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CITI Group to Buy OneWest for $3.4 Billion

CITI Group to Buy OneWest for $3.4 Billion

NYT-

The CIT Group, a lender to small and midsize businesses run by John A. Thain, said on Tuesday that it had agreed to acquire the parent company of OneWest Bank for $3.4 billion in cash and stock.

The deal will bolster CIT’s lending abilities by more than doubling its deposit base. OneWest currently manages $15 billion in deposits, as well as $23 billion in assets, including commercial and home mortgages.

It will merge with CIT’s own bank, creating a commercial bank with $28 billion in deposits and $67 billion in assets — putting it above the $50 billion threshold for increased regulatory oversight of banks deemed systemically important.

[NEW YORK TIMES]

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Housing Ponzi Scheme Losses: American Homeowners Battling Wall Street

Housing Ponzi Scheme Losses: American Homeowners Battling Wall Street

Relief for Homeowners?

Will the BlackRock/PIMCO suit help homeowners? Not directly. But it will get some big guns on the scene, with the ability to do all sorts of discovery, and the staff to deal with the results.

Fraud is grounds for rescission, restitution and punitive damages. The homeowners may not have been parties to the pooling and servicing agreements governing the investor trusts, but if the whole business model is proven to be fraudulent, they could still make a case for damages.


Global Research-

For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.

In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage. Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time.

The defendants are the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage-backed securities to repurchase defective loans.

[GLOBAL RESEARCH]

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JPMorgan pulls back from mortgage lending on foreclosure worries

JPMorgan pulls back from mortgage lending on foreclosure worries

Pulling away from sub-prime lending…the same lending that got these idiots into trouble in the first place and our asses rescuing them every-time. Folks, this is a good thing!


REUTERS-

JPMorgan Chase & Co, the second-largest U.S. mortgage lender, is backing away from making home loans to less creditworthy borrowers after losing faith in its ability to recover much money from foreclosing on homes, even with government guarantees.

The shift reflects a change in the way JPMorgan runs its mortgage business: while it used to regard collateral and U.S. government lending programs as key backstops to most of its loans, it now pays closer attention to the credit quality of borrowers. The bank wants to reduce the chances of having to foreclose on a loan, because it’s bad business.

“The cost to take a customer through the foreclosure process is just astronomical now,” Kevin Watters, chief executive of JPMorgan Chase’s residential mortgage banking business in New York, told Reuters in an interview.

[REUTERS]

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BofA pays AIG $650 million to settle mortgage disputes

BofA pays AIG $650 million to settle mortgage disputes

REUTERS-

Bank of America (BAC.N) agreed to pay American International Group Inc (AIG.N) $650 million to settle long-running legal disputes over defective mortgage-backed securities sold in the run-up to the financial crisis.

The deal, which the parties announced early Wednesday, ends securities fraud litigation that the insurer brought against Bank of America. It also removes the biggest obstacle to the bank’s $8.5 billion settlement with investors in mortgage securities issued by Countrywide Financial, the subprime lender Bank of America acquired in 2008.

AIG will file notices dismissing its litigation accusing the bank of causing billions of dollars in losses by selling it shoddy mortgage securities. The litigation is pending in New York and California.

[REUTERS]

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Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages

Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages

Department of Justice

Office of Public Affairs
FOR IMMEDIATE RELEASE
Monday, July 14, 2014
Justice Department, Federal and State Partners Secure Record $7 Billion Global Settlement with Citigroup for Misleading Investors About Securities Containing Toxic Mortgages
Citigroup to Pay the Largest Penalty of Its Kind – $4 Billion

The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009.  The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS.  The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas.  The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.

 

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered $20 billion to date for American consumers and investors.

 

“This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said Attorney General Eric Holder.  “The bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.  Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business.  Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.”

 

The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors.  Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects.  As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects.  In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.”  Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars.  This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.

“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi’s conduct,” said Associate Attorney General Tony West.  “In addition to the principal reductions and loan modifications we’ve built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”

 

Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7  million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.

 

Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup.  That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas.  An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations.  If Citigroup fails to live up to its agreement by the end of 2018,  it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.

 

The U.S. Attorney’s Offices for the Eastern District of New York and the District of Colorado conducted investigations into Citigroup’s practices related to the sale and issuance of RMBS between 2006 and 2007.

 

“The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day,” said U.S. Attorney John Walsh for the District of Colorado, Co-Chair of the RMBS Working Group.  “Today’s $7 billion settlement is a major step toward restoring public confidence in those markets.  Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the financial crisis.  As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.”

 

“After nearly 50 subpoenas to Citigroup, Trustees, Servicers, Due Diligence providers and their employees, and after collecting nearly 25 million documents relating to every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, our teams found that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” said U.S. Attorney of the Eastern District of New York Loretta Lynch.  “The investors in Citigroup RMBS included federally-insured financial institutions, as well as a host of states, cities, public and union pension and benefit funds, universities, religious charities, and hospitals, among others.  These are our neighbors in Colorado, New York and around the country, hard-working people who saved and put away for retirement, only to see their savings decimated.”

 

This settlement resolves civil claims against Citigroup arising out of certain securities packaged, securitized, structured, marketed, and sold by Citigroup.  The agreement does not release individuals from civil charges, nor does it release Citigroup or any individuals from potential criminal prosecution. In addition, as part of the settlement, Citigroup has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

 

Michael Stephens, Acting Inspector General for the Federal Housing Finance Agency said, “Citigroup securitized billions of dollars of defective mortgages, after which investors suffered enormous losses by purchasing RMBS from Citi not knowing about those defects. Today’s settlement is another significant step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit in the lead up to the financial crisis, and is a necessary step toward reviving a sound RMBS market that is crucial to the housing industry and the American economy.  We are proud to have worked with the Department of Justice, the U.S. Attorneys’ Offices in the Eastern District of New York and the District of Colorado. They have been great partners and we look forward to our continued work together.”

 

The underlying investigation was led by Assistant U.S. Attorneys Richard K. Hayes, Kevin Traskos, Lila Bateman, John Vagelatos, J. Chris Larson and Edward K. Newman, with the support of agents from the Office of the Inspector General for the Federal Housing Finance Agency, in conjunction with the President’s Financial Fraud Enforcement Task Force’s RMBS Working Group.

 

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.  The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state Attorneys General offices around the country.

 

The RMBS Working Group is led by its Director Geoffrey Graber and its five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

 

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov .

14-733
Attorney General

Source: DOJ

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Citigroup Is Said to Be Close to Settling Inquiry Into Mortgage Securities

Citigroup Is Said to Be Close to Settling Inquiry Into Mortgage Securities

NYT-

Citigroup and the Justice Department are nearing a deal that could cost the bank roughly $7 billion to settle a civil investigation into the sale of mortgage investments, people briefed on the matter said on Tuesday.

The settlement, which is expected to be announced within the next week, caps months of negotiations that grew so tense in June that the Justice Department threatened to sue if the bank did not agree to the government’s proposed penalty. The deal, which would be made up of a monetary penalty and relief for homeowners, would remove a huge legal obstacle that has been weighing on the bank’s share price and casting a shadow over its future.

At one point in the talks, the government demanded that Citigroup pay $10 billion. While the settlement will fall short of that demand, the bank will still pay more than once expected.

[NEW YORK TIMES]

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HSBC settles US claims over foreclosure-related charges

HSBC settles US claims over foreclosure-related charges

Just breaking and more info to follow…

 

Reuters-

HSBC Holdings PLC : * Settlement of civil fraud claims against HSBC Bank to be announced — New York federal court official * Reaches $10 million settlement with U.S. government to resolve false claims act case — court official * Case relates to bank’s alleged failure to oversee reasonableness of foreclosure-related charges submitted to U.S. department of housing and urban development — court official * Settlement of HSBC case expected to be formally announced later Tuesday.

[REUTERS]

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N.Y. Agency Taps TARP Ex-Watchdog Barofsky to Monitor Credit Suisse

N.Y. Agency Taps TARP Ex-Watchdog Barofsky to Monitor Credit Suisse

.

Credit Suisse Agreed to Pay $2.6B, Including $715M to New York, in Tax-Evasion Case


WSJ-

Neil Barofsky, the former watchdog of the U.S. government’s bank-bailout program, has been selected by New York’s banking agency to oversee Credit Suisse Group AG’s compliance with a tax-evasion settlement the firm reached with federal and state authorities last month, according to people familiar with the matter.

A five-member committee within the New York Department of Financial Services recently chose Mr. Barofsky from a pool of about 15 candidates who applied to be the monitor for the settlement, according to one of…

 [WALL STREET JOURNAL]

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BlackRock v. U.S. Bank | DERIVATIVE COMPLAINT AGAINST U.S. BANK NA FOR BREACH OF CONTRACT; VIOLATION OF THE TRUST INDENTURE ACT OF 1939; BREACH OF FIDUCIARY DUTY; BREACH OF DUTY OF INDEPENDENCE; AND NEGLIGENCE

BlackRock v. U.S. Bank | DERIVATIVE COMPLAINT AGAINST U.S. BANK NA FOR BREACH OF CONTRACT; VIOLATION OF THE TRUST INDENTURE ACT OF 1939; BREACH OF FIDUCIARY DUTY; BREACH OF DUTY OF INDEPENDENCE; AND NEGLIGENCE

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

BLACKROCK ALLOCATION TARGET SHARES: SERIES S PORTFOLIO; BLACKROCK BALANCED CAPITAL PORTFOLIO (FI); BLACKROCK CORE ACTIVE BOND FUND B; BLACKROCK CORE ACTIVE LIBOR FUND B; BLACKROCK CORE BOND PORTFOLIO; BLACKROCK CORE BOND TRUST; BLACKROCK COREALPHA BOND FUND E; BLACKROCK COREALPHA BOND MASTER PORTFOLIO; BLACKROCK COREPLUS BOND FUND B; BLACKROCK ENHANCED GOVERNMENT FUND, INC.; BLACKROCK FIXED INCOME GLOBALALPHA MASTER FUND LTD.; BLACKROCK FIXED INCOME VALUE OPPORTUNITIES; BLACKROCK FUNDS II, INFLATION PROTECTED BOND PORTFOLIO; BLACKROCK INCOME OPPORTUNITY TRUST; BLACKROCK INCOME TRUST, INC.; BLACKROCK LIMITED DURATION INCOME TRUST; BLACKROCK LOW DURATION BOND PORTFOLIO; BLACKROCK MANAGED VOLATILITY V.I. FUND (FI); BLACKROCK MULTI-ASSET INCOME – NON-AGENCY MBS PORTFOLIO; BLACKROCK MULTI-SECTOR INCOME TRUST; BLACKROCK SECURED CREDIT PORTFOLIO; BLACKROCK STRATEGIC INCOME OPPORTUNITIES PORTFOLIO; BLACKROCK TOTAL RETURN PORTFOLIO (INS – SERIES); BLACKROCK TOTAL RETURN V.I. PORTFOLIO (INS – VAR SER); BLACKROCK US MORTGAGE;
BLACKROCK WORLD INCOME FUND, INC.; FIXED INCOME SHARES (SERIES R); FIXED INCOME SHARES: SERIES C; FIXED INCOME SHARES: SERIES LD; FIXED INCOME SHARES: SERIES M; LVS I LLC; LVS I SPE XIV LLC; LVS II LLC; PARS ASPIRE FUND; PCM FUND, INC.; PIMCO ABSOLUTE RETURN STRATEGY 3D OFFSHORE FUND LTD.; PIMCO ABSOLUTE RETURN STRATEGY II MASTER FUND LDC; PIMCO ABSOLUTE RETURN STRATEGY III MASTER FUND LDC; PIMCO ABSOLUTE RETURN STRATEGY III OVERLAY MASTER FUND LTD.; PIMCO ABSOLUTE RETURN STRATEGY IV IDF LLC; PIMCO ABSOLUTE RETURN STRATEGY IV MASTER FUND LDC; PIMCO ABSOLUTE RETURN STRATEGY V MASTER FUND LDC; PIMCO CANADA CANADIAN COREPLUS BOND TRUST; PIMCO CANADA CANADIAN COREPLUS LONG BOND TRUST; PIMCO CANADA CANADIAN TACTICAL BOND TRUST; PIMCO CANADIAN TOTAL RETURN BOND FUND; PIMCO COMBINED ALPHA STRATEGIES MASTER FUND LDC; PIMCO CORPORATE & INCOME OPPORTUNITY FUND; PIMCO CORPORATE & INCOME STRATEGY FUND; PIMCO DISTRESSED SENIOR CREDIT OPPORTUNITIES FUND II, L.P.; PIMCO DYNAMIC CREDIT INCOME FUND; PIMCO DYNAMIC INCOME FUND; PIMCO EQUITY SERIES: PIMCO BALANCED INCOME FUND; PIMCO ETF TRUST: PIMCO LOW DURATION EXCHANGE-TRADED FUND; PIMCO ETF TRUST: PIMCO TOTAL RETURN EXCHANGE-TRADED FUND; PIMCO FUNDS: PIMCO EM FUNDAMENTAL INDEXPLUS® AR STRATEGY FUND; PIMCO FUNDS: PIMCO INTERNATIONAL FUNDAMENTAL INDEXPLUS® AR STRATEGY FUND; PIMCO FUNDS: PIMCO SMALL COMPANY FUNDAMENTAL INDEXPLUS® AR STRATEGY FUND; PIMCO FUNDS: PIMCO COMMODITIESPLUS® STRATEGY FUND; PIMCO FUNDS: PIMCO COMMODITY REAL RETURN STRATEGY FUND®; PIMCO FUNDS: PIMCO CREDIT ABSOLUTE RETURN FUND; PIMCO FUNDS: PIMCO DIVERSIFIED INCOME FUND; PIMCO FUNDS: PIMCO EMERGING LOCAL BOND FUND; PIMCO FUNDS: PIMCO EMERGING MARKETS BOND FUND; PIMCO FUNDS: PIMCO EMERGING MARKETS CURRENCY FUND; PIMCO FUNDS: PIMCO EMG INTL LOW VOLATILITY RAFI®-PLUS AR FUND; PIMCO FUNDS: PIMCO EXTENDED DURATION FUND; PIMCO FUNDS: PIMCO FLOATING INCOME FUND; PIMCO FUNDS: PIMCO FOREIGN BOND FUND (U.S. DOLLAR-HEDGED); PIMCO FUNDS: PIMCO FOREIGN BOND FUND (UNHEDGED); PIMCO FUNDS: PIMCO FUNDAMENTAL ADVANTAGE ABSOLUTE RETURN STRATEGY FUND; PIMCO FUNDS: PIMCO FUNDAMENTAL INDEXPLUS® AR FUND; PIMCO FUNDS: PIMCO GLOBAL ADVANTAGE® STRATEGY BOND FUND; PIMCO FUNDS: PIMCO GLOBAL BOND FUND (U.S. DOLLAR-HEDGED); PIMCO FUNDS: PIMCO GLOBAL BOND FUND (UNHEDGED); PIMCO FUNDS: PIMCO GLOBAL MULTI-ASSET FUND; PIMCO FUNDS: PIMCO GNMA FUND; PIMCO FUNDS: PIMCO HIGH YIELD FUND; PIMCO FUNDS: PIMCO INCOME FUND; PIMCO FUNDS: PIMCO INFLATION RESPONSE MULTI-ASSET FUND; PIMCO FUNDS: PIMCO INTERNATIONAL STOCKSPLUS® AR STRATEGY FUND (U.S. DOLLAR-HEDGED); PIMCO FUNDS: PIMCO INTERNATIONAL STOCKSPLUS® AR STRATEGY FUND (UNHEDGED); PIMCO FUNDS: PIMCO INVESTMENT GRADE CORPORATE BOND FUND; PIMCO FUNDS: PIMCO LONG DURATION TOTAL RETURN FUND; PIMCO FUNDS: PIMCO LONG-TERM CREDIT FUND; PIMCO FUNDS: PIMCO LONG-TERM U.S. GOVERNMENT FUND; PIMCO FUNDS: PIMCO LOW DURATION FUND; PIMCO FUNDS: PIMCO LOW DURATION FUND II; PIMCO FUNDS: PIMCO LOW DURATION FUND III; PIMCO FUNDS: PIMCO MODERATE DURATION FUND; PIMCO FUNDS: PIMCO MORTGAGE OPPORTUNITIES FUND; PIMCO FUNDS: PIMCO MORTGAGE-BACKED SECURITIES FUND; PIMCO FUNDS: PIMCO REAL ESTATE REAL RETURN STRATEGY FUND; PIMCO FUNDS: PIMCO REAL RETURN ASSET FUND; PIMCO FUNDS: PIMCO REAL RETURN FUND; PIMCO FUNDS: PIMCO SHORT-TERM FUND; PIMCO FUNDS: PIMCO SMALL CAP STOCKSPLUS® AR STRATEGY FUND; PIMCO FUNDS: PIMCO STOCKSPLUS® ABSOLUTE RETURN FUND; PIMCO FUNDS: PIMCO STOCKSPLUS® AR SHORT STRATEGY FUND; PIMCO FUNDS: PIMCO STOCKSPLUS® FUND; PIMCO FUNDS: PIMCO STOCKSPLUS® LONG DURATION FUND; PIMCO FUNDS: PIMCO TOTAL RETURN FUND; PIMCO FUNDS: PIMCO TOTAL RETURN FUND II; PIMCO FUNDS: PIMCO TOTAL RETURN FUND III; PIMCO FUNDS: PIMCO TOTAL RETURN FUND IV; PIMCO FUNDS: PIMCO UNCONSTRAINED BOND FUND; PIMCO FUNDS: PIMCO UNCONSTRAINED TAX MANAGED BOND FUND; PIMCO FUNDS: PIMCO WORLDWIDE FUNDAMENTAL ADVANTAGE AR STRATEGY FUND; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES ASSET-BACKED SECURITIES PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES DEVELOPING LOCAL MARKETS PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES EMERGING MARKETS PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES HIGH YIELD PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES INTERNATIONAL PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES LONG DURATION CORPORATE BOND PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES MORTGAGE PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES REAL RETURN PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES SHORT-TERM PORTFOLIO; PIMCO FUNDS: PRIVATE ACCOUNT PORTFOLIO SERIES U.S. GOVERNMENT SECTOR PORTFOLIO; PIMCO GLOBAL ADVANTAGE STRATEGY BOND FUND (CANADA); PIMCO GLOBAL CREDIT OPPORTUNITY MASTER FUND LDC; PIMCO GLOBAL INCOME OPPORTUNITIES FUND; PIMCO GLOBAL STOCKSPLUS & INCOME FUND; PIMCO HIGH INCOME FUND; PIMCO INCOME OPPORTUNITY FUND; PIMCO INCOME STRATEGY FUND; PIMCO INCOME STRATEGY FUND II; PIMCO LARGE CAP STOCKSPLUS ABSOLUTE RETURN FUND; PIMCO MONTHLY INCOME FUND (CANADA); PIMCO OFFSHORE FUNDS – PIMCO ABSOLUTE RETURN STRATEGY IV EFUND; PIMCO OFFSHORE FUNDS: PIMCO OFFSHORE FUNDS – PIMCO ABSOLUTE RETURN STRATEGY V ALPHA FUND; PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.; PIMCO TACTICAL OPPORTUNITIES MASTER FUND LTD.; PIMCO VARIABLE INSURANCE TRUST: PIMCO COMMODITYREALRETURN STRATEGY PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO EMERGING MARKETS BOND PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO FOREIGN BOND PORTFOLIO (U.S. DOLLAR HEDGED); PIMCO VARIABLE INSURANCE TRUST: PIMCO FOREIGN BOND PORTFOLIO (UNHEDGED); PIMCO VARIABLE INSURANCE TRUST: PIMCO GLOBAL ADVANTAGE STRATEGY BOND PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO GLOBAL BOND PORTFOLIO (UNHEDGED); PIMCO VARIABLE INSURANCE TRUST: PIMCO HIGH YIELD PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO LONG TERM U.S. GOVERNMENT PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO LOW DURATION PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO REAL RETURN PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO SHORT-TERM PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO TOTAL RETURN PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO UNCONSTRAINED BOND PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO GLOBAL MULTI-ASSET MANAGED ALLOCATION PORTFOLIO; PIMCO VARIABLE INSURANCE TRUST: PIMCO GLOBAL MULTI-ASSET MANAGED VOLATILITY PORTFOLIO; TERLINGUA FUND 2, LP; CREF BOND MARKET ACCOUNT; CREF SOCIAL CHOICE ACCOUNT; TIAA GLOBAL PUBLIC INVESTMENTS, MBS LLC; TIAA-CREF BOND FUND; TIAA-CREF BOND PLUS FUND; TIAA-CREF LIFE BOND FUND; TIAA-CREF LIFE INSURANCE COMPANY; TIAA-CREF SHORT-TERM BOND FUND; TIAA-CREF SOCIAL CHOICE BOND FUND; PRUDENTIAL BANK & TRUST; PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY; PRUDENTIAL TRUST COMPANY; THE GIBRALTAR LIFE INSURANCE COMPANY LTD.; THE PRUDENTIAL INSURANCE COMPANY OF AMERICA; THE PRUDENTIAL INVESTMENT PORTFOLIOS 2; THE PRUDENTIAL INVESTMENT PORTFOLIOS 9; THE PRUDENTIAL INVESTMENT PORTFOLIOS INC.; THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC. 17; THE PRUDENTIAL SERIES FUND; BROOKFIELD HIGH INCOME FUND INC.; BROOKFIELD MORTGAGE OPPORTUNITY INCOME FUND INC.; BROOKFIELD SECURITIZED CREDIT QIF FUND; BROOKFIELD TOTAL RETURN FUND INC.; CRYSTAL RIVER CAPITAL INC.; MILLERTON ABS CDO LTD.; GLOBAL PREFERRED RE LIMITED; LIICA HOLDINGS, LLC; LIICA RE I, INC.; LIICA RE II, INC.; MONUMENTAL LIFE INSURANCE COMPANY; STONEBRIDGE CASUALTY INSURANCE COMPANY; STONEBRIDGE LIFE INSURANCE COMPANY; STONEBRIDGE REINSURANCE COMPANY; TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY; TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY OF NEW YORK; TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY; TRANSAMERICA INTERNATIONAL RE (BERMUDA) LTD.; TRANSAMERICA LIFE (BERMUDA) LTD.; TRANSAMERICA LIFE INSURANCE COMPANY; TRANSAMERICA LIFE INTERNATIONAL (BERMUDA) LTD.; WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO; KORE ADVISORS LP; SEALINK FUNDING LIMITED; DZ BANK AG, derivatively, on behalf of the Trusts Identified in Exhibit 1
Plaintiffs,

-against-

U.S. BANK NATIONAL ASSOCIATION,
Defendant,

-and-

The Trusts Identified in Exhibit 1,
Nominal Defendants.

I. NATURE AND SUMMARY OF THE ACTION

1. Defendant U.S. Bank is a national banking association and is the Trustee for over a thousand RMBS trusts originally securitized by more than $1.3 trillion of residential mortgage loans. Among them are the Trusts at issue in this action: 841 private-label RMBS Trusts securitized between 2004 and 2008 collateralized with loans worth approximately $771 billion at the time of securitization. U.S. Bank, as Trustee, is the sole gatekeeper for the protection of the Trusts and their beneficial certificateholders (the “Certificateholders”), and must at all times act in the best interests of the Trusts. As alleged herein, U.S. Bank wholly failed to discharge its duties and obligations to protect the Trusts. Instead, to protect its own business interests, U.S. Bank ignored pervasive and systemic deficiencies in the underlying loan pools and the servicing of those loans and unreasonably refused to take any action. This derivative action seeks to recover billions of dollars in damages to the Trusts caused by U.S. Bank’s abdication of responsibility.

2. RMBS trusts are created to facilitate the securitization and sale of residential mortgage loans to investors. The trust’s assets consist entirely of the underlying loans, and the principal and interest (“P&I”) payments on the loans are “passed through” to the certificateholders. Between 2004 and 2008, a handful of large investment banks dominated the RMBS market and controlled the process from beginning to end. These banks act as “sponsors” of the RMBS, acquiring the mortgage loans from originators, who often were affiliates of the sponsors, or beholden to them through warehouse lending or other financial arrangements. Once the loans are originated, acquired and selected for securitization, the sponsor creates a trust where the loans are deposited for the benefit of the Certificateholders. The sponsor also hand-picks the servicer, often an affiliate of the sponsor or originator, to collect payments on the loans. Finally, a select number of these same banks that originate, securitize and service RMBS also act as trustees on other sponsor’s deals.

3. To ensure the quality of the RMBS and the underlying loans, the Trust documents generally include representations and warranties from the loan sellers attesting to the quality and characteristics of the mortgages as well as an agreement to cure, substitute, or repurchase mortgages that do not comply with those representations and warranties. Because the risk of non-payment or default on the loans is “passed through” to investors, other than these representations and warranties, the large investment banks and other players in the mortgage securitization industry have no “skin” in the game once the RMBS are sold to certificateholders. Instead, their profits are principally derived from the spread between the cost to originate or purchase loans, how much they can sell them to investors once packaged as securities, as well as various servicing-related income. Accordingly, volume became the focus, and the quality of the loans was disregarded.

[...]

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IN RE: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., MERS | 9th Circuit –  false, and therefore actionable, a document that is “forged, groundless, contains a material misstatement or false claim or is otherwise invalid….Pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a)

IN RE: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., MERS | 9th Circuit – false, and therefore actionable, a document that is “forged, groundless, contains a material misstatement or false claim or is otherwise invalid….Pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a)

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

IN RE: MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,

JONATHAN E. ROBINSON; SALLY J.
ROBINSON-BURKE; ROSA A. SILVAS;
JOSEPHA S. LOPEZ; JOSE TRINIDAD
CASAS; MARIA C. CASAS; LYNDON
B. GRAVES; TYRONE EVENSON;
MICHELLINA EVENSON; BRYAN
GRAY, [for complete list of
plaintiff/appellants, see Notice of
Appeal]; PABLO LEON,
Plaintiffs-Appellants,
v.
AMERICAN HOME MORTGAGE
SERVICING, INC.; AMERICA’S
SERVICING COMPANY; AMERICA’S
WHOLESALE LENDER; AURORA
LOAN SERVICES, LLC; AZTEC
FORECLOSURE CORP.; BAC HOME
LOANS SERVICING LP; BANK OF
AMERICA, NA; BANK OF NEW YORK
MELLON; CALIFORNIA
RECONVEYANCE CO.; CENTRAL
MORTGAGE CO.; COOPER CASTLE
LAW FIRM LLP; CR TITLE SERVICES,
INC.; DEUTSCHE BANK; EXECUTIVE
TRUSTEE SERVICES, LLC; FEDERAL
HOME LOAN MORTGAGE
CORPORATION; FEDERAL HOUSING
FINANCE AGENCY; FEDERAL
NATIONAL MORTGAGE
ASSOCIATION; FIDELITY NATIONAL
TITLE INSURANCE CO.; FIRST
AMERICAN LOAN STAR TRUSTEE
SERVICES, LLC; FIRST HORIZON
HOME LOAN CORP.; G.E. MONEY
BANK; GMAC MORTGAGE, LLC;
HOUSEKEY FINANCIAL CORP.; HSBC
MORTGAGE CORPORATION, USA;
HSBC MORTGAGE SERVICES, INC.;
HSBC BANK, U.S.A., N.A.; IB
PROPERTY HOLDINGS; JPMORGAN
CHASE BANK; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.; MERSCORP, INC.;
MORTGAGE IT, INC.; MTC
FINANCIAL, INC., DBA Trustee
Corps.; NATIONAL CITY MORTGAGE;
PNC FINANCIAL SERVICES GROUP,
INC.; NATIONAL DEFAULT
SERVICING CORP.; NDEX WEST
LLC; OLD REPUBLIC NATIONAL
TITLE INSURANCE CO.; QUALITY
LOAN SERVICE CORPORATION;
RECONTRUST COMPANY; SAXON
MORTGAGE, INC.; T.D. SERVICE
COMPANY; UTLS DEFAULT
SERVICES, LLC; WELLS FARGO
BANK, NA; WESTERN PROGRESSIVE
TRUSTEE, LLC; CITYMORTGAGE,
INC.; LIME FINANCIAL SERVICES
LIMITED,
Defendants – Appellees.

Excerpt:

Fourth, the MDL Court held that appellants had not
pleaded their robosigning claims with sufficient particularity
to satisfy Federal Rule of Civil Procedure 8(a). We disagree.
Section 33-420 characterizes as false, and therefore
actionable, a document that is “forged, groundless, contains
a material misstatement or false claim or is otherwise
invalid.” Ariz. Rev. Stat. §§ 33-420(A), (B) (emphasis
added). The CAC alleges that the documents at issue are
invalid because they are “robosigned (forged).” The CAC
specifically identifies numerous allegedly forged documents.
For example, the CAC alleges that notice of the trustee’s sale
of the property of Thomas and Laurie Bilyea was “notarized
in blank prior to being signed on behalf of Michael A. Bosco,
and the party that is represented to have signed the document,
Michael A. Bosco, did not sign the document, and the party
that did sign the document had no personal knowledge of any
of the facts set forth in the notice.” Further, the CAC alleges
that the document substituting a trustee under the deed of
trust for the property of Nicholas DeBaggis “was notarized in
blank prior to being signed on behalf of U.S. Bank National
Association, and the party that is represented to have signed
the document, Mark S. Bosco, did not sign the document.”
Still further, the CAC also alleges that Jim Montes, who
purportedly signed the substitution of trustee for the property
of Milan Stejic had, on the same day, “signed and recorded,
with differing signatures, numerous Substitutions of Trustee
in the Maricopa County Recorder’s Office . . . . Many of the
signatures appear visibly different than one another.” These
and similar allegations in the CAC “plausibly suggest an
entitlement to relief,” Ashcroft v. Iqbal, 556 U.S. 662, 681
(2009), and provide the defendants fair notice as to the nature
of appellants’ claims against them, Starr v. Baca, 652 F.3d
1202, 1216 (9th Cir. 2011).

We therefore reverse the MDL Court’s dismissal of
Count I.

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U.S. Bank Natl. Assn. v McCrory | NYSC – repeatedly violated both the statute and this court’s orders, and failed to provide documentation requested by the court. In short, the court found egregious behavior amounting to lack of good faith.

U.S. Bank Natl. Assn. v McCrory | NYSC – repeatedly violated both the statute and this court’s orders, and failed to provide documentation requested by the court. In short, the court found egregious behavior amounting to lack of good faith.

Decided on April 3, 2014

Supreme Court, Cortland County

 

U.S. Bank National Association AS TRUSTEE FOR RASC 2005-EMX4, Plaintiff,

against

Kristine H. McCrory, MICHAEL P. McCRORY, et al., Defendant.

13-539
Julie A. Campbell, J.

Plaintiff U.S. Bank National Association as Trustee for RASC 2005-EMX4 commenced this action for foreclosure.

In 2010 U.S. National Bank Association commenced a foreclosure action against these same defendants with respect to the same real property. That action was dismissed based on plaintiff’s lack of good faith during the settlement process [see Order and Decision, Index No. 10-001; RJI No. 2010-0060-C, copy attached]. In the dismissal order the court outlined a long succession of missteps by plaintiff taking place over a period of a year. The court found that plaintiff had made misrepresentations to the court and to the defendants; that plaintiff had reneged on modification offers after accepting defendants’ good faith payments; that plaintiff repeatedly violated both the statute and this court’s orders, and failed to provide documentation requested by the court. In short, the court found egregious behavior amounting to lack of good faith.

The order of dismissal contained the following provisions:

ORDERED, that in the event plaintiff commences a new action in [*2]foreclosure with respect to Kristine McCrory and the premises at issue herein, no additional costs or attorney fees will be allowed, absent good cause shown, and it is further

ORDERED, that a copy of the Order and Judgment of Dismissal shall be attached to the original pleadings in any such subsequent action in foreclosure and shall be specifically referenced in the body thereof.

That order was never appealed and remains the law of the case.

On November 12, 2013, plaintiff commenced this foreclosure action against Kristine McCrory, inter alia. The prior order of this Court is not attached to that complaint. The body of the complaint does not make reference to that order. And the complaint seeks relief including additional interest, late charges, attorney’s fees and costs.

On April 3, 2014, this Court held a conference on this action in accordance with CPLR 3408, which requires that plaintiff “appear in person or by counsel, and if appearing by counsel, such counsel shall be fully authorized to dispose of the case.” Plaintiff did not appear in person but sent counsel who advised that he was not authorized to dispose of the case without consulting with plaintiff. Moreover, counsel for plaintiff claimed to by wholly uninformed of this Court’s previous decision and order.

The Uniform Rules for Trial Courts also require that “only attorneys fully familiar with the action and authorized to make binding stipulations, or accompanied by a person empowered to act on behalf of the party represented, will be permitted to appear at a pretrial conference.” [22 NYCRR 202.26 (e)].

In short, plaintiff continues to ignore the laws of this state, to flaunt the orders of this Court and to manipulate the legal system with an absence of good faith toward defendants, the court and, apparently, its own attorney.

As this Court noted in the previous Decision and Order:

A foreclosure action is equitable in nature and triggers the equitable powers of the court [Notey v Darien Constr. Corp, 41 NY2d 1055 (1977)]. Once equity is invoked, the court’s power is as broad as equity and justice require [Mortgage Elec. Registration Sys., Inc. V Horkan, 68 AD3d 948 (Second Dept., 2009)]. “Moreover, as particular to foreclosure actions, this court has the power, and indeed the affirmative obligation under the New York Code of Rules and Regulations, to ensure that the parties are acting in good faith (see 22 NYCRR 212.12-a [c] [4]). In the wake of a national banking crisis resulting from years of wide-spread predatory lending practices … New York enacted sweeping new legislation effective August 2008 in an effort to stave off the alarming surge of mortgage foreclosures upon homeowners.” [BAC Home Loans Servicing v Westervelt, 29 Misc 3d 1224 (A) (Sup Ct, 2010)]. The court’s role is to ensure (1) [*3]that the primary statutory goal of keeping homeowners in their homes is met wherever feasible [see CPLR 3408 (a)]; and (2) to ensure the concomitant obligation of the parties to act in good faith [BAC Home Loans Servicing v Westervelt, supra].

For the reasons stated herein , and pursuant to Uniform Rule 202.26 (e), it is hereby

ORDERED, that the above matter is hereby dismissed, with prejudice.

This constitutes the Order and Judgment of the Court. The mailing of a copy of this Order and Judgment by this court shall not constitute notice of entry.

Dated:April 3, 2014ENTER

___________________________

Hon. Julie A. Campbell

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One West Bank, F.S.B. v Corrar | NYSC — plaintiff failed to move for a default judgment within a year after defendant’s default and, therefore, pursuant to CPLR §3215(c)

One West Bank, F.S.B. v Corrar | NYSC — plaintiff failed to move for a default judgment within a year after defendant’s default and, therefore, pursuant to CPLR §3215(c)

Decided on May 30, 2014
Supreme Court, Kings County

One West Bank, F.S.B., Plaintiff, – against-

against

Daniel Corrar a/k/a DANIEL CARRAZ a/k/a DANIEL COKRAR a/k/a DANIEL E. CORRAR, City of New York Environmental Control Board, Sea Gate Association, Manhattan Beer Distributors, “JOHN DOE”, “RICHARD ROE”, “JANE DOE”, “CORA COE”, “DICK MOE” and “RUBY POE”, the six, defendants last named in quotation marks being intended to designate tenants or occupants in possession of the herein described premises or portions thereof, if any there be, said names being fictitious, their true names being unknown to the plaintiff, Defendants.

19614/09

Attorney for Defendant Daniel Corrar
Baum & Bailey, P.C.
48 Wall Street, 11th Fl
New York, NY 10005

Attorney for Plaintiff
Stein, Weiner & Roth, LLP
One Old Country Road, Suite 113
Carle Place, NY 11514

Attorney for Defendant Sea Gate Association
Alan J. Wohlberg, Esq.
2805 Avenue N
Brooklyn, NY 11210

Attorney for Plaintiff
Ras Boriskin, LLC
900 Merchants Concourse, Suite LL-13
Westbury, NY 11590
Donald Scott Kurtz, J.

Recitation, as required by CPLR §2219(a), of the papers considered in the review of these motions:

PapersNumbered

Notice of Motion/Cross Motion/Attorneys’ affirmations

supplementing the motions……………………………………….1,2

Answering Affidavits/Affirmations……………………………3

Reply Affidavits/Affirmations/Memoranda of Law…….4Referee’s Report……………………………………………………….

Upon the foregoing cited papers, plaintiff’s motion for an Order of Reference and defendant Corrar’s cross-motion to dismiss plaintiff’s complaint pursuant to CPLR §3215(c), is decided as follows:

Plaintiff commenced this foreclosure action by the filing of a Summons and Verified Complaint on August 3, 2009. Defendant Daniel Corrar a/k/a Daniel Carraz a/k/a Daniel Cokrar a/k/a Daniel E. Corrar (hereinafter “defendant”) was allegedly served pursuant to CPLR §308(2) by delivery of the Summons and Verified Complaint to a co-tenant on August 6, 2009 and by the required mailing on August 11, 2009. Defendant failed to answer. A proposed Order of Reference was received by the Court on September 23, 2009. By letter dated October 13, 2010, plaintiff withdrew its proposed Order of Reference. On January 17, 2013, plaintiff filed a motion [*2]for an Order of Reference, noticed for February 6, 2013. On February 6, 2013, both plaintiff and defendant failed to appear and said motion was marked off. On September 27, 2013, plaintiff filed its second motion for an Order of Reference. On the return date, defendant appeared pro-se and the case was adjourned at his request to retain counsel. On January 29, 2014, defendant cross-moved for an order dismissing the complaint pursuant to CPLR §3215(c); cancelling any accrued interest from the date of defendant’s default including all fees and penalties; and, in the alternative, granting him an extension of time to serve an answer.Defendant maintains he never received the Summons and Verified Complaint. He submits an affidavit wherein he states he completed a trial modification in October 2008, prior to the action’s commencement. Thereafter, he was informed that IndyMac was no longer servicing his loan and he was unable to ascertain the identity of the new servicer. He maintains he does not know the co-tenant who was allegedly served with the Summons and Verified Complaint and that the first he learned of this action was when he received plaintiff’s second motion for an Order of Reference on September 24, 2013. Defendant argues that plaintiff failed to move for a default judgment within a year after defendant’s default and, therefore, pursuant to CPLR §3215(c), the action should be dismissed.

In opposition to defendant’s cross-motion, plaintiff argues that it made an application for entry of a default judgment within a year of defendant’s default, despite the application having been withdrawn. Plaintiff maintains that the threshold for satisfying CPLR §3215(c) is very low and merely an application for a default judgment is enough. Moreover, it argues that settlement discussions can constitute a reasonable excuse for plaintiff’s delay in entering a judgment and notes that on May 18, 2010, the case was calendered for a foreclosure pre-settlement conference.

CPLR §3215(c) states, in pertinent part, that if a plaintiff “fails to take proceedings for the entry of judgment within one year after the default, the Court shall…dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed.” This section “prevents a plaintiff from taking advantage of a defendant’s default where the plaintiff has also been guilty of inaction.” Myers v. Slutsky, 139 AD2d 709, 710 (2d Dept 1988). The legislative intent underlying CPLR §3215(c) was to “prevent the plaintiffs from unreasonably delaying the determination of an action…” and “to avoid inquests on stale claims (citations omitted).” Id., Giglio v. NTIMP, Inc., 86 AD3d 301, 307 (2d Dept 2011).

The Court does not agree with plaintiff’s contention that it made an application for entry of a default judgment within one year of defendant’s default. In fact, upon review of the papers, it is noted that plaintiff submitted an ex-parte application for an Order of Reference only, which was submitted directly to the court clerk. Therefore, this “application” could not have been a motion for a default judgment pursuant to CPLR §3215. Moreover, even if the Court considered plaintiff’s application to be a motion pursuant to CPLR §3215, said application or motion was withdrawn by plaintiff. “The effect of a withdrawal of a motion is to leave the record as it stood prior to its filing as though it had not been made.” Stoute v. City of New York, 91 AD2d 1043, [*3]app dismissed 59 NY2d 602, lv to app dismissed 59 NY2d 762 (1983). On January 17, 2013, approximately two and a half years after defendant’s alleged default, plaintiff filed its first motion for an Order of Reference. The Notice of Motion did not state plaintiff was seeking a default judgment. The motion was marked off on February 6, 2013. Plaintiff now makes its second motion for an Order of Reference. Again, upon review of the Notice of Motion, it still does not seek a default judgment, even though defendant’s alleged default occurred almost four years ago.

The Court finds plaintiff’s remaining argument that the May 18, 2010 foreclosure pre-settlement conference constitutes a reasonable excuse for plaintiff’s delay in entering a judgment to be without merit. Defendant did not appear and no conference was held. Moreover, the case was in that part only once, and after that one appearance, the case was immediately released to the IAS part for plaintiff to proceed.

In view of the foregoing, plaintiff’s application for an Order of Reference is hereby denied and defendant’s cross-motion to dismiss pursuant to CPLR §3215(c) is hereby granted.The foregoing shall constitute the Decision and Order of the Court.

DONALD SCOTT KURTZ
Justice, Supreme Court

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Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities

Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities

via: http://diversity.berkeley.edu

The Haas Institute has just released a new report entitled Underwater America: How the So-Called Housing Recovery is Bypassing Many CommunitiesDownload the full report here.

The report was launched at a national press conference on May 8 in Richmond, CA, in order to highlight the problem of widespread “underwater mortgages” – homeowners stuck in loans for more than their home is worth- which persists in many communities across the country. The report identifies the nation’s most troubled hot spots: the cities, metro areas and communities where the highest proportion of homeowners still have negative equity, or are “underwater.”  The report’s authors argue that market forces alone will not bring the recovery to these severely impacted communities, and call for local or federal intervention to reduce mortgage principal.

PRESS COVERAGE

NATIONAL

http://www.nytimes.com/2014/05/09/opinion/what-housing-recovery.html

http://www.reuters.com/article/2014/05/08/us-usa-housing-minorities-idUSBREA4713020140508

http://www.americanbanker.com/bankthink/morning-scan-more-fighting-over-fannie-freddie-yellen-on-shadow-banks-1067403-1.html

http://www.huffingtonpost.com/peter-dreier/post_7590_b_5313595.html

http://www.nytimes.com/2014/05/17/opinion/avoiding-foreclosure-a-view-from-the-treasury-dept.html

CALIFORNIA

http://sanfrancisco.cbslocal.com/2014/05/08/uc-berkeley-study-looks-at-underwater-mortgage-problem-supports-richmonds-eminent-domain-plan/

http://www.mercurynews.com/business/ci_25725683/underwater-homes-minorities-still-suffering-from-housing-collapse

http://www.contracostatimes.com/business/ci_25725683/underwater-homes-minorities-still-suffering-from-housing-collapse

http://blogs.kqed.org/newsfix/uc-berkeley-report-calls-for-action-on-underwater-homes

http://www.baycitynews.com/bcn/general/05/newsclip.14.05.09.21.51.00.1.txt

http://www.timesheraldonline.com/news/ci_25728872/vallejo-among-top-u-s-cities-mortgages-underwater

http://richmondstandard.com/2014/05/richmond/

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20140510/A_BIZ/405130302/-1/a_biz

http://www.modbee.com/2014/05/13/3338939/stanislaus-countys-home-affordability.html?sp=/99/1623/

CONNECTICUT

http://www.ctpost.com/news/article/Bridgeport-lands-on-top-10-underwater-mortgage-5472872.php

http://www.courant.com/business/real-estate/hc-hartford-tops-underwater-home-mortgages-story,0,1021185.htmlstory

http://www.courant.com/business/real-estate/hc-underwater-mortgages-in-connecticut-20140508,0,452800.htmlpage

http://www.rep-am.com/business/802799.txt

http://wnpr.org/post/homes-hartford-top-list-underwater-cities

http://connecticut.cbslocal.com/2014/05/09/hartford-hardest-hit-by-underwater-mortgages/

http://www.wfsb.com/story/25471944/report-hartford-top-city-with-underwater-mortgages

http://www.hartfordbusiness.com/article/20140508/NEWS01/140509915

http://www.ctnow.com/business/hc-hartford-underwater-mortgages-20140508,0,332458.story

http://wnpr.org/post/lawmakers-avert-legal-aid-cuts-q-poll-shows-gubernatorial-race-deadlocked

WISCONSIN

http://www.jsonline.com/blogs/purple-wisconsin/258542721.html

http://www.jsonline.com/news/milwaukee/wells-fargo-injects-515-million-into-milwaukee-home-buyer-program-b99265500z1-258493141.html

http://milwaukeecourieronline.com/index.php/2014/05/10/report-shows-housing-crisis-far-from-over-for-milwaukee/
http://milwaukeecourieronline.com/index.php/2014/05/17/state-action-needed-to-solve-milwaukees-foreclosure-crisis/

http://www.wisconsingazette.com/trending-news/tiny-homes-big-solutions.html

NEW JERSEY

www.njspotlight.com/stories/14/05/09/nj-still-drowning-in-underwater-mortgages-new-study-reveals

ST. LOUIS

http://www.stltoday.com/business/local/st-louis-is-hot-spot-for-underwater-mortgages/article_1a9b46b5-38f4-5b93-b4b4-e895f8e0bab5.html

http://www.kansas.com/2014/05/10/3449242/st-louis-area-hotspot-for-underwater.html

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor/lots-of-opportunities-to-buy-in-north-county/article_4907c724-5478-5e80-af48-a7d79fede68d.html

DETROIT

http://wdet.org/shows/craig-fahle-show/episode/homes-underwater-detroit/

http://articles.chicagotribune.com/2014-05-13/business/sns-rt-us-usa-detroit-housing-20140513_1_bankrupt-detroit-modifications-housing-market

http://metrotimes.com/news/news-hits/redefining-eminent-domain-1.1684933

MEMPHIS

http://www.bizjournals.com/memphis/news/2014/05/12/report-housing-recovery-is-skipping-memphis.html

ORLANDO

http://articles.orlandosentinel.com/2014-05-07/business/os-orlando-home-cash-buyers-20140507_1_realtytrac-report-metro-orlando-orlando-area

ATLANTA

http://atlantablackstar.com/2014/05/31/homeowners-color-still-underwater/

CHARLESTON, SC

http://www.charlestonchronicle.net/83287/2152/housing-recovery-ignores-black-and-latino-communities

In the first report of its kind, the authors analyze negative equity and foreclosure data together with race and income data, at a zip code level, as well as city and metropolitan area. The report uncovers the depth of the housing problem that persists in these hard hit communities, as well as how the legacy of predatory lending has meant a disproportionate negative impact on African American and Latino communities. One in ten Americans live in the 100 hardest hit cities where the number of underwater homeowners range from 22% to 56%, the report says.

REPORT AUTHORS: Peter Dreier, Professor of Politics and chair of the Urban & Environmental Policy Department at Occidental CollegeSaqib Bhatti, Fellow at the Nathan Cummings FoundationRob Call, graduate student in urban planning at the Massachusetts Institute of TechnologyAlex Schwartz, Professor of Urban Policy at the Milano School of International Affairs, Management, and Urban Policy at The New School; and Gregory Squires, Professor of Sociology and Public Policy & Public Administration and chair of the Department of Sociology at The George Washington University.

RECOMMENDATIONS FROM THE REPORT

1. Loan holders—banks, government sponsored enterprises (i.e., Fannie Mae and Freddie Mac, which are regulated by the Federal Housing Finance Agency, FHFA), and investors—should reduce the principal on underwater mortgages to current market values.

2. If loan holders are unwilling or unable to reduce the principal on underwater mortgages to current market values, they should allow these loans to be purchased by publicly-owned or nonprofit entities that are willing to restructure them with fair and affordable terms.

3. Local municipalities should use all options at their disposal to facilitate the goal of resetting mortgages to current market values, including the use of “reverse eminent domain” (the program proposed in Richmond, California and elsewhere) to acquire mortgages in order to restructure them with fair and affordable terms.

4. Banks, government sponsored enterprises like Fannie Mae and Freddie Mac, and investors that own vacant homes that have already been foreclosed upon should sell them to publicly- owned or nonprofit entities that can convert them to affordable housing units for residents of the community instead of selling them to speculators.

5. Local municipalities should use all options at their disposal to facilitate the goal of turning vacant, foreclosed homes into affordable housing. This includes the use of “reverse eminent domain” to acquire properties in order to convert them to af- fordable housing units for residents of the community and to prevent them from being purchased by speculators.


Fact Sheets on Hardest-Hit Areas

View specific reports on the hardest-hit cities and neighborhoods. 

California Cities

Georgia ZIP Codes

Antioch, CA

Atlanta, GA

Baltimore, MD

Cincinnati, OH

Cleveland, OH

Coachella, CA

Detroit, MI

Hartford, CT

Irvington, NJ

Milwaukee, WI

Minneapolis, MN

New York, NY

Newark, NJ

Richmond, CA

San Pablo, CA

Seattle, WA

Vallejo, CA.pdf

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Burt v. Bank of New York Mellon | California Ruling Supporting Glaski Case Issues and the Homeowners

Burt v. Bank of New York Mellon | California Ruling Supporting Glaski Case Issues and the Homeowners

Tentative Rulings for Department 403

3 Tentative Ruling

Re: Burt v. Bank of New York Mellon
Case No. 14CECG00641

Hearing Date: June 4th, 2014 (Dept. 403)

Motion: Defendants’ Demurrer to Complaint

Tentative Ruling:
To overrule the demurrer to the complaint, in its entirety. (Code Civ. Proc. §
430.10(e).) Defendants shall serve and file their answer within ten days of the date of
service of this order.

Explanation:
Defendants have demurred to the entire complaint on the ground that it fails to
state facts sufficient to constitute a cause of action. Their first argument is that plaintiffs
are required to allege that they are ready, willing and able to tender the entire amount
they owe under the loan in order to state a claim for wrongful foreclosure, or related
causes of action.

In Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, the Court of
Appeal stated, “It is settled that an action to set aside a trustee’s sale for irregularities in
sale notice or procedure should be accompanied by an offer to pay the full amount of
the debt for which the property was security.” (Arnolds Management Corp. v. Eischen
(1984) 158 Cal.App.3d 575, 578-579, emphasis added.)

Here, however, plaintiffs are not attempting to set aside a completed trustee’s
sale. They are instead trying to prevent the foreclosure sale from happening at all.
Thus, the rule stated in Arnolds Management does not apply here, because the
trustee’s sale has not yet taken place.

Also, in Glaski v. Bank of America, N.A. (2013) 218 Cal.App.4th 1079, the Fifth
District Court of Appeal held that a plaintiff who challenges a pending foreclosure
proceeding based on alleged defects in the assignment of the note and deed of trust
that render the assignment void does not have to allege tender in order to state a valid
claim for wrongful foreclosure and related claims.

“Tender is not required where the foreclosure sale is void, rather than voidable,
such as when a plaintiff proves that the entity lacked the authority to foreclose on the
property. [¶] Accordingly, we cannot uphold the demurrer to the wrongful foreclosure
claim based on the absence of an allegation that Glaski tendered the amount due
under his loan.” (Id. at 1100, internal citations omitted.)

Here, plaintiffs have alleged that the assignment of the note and deed of trust is
void because it was completed after the closing date of the trust. (Complaint, ¶¶ 21-
26.) Thus, plaintiffs are not required to allege tender of the full amount due under the
loan in order to support their claims. The court declines to sustain the demurrer to the
extent it is based on the tender rule.

Next, defendants argue that plaintiffs have not stated a claim under Civil Code
section 2923.6 because the statute only applies to “owner-occupied residential”
properties (Civil Code § 2924.15(a)), and plaintiffs have admitted that their property is
not residential. Plaintiffs have alleged that the County of Fresno refused to recognize
their property as residential, and County records only show a “mobile home” on the
property. (Complaint, ¶ 29.)

Section 2924.15(a) does not define what “residential” property is, but it does
state that “‘owner-occupied’ means that the property is the principal residence of the
borrower and is security for a loan made for personal, family, or household purposes.”
(Civ. Code, § 2924.15(a).) Here, the plaintiffs have alleged that the property is their
principal residence, and that it was security for the loan made for the personal, family
or household purposes. (Complaint, ¶¶ 28, 62.) While the property may not be
recognized as containing a residence in the County’s records, the plaintiffs have
adequately alleged that they are actually residing on the property, and that the loan
was made to purchase their family home. Therefore, plaintiffs have sufficiently alleged
that the property is “owner-occupied residential real property” for the purpose of
section 2923.6(a).

Defendants also argue that plaintiffs have not alleged any actual violation of
section 2923.6, because section 2923.6 only bars foreclosure proceedings when a loan
modification application is pending, and here the plaintiffs admit that they did not
submit their loan modification application until after the notice of default was issued.

Civil Code section 2923.6(c) states, in part, “If a borrower submits a complete
application for a first lien loan modification offered by, or through, the borrower’s
mortgage servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default or notice of sale, or conduct a trustee’s sale,
while the complete first lien loan modification application is pending. A mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall not record a notice
of default or notice of sale or conduct a trustee’s sale until any of the following occurs:
(1) The mortgage servicer makes a written determination that the borrower is not
eligible for a first lien loan modification, and any appeal period pursuant to subdivision
(d) has expired.”

Here, plaintiffs allege that they were attempting to obtain a loan modification
application in June of 2013, but they did not actually receive the application until July
3rd, 2013. (Complaint, ¶¶ 38, 40.) They completed and submitted the loan modification
application on July 24th, 2013 by Federal Express. (Id. at ¶ 40.) However, the notice of
default was issued on June 21st, 2013, before the loan modification application was
completed or sent out. (Request for Judicial Notice, Exhibit 3. The court intends to take
judicial notice of the notice of default and the other documents attached to the
request for judicial notice as officially recorded documents.) Thus, plaintiffs cannot
show that the notice of default was issued in violation of section 2923.6.

On the other hand, plaintiffs also allege that defendants issued the notice of
trustee’s sale on February 12th, 2014, while the loan modification process was still
pending. (Complaint, ¶¶ 41-55.) The Bank appears to claim that the notice of trustee’s
sale was sent out after the first application for loan modification had been denied, and
before plaintiffs resubmitted a new application. However, the allegations of the
complaint appear to indicate that the first loan modification application was pending
at the time the notice of trustee’s sale was served on plaintiffs. (Complaint, ¶¶ 51, 55.)
Defendants have not shown that there was a written denial of the application before
the notice of trustee’s sale was issued. Therefore, the plaintiffs have sufficiently alleged
that the defendants violated section 2923.6 by issuing the notice of trustee’s sale while
the loan modification application was pending.

With regard to the second cause of action for wrongful foreclosure, defendants
argue that the plaintiffs cannot show that they were injured by the alleged irregularities
in the assignment process, as there was no change in their obligations under the note.
They also contend that plaintiffs have no standing to allege defects in the assignment,
because they were not parties to the assignment. However, the Fifth District Court of
Appeal rejected these arguments in Glaski v. Bank of America, supra, 218 Cal.App.4th
1079.

In Glaski, the Court of Appeal found that the plaintiff had alleged sufficient facts
to support claims for wrongful foreclosure, quiet title, declaratory relief, cancellation of
instruments, and unfair business practices under Business and Professions Code section
17200 based on alleged defects in the assignment of the note and deed of trust.
(Glaski, supra, at 1101.) The Glaski court found that the allegation that the assignment
was made after the closing date of the trust was sufficient to show that the assignment
was void, and thus the lender had no authority to foreclose on the property. (Id. at
1096-1097.) The Glaski court also rejected the argument that the borrower has no
standing to challenge the assignment because the borrower was not a party to the
assignment. (Id. at 1094-1095.)

Here, plaintiffs’ allegations are similar to those in Glaski, since plaintiffs are
alleging that the deed of trust and note were not transferred or assigned properly
before the closing date for the trust. (Complaint, ¶¶ 23-25.) Therefore, under Glaski, the
plaintiffs have stated a valid claim for wrongful foreclosure, because Bank of America
and Bank of New York allegedly have no standing to foreclose on the note.
Conversely, plaintiffs do have standing to assert the improper assignment, because
they are alleging that the assignment is void, and not just voidable. (Glaski, supra, at
1094-1095.) The court in Glaski did not require any showing that the borrower suffered
actual prejudice from the improper assignment, since the improper assignment
rendered the entire assignment void. (Ibid.) Therefore, the court intends to overrule the
demurrer to the second cause of action for wrongful foreclosure.

Likewise, the third cause of action for cancellation of the notice of default,
assignment of the deed of trust, and notice of trustee’s sale is also sufficiently alleged.

In Glaski, the court specifically found that plaintiff could state a claim for, among other
things, cancellation of the allegedly invalid instruments based on the defects in the
assignment. (Glaski, supra, at 1101.) Here, plaintiffs have made allegations that the
assignment was void, so the court will permit plaintiffs to proceed with their cancellation
of instruments cause of action and overrule the demurrer to the third cause of action.
For the same reasons, plaintiffs have adequately alleged their quiet title claim in
the fourth cause of action. Glaski specifically held that plaintiff could allege a quiet title
claim based on the same theory alleged in the present case. (Glaski, supra, at 1101.)
Defendants argue that plaintiffs cannot state a quiet title claim against them because
plaintiffs have not alleged full payment of the note. However, plaintiffs have alleged
that defendants have no authority to collect payments on the note or foreclose on the
property because of the improper assignment. (Complaint, ¶ 84.) Therefore, plaintiffs
do not have to allege that they paid the note in order to allege a quiet title claim
against defendants.

Finally, defendants demur to the plaintiffs’ fifth cause of action for unfair business
practices under Business and Professions Code section 17200, contending that plaintiffs
have not alleged a predicate violation of any statute, or that they have suffered any
loss of money or property as a result of defendants’ actions. However, as discussed
above, plaintiffs have adequately alleged violations of Civil Code section 2923.6 by
proceeding with the foreclosure while the loan modification application was pending,
as well as falsely claiming that they were entitled to collect on the note when allegedly
the assignment of the note and deed of trust was invalid. Thus, plaintiffs have
sufficiently alleged predicate violations of other laws to support their UCL claim. In
addition, plaintiffs have alleged that they are in danger of losing their home due to
defendants’ unfair business practices. Therefore, plaintiffs have sufficiently alleged their
claim under the UCL, and the court intends to overrule the demurrer to the fifth cause
of action.

Pursuant to CRC 3.1312 and CCP §1019.5(a), no further written order is necessary.
The minute order adopting this tentative ruling will serve as the order of the court and
service by the clerk will constitute notice of the order.

Tentative Ruling
Issued By: KCK on 6/3/2014 .
(Judge’s initials) (Date)

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Appeals Court Overturns Decision to Reject S.E.C.-Citigroup Settlement

Appeals Court Overturns Decision to Reject S.E.C.-Citigroup Settlement

Always great to see the SEC and the ones that commits the fraud team up! This is Team Work Ya’ll!!

Update: SEC releases Statement on 2nd Circuit Decision:

Andrew Ceresney
Director, SEC Division of Enforcement

June 4, 2014

“We are pleased with today’s ruling by the Second Circuit Court of Appeals reaffirming the significant deference accorded to the SEC in determining whether to settle with parties and on what terms.  While the SEC has and will continue to seek admissions in appropriate cases, settlements without admissions also enable regulatory agencies to serve the public interest by returning money to harmed investors more quickly, without the uncertainty and delay from litigation and without the need to expend additional agency resources.”

NY Times-

A federal appeals court on Wednesday overturned a judge’s decision to reject a federal settlement deal with Citigroup, undercutting the judge’s concerns that the bank got off with little more than a slap on the wrist.

In a long-awaited 28-page opinion, a three-judge panel of the United States Court of Appeals for the Second Circuit concluded that the trial judge “abused its discretion by applying an incorrect legal standard in its review” of the case. The harsh rebuke of the judge, Jed S. Rakoff, now sets in motion a process that will most likely lead to the deal being approved.

The opinion, coming nearly three years after the bank settled the case with the Securities and Exchange Commission, represents a turning point in the debate over how to punish Wall Street misdeeds. As Wall Street remains under the federal spotlight, facing both criminal and civil scrutiny, banks looked to the Citigroup case as a barometer for the broader crackdown.

[NEW YORK TIMES]

image: Justin Maxon/The New York Times

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Debt Collection & Debt Buying — The State of Lending in America & its Impact on U.S. Households | Center for Responsible Lending

Debt Collection & Debt Buying — The State of Lending in America & its Impact on U.S. Households | Center for Responsible Lending

Once a consumer obtains a loan, an entirely different set of actors and rules comes into play in collecting the loan should it go into default. For many consumers, defaulting on a loan is inevitable when unemployment, medical emergencies, or some other financial crisis leaves them unable to cover the payments.

The Great Recession only made this outcome more likely for more U.S. households. Currently, more than one in seven adults is being pursued by debt collectors in the U.S., for amounts averaging about $1,500 (Federal Reserve Bank of New York, 2014).

If a borrower is unable to make payments on a loan for a certain period of time, the lender will
typically deem the obligation to be in default and attempt to collect on the debt. The lender can
do so by pursuing the borrower itself using an internal collections department or by outsourcing
collection activities to a third-party debt collector or law firm. The lender generally will also report
the debt to the major credit reporting agencies (CRAs).

The third-party debt collection industry has grown tremendously over the past few decades, with
2010 revenue more than 6.5 times that of 1972, after controlling for inflation (Hunt, 2013). The
industry’s participants make more than one billion consumer contacts annually for hospitals, govern
-ment entities, banks and credit card companies, student lenders, telecommunications companies, and
utility providers (Hunt, 2013).

The federal Fair Debt Collection Practices Act (FDCPA) prohibits unfair, deceptive, and abusive
debt-collection practices, such as threatening consumers, misrepresenting consumers’ rights, and
making harassing phone calls. However, the FDCPA only applies to third-party debt collectors and
thus does not apply to creditors—such as many banks and hospitals—that collect their own debts.
The Consumer Financial Protection Bureau (CFPB) has the authority to write and enforce rules
related to this statute and can also examine “larger participant” debt collectors for compliance. In
many states, debt collectors must be licensed in order to collect debts in the state and thus are also
subject to state oversight.

Although debt collection plays an important role in the functioning of the U.S. credit market, it
may also expose American households to unnecessary abuses, harassment, and other illegal conduct.
The Federal Trade Commission (FTC) received over 200,000 complaints about debt collection in
2013—second only to complaints regarding identity theft (FTC, 2014a).

[...]

 

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