according to several sources familiar with the talks. The final details of the arrangement, according to the source who revealed them, will apparently not preclude prosecutors and regulators from taking legal action against many of the common abuses during the house bubble. It remains to be seen whether all parties will ultimately sign off on the language.

The settlement is worth $25 billion, a sum which will be distributed to homeowners who were wrongfully foreclosed on as well as those who remain underwater. In addition, banks could still face future legal action over 12 specific violations.

According to someone intimate with the negotiations, there will be no legal release of the banks with respect to:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

[HUFFINGTONPOST]