02/16/2012 | FORECLOSURE FRAUD | by DinSFLA

Archive | February 16th, 2012

Adam Levitin: Why No Investigation?

Adam Levitin: Why No Investigation?

The robosigning itself and similar lack of internal controls are the small potatoes. There are much more serious things in the SF City Assessor report.


Credit Slips-

Here’s a bombshell: the San Francisco City Assessor commissioned a serious audit of foreclosure documentation filed in the past few years. The audit examined 400 foreclosures.  It found problems with 85% of them, often multiple problems. What’s more, some of the problems are pretty serious as they implicate not only borrowers’ rights, but the integrity of mortgage-backed securities and the property title system.  

The San Francisco City Assessor’s audit also serves as a benchmark for evaluating the Federal-State servicing settlement.  The San Francisco City Assessor managed to accomplish in a few months what the Federal government and state Attorneys General weren’t able to do in nearly a year and a half with far greater resources at their disposal:  perform a credible investigation of foreclosure documentation with serious implications about the securitization process in general.  That’s a lot of egg on the face of Shaun Donovan, Eric Holder, Tom Miller, et al.  The SF City Assessor report shows that it really wasn’t so hard for a motivated party to undertake a serious investigation. And that raises the question of why the largest consumer fraud settlement in history proceeded with virtually no investigation. 

The lack of investigation was the compelling criticism that led the NY and DE AGs to stay out of the settlement for quite a while. I’ve never heard an answer as to why no serious investigation. As the SF City Assessor’s audit shows, the documentation is all a matter of public record.  It’s not that hard to do, especially if you have the resources of the federal government.  So the resources were there. The capability was there. So why no investigation?  The answer has to lie with lack of motivation. Were the Feds and AGs scared of what they would find if they delved too deeply into the issue? 

I hope that members of Congress will question the Attorney General and HUD Secretary the next time they show up to testify on the Hill.  The issue is also worthy of a GAO or IG examination. 

[...]

[CREDIT SLIPS]

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Foreclosure Fraud, Abuse Rampant Across U.S., experts say

Foreclosure Fraud, Abuse Rampant Across U.S., experts say

* Report found 84 pct of San Francisco disclosures illegal

* High levels found across the country, experts say

REUTERS-

A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.

The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.

“The audit in San Francisco is the most detailed and comprehensive that has been done – but it’s likely those numbers are comparable nationally,” Diane Thompson, an attorney at the National Consumer Law Center, told Reuters.

Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork.

[REUTERS]

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OUTRAGEOUS: Taxpayers will be subsidizing Foreclosure Fraud settlement through HAMP

OUTRAGEOUS: Taxpayers will be subsidizing Foreclosure Fraud settlement through HAMP

Think you’ll have a free pass from that under water, submerged house that will only continue to sink further.

The so called principal reductions were to be a penalty not a money making scheme!

Your title will still have issues…lots of them!

FT-

The $40bn foreclosure-abuse settlement reached last week between regulators and big US banks gave President Barack Obama another shot at resuscitating his three-year-old initiative to help troubled homeowners.

As details of the agreement dribble out, it appears the deal may also give big banks reason to celebrate and mortgage bond investors and taxpayers reason to pause.

[...]

But in allowing the banks to use taxpayer-funded Hamp to meet their obligations under the settlement, the government presented the banks with an opportunity to reduce their losses, experts said.

“If the banks are doing something under this settlement, and cash flows from taxpayers to the banks, that is fundamentally an upside-down result,” said Neil Barofsky, a former special inspector-general of the troubled asset relief programme.

[FINANCIAL TIMES] subscription only

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LETTER: MBIA tells judge of newly uncovered Countrywide fraud “FACTS” database

LETTER: MBIA tells judge of newly uncovered Countrywide fraud “FACTS” database

Alison Frankel-

I sure hope the Securities and Exchange Commission and other members of the new joint mortgage-backed securities task force are paying attention to the docket in MBIA’s New York State Supreme Court fraud and breach-of-contract suit against Countrywide. On Wednesday, MBIA’s lawyers at Quinn Emanuel Urquhart & Sullivan sent a letter to Justice Eileen Bransten requesting that she order Countrywide to produce discovery on an internal fraud-tracking database “which MBIA had not previously known to exist.” MBIA said it needs the discovery to prepare for upcoming depositions of former Countrywide employees who tried to expose its allegedly fraudulent mortgage underwriting practices, including the well-known whistleblowers Eileen Foster and Mari Eisenman.

[REUTERS LEGAL]

Scribd

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Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S.

Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S.

Keep rewarding these dead beats, making them serve no jail time and they shall continue buying their settlements for as long as they go unpunished!

BLOOMBERG-

Four years after rotten mortgages helped trigger a global financial crisis, Sherry Hunt said her Citigroup Inc. quality-control team 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 yesterday 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.

[BLOOMBERG]

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REUTERS FEATURE-The U.S. foreclosure crisis, Beverly Hills-style

REUTERS FEATURE-The U.S. foreclosure crisis, Beverly Hills-style

It’s a business decision for the rich!

Reuters-

* Record number of defaults in Beverly Hills

* Many wealthy owners could still pay but walked away

* Only 12 of 180 distressed homes up for sale

BEVERLY HILLS, Feb 16 (Reuters) – The careworn house not far from Santa Monica Boulevard resembles millions of other homes that have been foreclosed on since the calamitous U.S. housing crash four years ago.

Garbage spews from trash bags behind the property. A smashed television leans against broken furniture. A filthy toy dog lies on its side, an ear draped across its face. The garden is overgrown. The house needs a paint job.

[REUTERS]

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