Billion | FORECLOSURE FRAUD | by DinSFLA - Part 2

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Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for Defrauding Investors in the Lead Up to the Financial Crisis

Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for Defrauding Investors in the Lead Up to the Financial Crisis

FOR IMMEDIATE RELEASE
Tuesday, February 3, 2015

Justice Department and State Partners Secure $1.375 Billion Settlement with S&P for Defrauding Investors in the Lead Up to the Financial Crisis

Attorney General Eric Holder announced today that the Department of Justice and 19 states and the District of Columbia have entered into a $1.375 billion settlement agreement with the rating agency Standard & Poor’s Financial Services LLC, along with its parent corporation McGraw Hill Financial Inc., to resolve allegations that S&P had engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs).  The agreement resolves the department’s 2013 lawsuit against S&P, along with the suits of 19 states and the District of Columbia.  Each of the lawsuits allege that investors incurred substantial losses on RMBS and CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks.  Other allegations assert that S&P falsely represented that its ratings were objective, independent and uninfluenced by S&P’s business relationships with the investment banks that issued the securities.

The settlement announced today is comprised of several elements.  In addition to the payment of $1.375 billion, S&P has acknowledged conduct associated with its ratings of RMBS and CDOs during 2004 to 2007 in an agreed statement of facts.  It has further agreed to formally retract an allegation that the United States’ lawsuit was filed in retaliation for the defendant’s decisions with regard to the credit of the United States.  Finally, S&P has agreed to comply with the consumer protection statutes of each of the settling states and the District of Columbia, and to respond, in good faith, to requests from any of the states and the District of Columbia for information or material concerning any possible violation of those laws. 

“On more than one occasion, the company’s leadership ignored senior analysts who warned that the company had given top ratings to financial products that were failing to perform as advertised,” said Attorney General Holder.  “As S&P admits under this settlement, company executives complained that the company declined to downgrade underperforming assets because it was worried that doing so would hurt the company’s business.  While this strategy may have helped S&P avoid disappointing its clients, it did major harm to the larger economy, contributing to the worst financial crisis since the Great Depression.”

Attorney General Holder was joined in announcing the settlement with Acting Associate Attorney General Stuart F. Delery, Acting Assistant Attorney General for the Civil Division Joyce R. Branda and Acting U.S. Attorney for the Central District of California Stephanie Yonekura.  Also joining the Department of Justice in making this announcement are the attorneys general from Arizona, Arkansas, California, Connecticut, Colorado, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Washington and the District of Columbia.

“This resolution provides further proof that the Department of Justice will vigorously pursue investigations and litigation, no matter how challenging, to protect the best interests of the American people,” said Acting Associate Attorney General Delery.  “As part of the resolution, S&P admitted facts demonstrating that it misrepresented itself to investors and the public, allowing the pursuit of profits to bias its ratings.  S&P also agreed to retract its unsubstantiated claim that this lawsuit was initiated in retaliation for the decisions S&P made about the credit rating of the U.S. government.  Today’s announcement is the latest result of our dedicated effort to address misconduct of every kind that contributed to the financial crisis.”

“Today’s historic settlement demonstrates that we will use all of our resources and every legal tool available to hold accountable those who commit financial fraud,” said Acting Assistant Attorney General Branda.  “Thanks to the tireless efforts of our team in Washington and California, S&P has not only paid a record-setting penalty, but has now admitted to the American people facts that make clear its own unlawful role in the financial crisis.”

Half of the $1.375 billion payment – or $687.5 million – constitutes a penalty to be paid to the federal government and is the largest penalty of its type ever paid by a ratings agency.  The remaining $687.5 million will be divided among the 19 states and the District of Columbia.  The allocation among the states and the District of Columbia reflects an agreement between the states on the distribution of that money.

In its agreed statement of facts, S&P admits that its decisions on its rating models were affected by business concerns, and that, with an eye to business concerns, S&P maintained and continued to issue positive ratings on securities despite a growing awareness of quality problems with those securities. S&P acknowledges that:

  • S&P promised investors at all relevant times that its ratings must be independent and objective and must not be affected by any existing or potential business relationship;
  • S&P executives have admitted, despite its representations, that decisions about the testing and rollout of updates to S&P’s model for rating CDOs were made, at least in part, based on the effect that any update would have on S&P’s business relationship with issuers;
  • Relevant people within S&P knew in 2007 many loans in RMBS transactions S&P were rating were delinquent and that losses were probable;
  • S&P representatives continued to issue and confirm positive ratings without adjustments to reflect the negative rating actions that it expected would come.

In addition, S&P acknowledges that the voluminous discovery provided to S&P by the United States in the litigation does not support their allegation that the United States’ complaint was filed in retaliation for S&P’s 2011 decisions on the credit rating of the United States.  S&P will formally retract that claim in the litigation.

“S&P played a central role in the crisis that devastated our economy by giving AAA ratings to mortgage-backed securities that turned out to be little better than junk,” said Acting U.S. Attorney Yonekura.  “Driven by a desire to increase profits and market share, S&P blessed innumerable securitizations that were used by aggressive lenders to offload the risks of billions of dollars in mortgage loans given to homeowners who had no ability to pay them off.  This conduct fueled the meltdown that ultimately led to tens of thousands of foreclosures in my district alone.  This historic settlement makes clear the consequences of putting corporate profits over honesty in the financial markets.”

Today’s settlement was announced in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes, enhancing coordination and cooperation among federal, state and local authorities, addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

15-126
Consumer Protection
StopFraud
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WEISS vs BANK OF AMERICA | PA: Homeowners file RICO class action against Bank of America

WEISS vs BANK OF AMERICA | PA: Homeowners file RICO class action against Bank of America

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF PENNSYLVANIA

WILLIAM WEISS and ROBERT LESSMAN, and
ANN HARRELL and EDDIE HARRELL,
individually and on behalf of all others similarly
situated,
Plaintiffs,

v.

BANK OF AMERICA CORPORATION, BANK
OF AMERICA, N.A., and BANK OF AMERICA
REINSURANCE CORPORATION,
Defendants.

INTRODUCTION

1. Defendants Bank of America Corporation (“BAC”), Bank of America, N.A, (“BoA
N.A.”), and their affiliated reinsurer, Bank of America Reinsurance Corporation (“BoA RE”)
(collectively, “Bank of America”), have engaged in a pattern of racketeering activity in violation of
the Racketeer Influenced and Corrupt Organizations Act (“RICO”) by effectuating a captive
reinsurance scheme which defrauded Plaintiffs William Weiss, Robert Lessman, Ann Harrell and
Eddie Harrell (collectively, “Plaintiffs”) and the Class (defined below) and compelled them to fund
illegal kickbacks and referral payments in the form of purported reinsurance premiums that were
paid by United Guaranty Residential Insurance Company, Triad Guaranty Insurance Corporation,
Republic Mortgage Insurance Company, Mortgage Guaranty Insurance Corporation, Radian
Guaranty Inc., Genworth Mortgage Insurance Corporation, and PMI Mortgage Insurance Company
(collectively, the “Private Mortgage Insurers”) to BoA RE.

2. This is a proposed nationwide action brought by Plaintiffs on behalf of themselves and
a class of all other similarly situated persons who obtained residential mortgage loans originated,
funded and/or originated through correspondent lending by BAC and/or BoA N.A. and their mortgage
lending subsidiaries and/or affiliates between January 1, 2004, and the present (the “Class Period”)
and, in connection therewith, purchased private mortgage insurance and whose residential mortgage
loans were included within Bank of America’s captive mortgage reinsurance arrangements
(hereinafter, the “Class”).

3. Captive reinsurance schemes, such as the scheme involving Defendants described
herein, have been widespread throughout the mortgage lending industry. As American Banker
magazine reported in connection with an investigation by the Inspector General of the Department of
Housing and Urban Development (“HUD”), “beginning in the late 1990s major U.S. banks began
coercing [private mortgage] insurers into cutting them in on what would ultimately amount to $6
billion of insurance premiums in exchange for assuming little or no risk.” See Jeff Horwitz, Bank
Mortgage Kickback Scheme Thrived Amid Regulatory Inaction, American Banker (Sept. 16, 2011,
7:45 PM), http://www.americanbanker.com/issues/176_181/mortgages-reinsurance-deals-kickbacks-
HUD-1042277-1.html, attached as Exhibit 1 (hereinafter referred to as “Mortgage Kickback
Scheme”); see also Jeff Horwitz, Banks Took $6B in Reinsurance Kickbacks, Investigators Say,
American Banker (Sept. 6, 2011, 4:55 PM), http://www.americanbanker.com/issues/176_173/mortgage-reinsurance-respa-kickbacks-hudinvestigation-doj-1041928-1.html, attached as Exhibit 2 (hereinafter referred to as “Reinsurance
Kickbacks”).

[...]

Down Load PDF of This Case

 

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How corporate America is blocking $50 million from reaching Florida homeowners

How corporate America is blocking $50 million from reaching Florida homeowners

Palm Beach Post-

In March 2013, a $50 million foreclosure prevention program was approved to reduce monthly mortgage payments for struggling Florida homeowners.

But in nearly two years, just 71 borrowers have been approved for the plan, called the Modification Enabling Pilot.

Why it’s been slow on the uptake, and may eventually fatally stumble, is an inability to compete with corporate hedge funds and billion-dollar, for-profit firms still making money on the housing crisis. And it’s not an easy program to understand so the public lacks awareness.

[PALM BEACH POST]

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Exclusive: Big mortgage investors take first step toward suing Ocwen

Exclusive: Big mortgage investors take first step toward suing Ocwen

REUTERS-

Major mortgage bond investors including BlackRock (BLK.N), MetLife (MET.N) and Pimco (ALVG.DE) on Friday took a first step toward suing Ocwen Financial Corp (OCN.N), accusing it of having failed to properly collect payments on $82 billion of home loans, according to a person familiar with the matter and to documents seen by Reuters.

The group sent a formal notice of non-performance to Ocwen and trustees for 119 residential mortgage-backed securities trusts, alleging improper loan modification practices, wrongfully recouped advances, and a failure to account for cash flows.

The notice said that Ocwen also steered work to affiliates such as Altisource Portfolio Solutions (ASPS.O) and Home Loan Servicing Solutions (HLSS.O) for allegedly unnecessary or overpriced mortgage servicing to the detriment of the trusts, investors and borrowers.

[REUTERS]

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Four National Banks to Pay $2.7 Million to Massachusetts Over Unlawful Foreclosures

Four National Banks to Pay $2.7 Million to Massachusetts Over Unlawful Foreclosures

Bank of America, JP Morgan Chase, Citi and Wells Fargo Bank to Assist Consumers in Curing Foreclosure-Related Title Defects

BOSTON – Four national banks agreed to pay a total of $2.7 million and undertake obligations to facilitate the repair of defective property titles, resolving claims that they unlawfully foreclosed on properties in Massachusetts when they did not hold the mortgages, Attorney General Martha Coakley announced today.

The consent judgment, entered today in Suffolk Superior Court, resolves the AG’s allegations that Bank of America, JP Morgan Chase Bank, Citi, and Wells Fargo Bank violated Massachusetts foreclosure law and the Massachusetts Consumer Protection Act by illegally foreclosing upon Massachusetts residents’ homes when the banks lacked the legal authority to do so.

“Our continued work to address illegal foreclosures in Massachusetts plays an important role in ensuring liquidity in our housing market and providing relief to homeowners who purchased properties with defective titles,” AG Coakley said. “This settlement holds these four national banks accountable for violating state law and cutting corners in the foreclosure process.”

According to the amended complaint, the AG’s Office alleged that the defendants’ unlawful conduct resulted in void foreclosures affecting the marketability and insurability of property titles throughout the Commonwealth. The Supreme Judicial Court ruled in the Ibanez decision that mortgagees seeking to foreclose must strictly comply with Massachusetts foreclosure laws. Under the statutory power of sale and Massachusetts law, a foreclosure is void unless a bank or other foreclosing party is the mortgagee of record or holds the mortgage through a valid assignment before publishing the notice of foreclosure sale.

The amended complaint alleged that the banks ignored this fundamental legal mandate and foreclosed on homeowners when they had no legal authority to conduct the foreclosures. The banks’ failure to obtain a valid assignment of the mortgage prior to foreclosure has adversely impacted titles to numerous properties in the Commonwealth. The AG’s Office is continuing to negotiate a resolution of these claims also alleged against GMAC Mortgage, LLC, one of the named defendants, which filed bankruptcy in May 2012.

Under the terms of the settlement, the banks are obligated to assist a consumer who makes a claim that the title to his or her residence is void from an unlawful foreclosure by conducting a thorough title review, providing curative documents, releasing junior liens held by the banks, and, in cases where consumers do not have title insurance, paying reasonable costs associated with the title cure. In addition, the banks will pay $2.7 million, $700,000 of which will be allocated to the Attorney General’s Local Consumer Aid Fund to provide consumer assistance. The remaining $2 million of the settlement will be paid to the Commonwealth’s General Fund.

The complaint initially contained allegations against the banks relating to widespread mortgage servicing abuses and allegations against Mortgage Electronic Registration System, Inc. (“MERS”) and the banks for violation of Massachusetts law relating to registered land. The allegations relating to registered land were dismissed in November 2012, while the servicing allegations against the banks were resolved in the National Mortgage Settlement, a landmark agreement announced in February 2012. So far, the settlement has provided more than $63 billion in relief to distressed homeowners nationwide, and created significant new servicing standards which the banks must follow. The settlement brought more than $300 million in relief to Massachusetts borrowers, including a direct payment of more than $44.5 million to the Commonwealth, used in part to establish the AG’s HomeCorps program and offer grants aimed at helping to mitigate the impact of the foreclosure crisis.

In February 2014, Ocwen, the nation’s fourth largest mortgage servicer, entered into a $2.1 billion national settlement with the federal government, and 49 states, including Massachusetts, resulting in an estimated $80 million in principal reduction and cash payments to Massachusetts homeowners over claims of loan servicing misconduct and so-called “robo-signing.” Massachusetts homeowners also received approximately $1.5 million in cash payments from that multistate settlement. In addition, in June 2014, Massachusetts filed a separate assurance of discontinuance with Ocwen, paying Massachusetts $3.7 million to resolve claims that it failed to provide certain notices to homeowners and unlawfully foreclosed on certain properties in violation of state law.

More information about AG Coakley’s work during the lending crisis can be found on the AG’s website.

This matter was handled by Assistant Attorneys General Justin J. Lowe, Lisa R. Dyen and Division Chief Stephanie Kahn, with assistance from Assistant Attorneys General Amber Villa and Sara Cable, of Attorney General Martha Coakley’s Consumer Protection Division.

#############

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Is Ocwen Underwater?

Is Ocwen Underwater?

Capital and Main-

Last May, I wrote in Capital & Main about Ocwen, the non-bank mortgage servicing company that abused California homeowners by failing to honor signed agreements, illegally imposing fees and violating state regulations. In fact, when asked, a top-level Ocwen representative had never heard of the state’s groundbreaking consumer protection law, the Homeowner Bill of Rights (HBOR). The Ocwen rep said the company had no training for HBOR and no process established to conform to it.

It should come as no surprise, then, that Ocwen ignores its responsibilities to state regulators, the same way it ignores rules for dealing with homeowners. The California Department of Business Oversight alleges that Ocwen failed to deliver the agency documents showing Ocwen’s compliance with HBOR, despite 10 separate requests over 18 months, a subpoena and even a judicial order.

After imposing two comically low fines of $1,000 each, Commissioner of Business Oversight Jan Lynn Owen made a formal notice of intent to suspend Ocwen’s business license in California for one year. That would mean the company would have to immediately sell the servicing rights to more than 378,000 homes, with a principal balance of $95 billion. Nearly one in six loans Ocwen services are in California.

[CAPITAL AND MAIN]

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JPMorgan’s CEO Dimon: Amid the onslaught, the bank will “try to stop stepping in dog shit, which we do every now and then.”

JPMorgan’s CEO Dimon: Amid the onslaught, the bank will “try to stop stepping in dog shit, which we do every now and then.”

Buzz Feed-

Is JPMorgan too big? The question has been asked frequently by critics since the 2008 financial crisis lead to America’s largest bank getting even bigger — and paying out more than $20 billion in fines and penalties. And while being too big to fail attracts concern from one group of naysayers, doubts about its size have gained new credence after the bank announced today its profit fell by 6.6% in its most recent quarter compared to a year ago.

Earlier this month, a high-profile analyst report said the bank could be worth more broken up into pieces than it is today. That, plus worries about new regulatory requirements, has investors worried; JPMorgan stock fell 3.45% today to $56.81 today and is down 9.25% so far this year.

JPMorgan is unquestionably a behemoth: $2.6 trillion in assets, $757 billion worth of loans, $1.4 trillion in deposits, 241,000 employees all over the world, exposed to $65 trillion worth of derivatives trades. It has long argued that its size gives it unique advantages for its customers and shareholders, as well as healthily gushing revenue streams — $94.2 billion in 2014, $96.6 billion in 2013.

[BUZZ FEED]

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Ocwen Financial (OCN) Issues Commentary on California DBO Administrative Action

Ocwen Financial (OCN) Issues Commentary on California DBO Administrative Action

H/T Street Insider

Ocwen Financial Corporation

 January 13, 2015

Ocwen Cooperating With California Dept. of Business Oversight

 

Anticipates Resolution Through Cooperation With Prescribed Administrative Process

Effective Controls in Place to Ensure Compliance With California Regulations

ATLANTA, Jan. 13, 2015 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (NYSE:OCN), a leading financial services holding company, today commented that it is fully cooperating with the California Department of Business Oversight (DBO) to resolve an administrative action dated October 3, 2014.

Ron Faris, President and CEO of Ocwen commented, “We are cooperating fully with the Department of Business Oversight. Since this notification, we have dedicated substantial resources towards satisfying the DBO’s requests. We believe we have provided the requested information in the format requested. We expect that we will receive follow up requests or clarifications and that further document and information exchanges may take place. We expect our ongoing cooperation will result in a satisfactory outcome for all parties.”

“Ocwen has a strong track record in California in helping struggling homeowners, and we are committed to working cooperatively with the DBO to further our common goal of assisting struggling families. In 2014, Ocwen completed more than 13,000 loan modifications and over 3,500 short sales in California. Over 35 percent of these loan modifications in California included some form of principal reduction relief for homeowners, totaling more than $460 million,” added Mr. Faris.

“Ocwen has been a strong partner in helping California families save their homes from foreclosure. Ocwen’s Shared Appreciation Modification and principal reduction products have and continue to provide sustainable resolutions for struggling families in California,” stated Todd Emerson, CEO of Springboard, a non-profit, HUD-approved housing counseling agency formed in 1974 and dedicated to helping homeowners find the best solutions when facing difficulty with their mortgages.

Ocwen believes it has effective controls in place to ensure compliance with the California Homeowners Bill of Rights and all single point of contact requirements under federal and state laws.

“As an industry leader in mortgage loan modifications, both under government programs and in our proprietary program, Ocwen remains committed to assisting distressed homeowners. Since the outset of the mortgage crisis, Ocwen has provided more than 500,000 loan modifications nationwide and more principal reduction relief than any other mortgage servicer. In 2014 alone, Ocwen wrote down over $1.8 billion in principal on underwater mortgages nationwide,” said Mr. Faris. “We did not originate the loans we service, but we have taken a leading role in helping to stabilize communities most affected by the financial crisis. We intend to continue to play a leading role in helping homeowners.”

As part of its mission to assist homeowners, Ocwen has long-standing partnerships with leading non-profit consumer advocacy groups across the country. Ocwen works with non-profit groups to expand its reach and improve the quality of the assistance it provides to its customers.

“Since the outset of the mortgage crisis, Ocwen has been the best mortgage servicer in assisting homeowners throughout the country, particularly in hard hit areas in California,” said Faith Bautista, President and CEO of the National Asian American Coalition, a HUD-approved nonprofit organization with a focus on homeownership, diversity and consumer protection for underserved minority communities.  ”No other bank or servicer has been as responsive as Ocwen in providing loan modifications, principal write downs and helping struggling families keep their homes.”

Ricardo Byrd, Executive Director of the National Association of Neighborhoods (NAN), one of America’s largest and oldest grassroots organizations in the United States, said, “NAN applauds Ocwen’s leadership in homeownership preservation, especially in communities of color. They are unsurpassed in finding sustainable loan modifications for distressed borrowers and providing principal reductions for families stuck with underwater mortgages.”

“We are committed to resolving the DBO’s concerns, and we expect that we will be able to do so. In addition to working with leading non-profit organizations to further improve our ability to help homeowners, we continue to build a world class risk and compliance management system at Ocwen,” stated Marcelo Cruz, Chief Risk Officer of Ocwen.

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. Ocwen is headquartered in Atlanta, Georgia, and has additional offices and operations in California, Florida, Iowa, New Jersey, Pennsylvania, Texas, the United States Virgin Islands, Washington, DC, India and the Philippines. Utilizing proprietary technology, global infrastructure and world-class training and processes, we provide solutions that help homeowners and make our clients’ loans worth more. Additional information is available at www.Ocwen.com.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the following: uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing practices; uncertainty related to claims, litigation and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification and other practices; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to grow and adapt our business, including the availability of new loan servicing and other accretive business opportunities; uncertainty related to acquisitions, including our ability to close acquisitions and to integrate the systems, procedures and personnel of acquired assets and businesses; our ability to effectively manage our regulatory and contractual compliance obligations; the adequacy of our financial resources, including our sources of liquidity and ability to fund and recover advances, repay borrowings and comply with debt covenants; uncertainty related to general economic and market conditions, delinquency rates, home prices and disposition timelines on foreclosed properties; as well as other risks detailed in Ocwen’s reports and filings with the Securities and Exchange Commission (SEC), including its annual report on Form 10-K/A for the year ended December 31, 2013 (filed with the SEC on 08/18/14) and its quarterly report on Form 10-Q for the quarter ended September 30, 2014 (filed with the SEC on 10/31/14). Anyone wishing to understand Ocwen’s business should review its SEC filings. Ocwen’s forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. Ocwen may post information that is important to investors on its website.

CONTACT: FOR FURTHER INFORMATION CONTACT: Investors: Stephen Swett T: (203) 614-0141 E: shareholderrelations@ocwen.com Media: Sard Verbinnen & Co. Margaret Popper/David Millar T: 212-687-8080

Copyright 2015 Ocwen Financial Corporation

Source: http://shareholders.ocwen.com/releasedetail.cfm?ReleaseID=891150

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CA Dept of Business Oversight | OCWEN || ACCUSATION IN SUPPORT OF NOTICE OF INTENT TO ISSUE AN ORDER SUSPENDING RESIDENTIAL MORTGAGE LENDER AND LOAN SERVICER LICENSE

CA Dept of Business Oversight | OCWEN || ACCUSATION IN SUPPORT OF NOTICE OF INTENT TO ISSUE AN ORDER SUSPENDING RESIDENTIAL MORTGAGE LENDER AND LOAN SERVICER LICENSE


Case Number: FSD License #413-0544

Date of Initial Action: 10/03/14

Defendants/Respondents: Ocwen Loan Servicing, LLC
See also FSD Licensee Listing 413-0544

Documents:


 Lic. Status:  Active License  Lic. Date:  Jan 12, 2011
 Lic. Number:  4130544  Lic. Type:  Residential Mortgage Lender
 Name:  Ocwen Loan Servicing, LLC
  
 Address:  1661 Worthington Road Suite 100
West Palm Beach,  FL  33409

________________________

California Regulator In Process Of Suspending Ocwen Financial’s 

Forbes-Jan 13, 2015
Mortgage firm Ocwen Financial has found itself in hot water over … According to the L.A. Times, an administrative law judge will preside over …
Ocwen, California Regulators Lock Horns
In-Depth-Wall Street Journal-13 hours ago


Explore in depth (69 more articles)

Related:

03/14/2014
California Joins $2.1 Billion Settlement With Ocwen Mortgage Loan Servicing
The California share of relief to borrowers in the settlement between Ocwen and 49 states is $268 million. (PDF) (HTML)

________________________

Home About DBO

About Us

The Department of Business Oversight (DBO) provides protection to consumers and services to businesses engaged in financial transactions. The Department regulates a variety of financial services, products and professionals. The Department oversees the operations of state-licensed financial institutions, including banks, credit unions, money transmitters, issuers of payment instruments and travelers checks, and premium finance companies. Additionally, the Department licenses and regulates a variety of financial businesses, including securities brokers and dealers, investment advisers, deferred deposit (commonly known as payday loans) and certain fiduciaries and lenders. The Department regulates the offer and sale of securities, franchises and off-exchange commodities. For the complete list, see the Department’s Licensees page.

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Banks Rejected by U.S. High Court on Mortgage Securities Suits

Banks Rejected by U.S. High Court on Mortgage Securities Suits

Bloomberg-

The U.S. Supreme Court dealt a blow to Royal Bank of Scotland Group Plc and Nomura Holdings Inc. (8604), refusing to derail federal government lawsuits that seek billions of dollars over the sale of risky mortgage-backed securities.

The justices today turned away an appeal by four banks, including units of RBS and Nomura, in a case stemming from the collapse of two credit unions that owned more than $1.7 billion in those securities.

High court review might have helped RBS fight off a separate suit by the Federal Housing Finance Agency over $32 billion in mortgage-backed securities. RBS now is likely to settle that case for at least $1.7 billion, according to Elliott Stein and Alison Williams, analysts with Bloomberg Intelligence. Nomura may settle a smaller FHFA lawsuit against it as well.

[BLOOMBERG]

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JPMorgan settles currency price rigging lawsuit in U.S.

JPMorgan settles currency price rigging lawsuit in U.S.

Another day, another settlement.


Financial Times-

JPMorgan Chase & Co has become the first bank to settle a U.S. antitrust lawsuit in which investors accused 12 major banks of rigging prices in the $5 trillion-a-day foreign exchange market.

The settlement was disclosed in a letter filed on Monday with the U.S. District Court in Manhattan from lawyers for JPMorgan, the largest U.S. bank, and investors. Terms were not revealed. Settlement papers are to be filed with the court this month.

The accord requires court approval, and was reached after mediation with Kenneth Feinberg, who also oversees a General Motors Co program to compensate drivers whose vehicles had faulty ignition switches.

The 2013 lawsuit is separate from criminal and civil probes worldwide into whether banks rigged currency rates to boost profit at the expense of customers and investors. JPMorgan was among six banks that in November reached $4.3 billion of settlements with U.S. and European regulators.

[FINANCIAL TIMES]

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[VIDEO] Matt Taibbi and “The $9 Billion Witness” Who Exposed How JPMorgan Chase Helped Wreck the Economy

[VIDEO] Matt Taibbi and “The $9 Billion Witness” Who Exposed How JPMorgan Chase Helped Wreck the Economy

Democracy Now-

In holiday special, we feature a Democracy Now! broadcast exclusive interview with Alayne Fleischmann, the whistleblower who helped the Justice Department force JPMorgan Chase to pay one of the largest fines in U.S. history for its role in the financial crisis. She is featured in a Rolling Stone investigation by recently returned Matt Taibbi, who also joins us. Fleischmann details how she witnessed “massive criminal securities fraud” in the bank’s mortgage operations. Taibbi’s investigation is headlined, “The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking.”

[DEMOCRACY NOW]

image: youtube

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Ambac sues Bank of America over Countrywide mortgage bonds

Ambac sues Bank of America over Countrywide mortgage bonds

Perfect way to start off the New Year!


Reuters-

Ambac Assurance Corp sued Bank of America Corp to recoup hundreds of millions of dollars of losses from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from the bank’s Countrywide Home Loans unit.

In a complaint filed on Tuesday in a New York state court in Manhattan, Ambac accused Countrywide of lying about how well it underwrote so-called “pay option adjustable-rate mortgage negative amortization” loans that backed the securities.

The securities were issued in eight transactions between 2005 and 2007, Ambac said.

[REUTERS]

Image Credit: Reuters/Mike Blake

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






Posted in STOP FORECLOSURE FRAUD1 Comment

The Year in White-Collar Crime

The Year in White-Collar Crime

Simply Unbelievable.


NYT-

White-collar crime cases can take years to develop, so today’s headlines often reflect what happened well in the past. And as we approach the end of 2014, there is a sense, to steal a line from Yogi Berra, that it’s like déjà vu all over again.

We will, of course, see continued fallout from the practices that helped fuel the financial crisis. This past year, the Justice Department reached multibillion-dollar settlements with Bank of America and JPMorgan Chase for selling shoddy mortgage-backed securities before the financial crisis hit in 2008. Most of the loans packaged for investors were made by companies acquired by the banks as the real estate market spiraled downward in 2008, so they paid for the sins of others.

The settlements with big banks hardly close out cases from the financial crisis as names from the past keep popping to the surface. DealBook reported that the Justice Department was considering a civil fraud case against Angelo R. Mozilo, former chief executive of Countrywide Financial, which was at the center of the subprime mortgage market. Prosecutors in Los Angeles closed a criminal investigation a few months after Mr. Mozilo reached a settlement with the Securities and Exchange Commission in 2010 over securities fraud charges. But he may be back in the news again if a new round of civil fraud charges is filed.

The S.E.C. sued the former chief executives of mortgage giants Fannie Mae and Freddie Mac, along with other officers of the companies, for securities fraud in 2011 for not adequately disclosing the companies’ exposure to the subprime mortgages that led to a government bailout. Those cases are just winding up the discovery phase, so it is unlikely there will be a trial in 2015 as the two sides continue to fight over whether the case should proceed.

[NEW YORK TIMES]

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New York’s Top Cop Scores as Credit Suisse Faces $10 Billion Mortgage Fraud Suit

New York’s Top Cop Scores as Credit Suisse Faces $10 Billion Mortgage Fraud Suit

BusinessWeek-

Credit Suisse Group AG (CSGN) was ordered to face a $10 billion lawsuit by New York’s attorney general accusing the Swiss bank of fraud in the sales of mortgage-backed securities before the 2008 financial crisis.

A New York State Supreme Court justice rejected the bank’s request to dismiss the case, a move that gives leverage to Attorney General Eric Schneiderman to demand internal bank documents and force a settlement. New York demonstrated the bank may have engaged in misconduct, Justice Marcy Friedman said in a Dec. 24 decision, allowing the suit to head toward trial.

In addition to forcing Zurich-based Credit Suisse to defend itself or settle, the ruling may strengthen Schneiderman’s hand in punishing other banks for bad behavior tied to the recession.

[BUSINESS WEEK]

image: BusinessWeek

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






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NYDFS ANNOUNCES OCWEN CHAIRMAN TO RESIGN FROM FIRM AND RELATED COMPANIES; OCWEN TO PROVIDE DIRECT HOMEOWNER RELIEF AND UNDERTAKE SIGNIFICANT OPERATIONAL REFORMS

NYDFS ANNOUNCES OCWEN CHAIRMAN TO RESIGN FROM FIRM AND RELATED COMPANIES; OCWEN TO PROVIDE DIRECT HOMEOWNER RELIEF AND UNDERTAKE SIGNIFICANT OPERATIONAL REFORMS

December 22, 2014

Contact: Matt Anderson, 212-709-1691

NYDFS ANNOUNCES OCWEN CHAIRMAN TO RESIGN FROM FIRM AND RELATED COMPANIES; OCWEN TO PROVIDE DIRECT HOMEOWNER RELIEF AND UNDERTAKE SIGNIFICANT OPERATIONAL REFORMS

$150 Million in ‘Hard-dollar’ Assistance to New Yorkers

NYDFS Will Have Independent Monitor at Ocwen for up to Additional Three Years

Benjamin M. Lawsky, Superintendent of Financial Services, announced today that — to address serious conflict of interest issues uncovered during a New York State Department of Financial Services (NYDFS) investigation — William C. Erbey will step down from his position as Executive Chairman of Ocwen Financial Corporation (OCN) and from his positions as Chairman of the Board of Directors of each of four related companies: Altisource Portfolio Solutions S.A. (ASPS), Altisource Residential Corporation (RESI), Altisource Asset Management Corporation (AAMC), and Home Loan Servicing Solutions, Ltd. (HLSS). As of these resignations, Mr. Erbey will have no directorial, management, oversight, consulting, or any other role at Ocwen or any related party, or at any of Ocwen’s or the related parties’ affiliates or subsidiaries.

Additionally, Ocwen — the fourth-largest mortgage servicer in the country and largest subprime mortgage servicer in the United States — will undertake significant operational reforms to address serious servicing misconduct and conflict of interest issues at the company; have an NYDFS-selected, independent monitor on site for up to an additional three years; and provide “hard-dollar” assistance to New Yorkers totaling $150 million.

Superintendent Lawsky said: “Today’s agreement will deliver significant assistance to Ocwen homeowners in New York and provide a new path for the company to clean up its operations. We will continue to closely monitor Ocwen to ensure that it lives up to its obligations under this agreement, and treats struggling homeowners with the respect and dignity they deserve.”

That $150 million in hard-dollar assistance Ocwen will pay includes:

  • $50 million in direct, hard-dollar restitution payments to former and current Ocwen homeowners in New York. Ocwen homeowners in New York who lost their homes to foreclosure will receive a payment of $10,000 each. After the payments are made to foreclosed homeowners, the balance of the funds will be distributed equally to current and former Ocwen homeowners (up to $1,000 each) who have had foreclosure proceedings initiated against them but have not yet lost their homes to foreclosure, and those current Ocwen homeowners will also have the opportunity to be reviewed for a mortgage modification or other alternative to foreclosure.
  • $100 million for housing, foreclosure relief, and community redevelopment programs supporting New York’s housing recovery.

Ocwen may not use so-called “soft-dollar” mortgage modifications of loans it does not own to satisfy any of this $150 million penalty. As a servicer, Ocwen is already under a legal obligation to make such modifications if they are in the best interest of homeowners and investors. As such, soft dollar settlements do not represent either a punitive penalty to Ocwen for its misconduct or provide significant additional relief to consumers. Moreover, Ocwen shall not seek or accept, directly or indirectly, reimbursement or indemnification with regard to any or all of the amounts payable under today’s agreement; nor will it claim a U.S. tax deduction or tax credit for those payments.

Ocwen will continue to not be permitted to acquire additional mortgage servicing rights (MSRs). Ocwen may not begin to acquire additional MSRs until and unless it receives prior approval from NYDFS, and meets benchmarks developed by the independent monitor concerning the adequacy of Ocwen’s onboarding process for newly acquired MSRs and its ability to adequately service both those newly acquired MSRs and its existing loan portfolio.

NYDFS’ Investigation of Ocwen’s Misconduct

Ocwen is currently the fourth largest mortgage loan servicer and the largest servicer of subprime loans in the United States, servicing an unpaid principal balance (“UPB”) of approximately $430 billion.

Ocwen has grown more than ten-fold in the last several years. Beginning in 2009, Ocwen significantly expanded its servicing operations through the acquisition of several major servicers of home loans, as well as the acquisition of mortgage servicing rights (MSRs) for hundreds of billions of dollars in UPB.

In 2010 and 2011, NYDFS participated in a multistate examination of Ocwen, as well as entities ultimately acquired by Ocwen. The examination of Ocwen identified, among other things, deficiencies in Ocwen’s servicing platform and loss mitigation infrastructure, including (a) robo-signing, (b) inaccurate affidavits and failure to properly validate document execution processes, (c) missing documentation, (d) wrongful foreclosure, (e) failure to properly maintain books and records, and (f) initiation of foreclosure actions without proper legal standing.

Accordingly, Ocwen and NYDFS entered into an Agreement on Mortgage Servicing Practices on September 1, 2011. In June 2012, the Department conducted a surprise examination of Ocwen to assess its compliance with the 2011 Agreement, and uncovered significant violations. Consequently, on December 5, 2012, Ocwen entered into a Consent Order with NYDFS, which required Ocwen to retain an independent compliance monitor for two years.

During the course of the Monitor’s review, it identified numerous and significant additional violations of the 2011 Agreement, as well as New York State laws and regulations. For example, a limited review by the Monitor of 478 New York loans that Ocwen had foreclosed upon revealed 1,358 violations of Ocwen’s legal obligations, or about three violations per foreclosed loan. These violations included:

  • failing to confirm that it had the right to foreclose before initiating foreclosure proceedings;
  • failing to ensure that its statements to the court in foreclosure proceedings were correct;
  • pursuing foreclosure even while modification applications were pending (“dual tracking”);
  • failing to maintain records confirming that it is not pursuing foreclosure of servicemembers on active duty; and failing to assign a designated customer care representative.

The Department and the Monitor also identified, among other issues, (a) inadequate and ineffective information technology systems and personnel, and (b) widespread conflicts of interest with related parties.

In the course of its review, the Monitor determined that Ocwen’s information technology systems are a patchwork of legacy systems and systems inherited from acquired companies, many of which are incompatible. A frequent occurrence is that a fix to one system creates unintended consequences in other systems. As a result, Ocwen regularly gives borrowers incorrect or outdated information, sends borrowers backdated letters, unreliably tracks data for investors, and maintains inaccurate records.

Ocwen’s core servicing functions rely on its inadequate systems.  Specifically, Ocwen uses comment codes entered either manually or automatically to service its portfolio; each code initiates a process, such as sending a delinquency letter to a borrower, or referring a loan to foreclosure counsel.  With Ocwen’s rapid growth and acquisitions of other servicers, the number of Ocwen’s comment codes has ballooned to more than 8,400 such codes.  Often, due to insufficient integration following acquisitions of other servicers, there are duplicate codes that perform the same function.

Despite these issues, Ocwen continues to rely on those systems to service its portfolio of distressed loans. Ocwen’s reliance on technology has led it to employ fewer trained personnel than its competitors. For example, Ocwen’s Chief Financial Officer recently acknowledged, in reference to its offshore customer care personnel, that Ocwen is simply “training people to read the scripts and the dialogue engines with feeling.”  Ocwen’s policy is to require customer support staff to follow the scripts closely, and Ocwen penalizes and has terminated customer support staff who fail to follow the scripts that appear on their computer screens. In some cases, this policy has frustrated struggling borrowers who have complex issues that exceed the bounds of a script and have issues speaking with representatives at Ocwen capable of addressing their concerns.  Moreover, Ocwen’s customer care representatives in many cases provide conflicting responses to a borrower’s question.  Representatives have also failed in many cases to record in Ocwen’s servicing system the nature of the concerns that a borrower has expressed, leading to inaccurate records of the issues raised by the borrower.

The Department’s review of Ocwen’s mortgage servicing practices also uncovered a number of conflicts of interest between Ocwen and four other public companies (the aforementioned “related companies”), all of which are chaired by Mr. Erbey, who is also the largest individual shareholder of each and the Executive Chairman of Ocwen.

Despite Mr. Erbey’s holdings in these companies, Mr. Erbey has not in fact recused himself from approvals of several transactions with the related parties.  Mr. Erbey, who owns approximately 15 percent of Ocwen’s stock, and nearly double that percentage of the stock of Altisource Portfolio, has participated in the approval of a number of transactions between the two companies or from which Altisource received some benefit, including the renewal of Ocwen’s forced placed insurance program in early 2014.

Ocwen’s close business relationship with related companies is particularly evident in its relationship with Altisource Portfolio, which has dozens of subsidiaries that perform fee-based services for Ocwen.  In one example, Altisource Portfolio subsidiary Hubzu, an online auction site, hosts nearly all Ocwen auctions.  In certain circumstances, Hubzu has charged more for its services to Ocwen than to other customers — charges which are then passed on to borrowers and investors.  Moreover, Ocwen engages Altisource Portfolio subsidiary REALHome Services and Solutions, Inc. as its default real estate agency for short sales and investor-owned properties, even though this agency principally employs out-of-state agents who do not perform the onsite work that local agents perform, at the same cost to borrowers and investors.

Conflicts of interest are also evident at other levels of the Ocwen organization.  For example, during its review, the Monitor discovered that ?Ocwen’s Chief Risk Officer concurrently served as the Chief Risk Officer of Altisource Portfolio. The Chief Risk Officer reported directly to Mr. Erbey in both capacities.  This individual seemed not to appreciate the potential conflicts of interest posed by this dual role, which was of particular concern given his role as Chief Risk Officer.

Homeowner Relief

In addition to the direct payments to Ocwen homeowners in New York, the company will also provide the following relief:

  • Ocwen will provide upon request by a New York borrower that borrower’s complete loan file, which includes all information from all systems, including comment codes, at no cost to the borrower, regardless of whether such borrower’s loan is still serviced by Ocwen.
  • Ocwen will provide every New York borrower who is denied a modification, short sale, or deed-in-lieu of foreclosure, a detailed explanation of the reasons for denial.
  • For all New York borrowers who have been reported negatively by Ocwen to credit agencies since January 1, 2010, Ocwen will provide upon request at no cost a copy of such borrower’s credit report (including credit scores), regardless of whether such borrower’s loan is still serviced by Ocwen.
  • Nothing in today’s agreement shall excuse Ocwen from paying additional required restitution to any borrowers harmed by its improper or illegal conduct, including the backdating of letters to borrowers.

Additional Board Members, Monitor, and Significant Operational Reforms

Under today’s agreement, to help address conflict of interest issues, Ocwen will expand its Board of Directors by two independent board members in consultation with the Monitor. These additional directors will not own equity in any related party company. Moreover, Ocwen’s Board will contain no more than two executive directors at any time.

The Monitor will also review the adequacy and effectiveness of Ocwen’s operations, and assess Ocwen’s progress in complying with recommended corrective measures.  Such an assessment will include but is not limited to the following areas:

  • Information technology systems and personnel, including with respect to record keeping and borrower communications;
  • Number of personnel and the training and expertise of its personnel in all servicing operations;
  • Onboarding process for newly acquired mortgage servicing rights, including Ocwen’s ability to onboard newly acquired MSRs without interruption to servicing newly acquired loans or its existing loan portfolio;
  • Controls in identifying and correcting errors made by Ocwen’s personnel or systems;
  • Risk management functions;
  • Contracts or proposed contracts with third parties, including but not limited to related parties;
  • Fees charged by Ocwen to borrowers or mortgage investors; and
  • The Ocwen borrower experience.

The Monitor will review and assess Ocwen’s current committees of the Board of Directors.  The Ocwen Board will consult with the Monitor concerning, among other things, the structure, composition, and reporting lines of such committees, and whether certain committees should be either disbanded or created. The Board will consult with the Monitor to determine which decisions should be committed to the specific oversight of the Board’s independent directors, or a committee comprised of such independent directors, including, but not limited to:

  • Approval of transactions with related parties;
  • Approval of transactions to acquire mortgage servicing rights, sub-servicing rights, or otherwise to increase the number of loans serviced by Ocwen;
  • Approval of new relationships with third-party vendors;
  • Determinations as to whether Ocwen’s servicing, compliance, and information technology functions are adequately staffed;
  • Determinations as to whether Ocwen’s servicing, compliance, and information technology personnel are adequately trained;
  • Determinations as to whether Ocwen’s information technology infrastructure and ongoing investment in information technology systems are adequate;
  • Determinations as to whether Ocwen is adequately addressing the issues identified by the Operations Monitor and the Compliance Monitor; and
  • Determinations as to whether Ocwen is treating borrowers fairly and is communicating with borrowers appropriately.

The Monitor will semi-annually review and approve Ocwen’s benchmark pricing and performance studies with respect to all fees or expenses charged to New York borrowers by any related party.

The Board will also consult with the Monitor to determine whether any additional members of senior management should be terminated or whether additional officers should be retained to achieve the goals of complying with today’s agreement — and all other applicable laws, regulations, and agreements — as well as creating a corporate culture of ethics, integrity, compliance, and responsiveness to borrowers.

To view a copy of today’s consent order between NYDFS and Ocwen, please visit, link.

###

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NATIONAL CREDIT UNION ADMINISTRATION BOARD vs U.S. BANK N A, and BANK OF AMERICA, N A |  NCUA Sues Trustees of 99 Mortgage-Backed Securities

NATIONAL CREDIT UNION ADMINISTRATION BOARD vs U.S. BANK N A, and BANK OF AMERICA, N A | NCUA Sues Trustees of 99 Mortgage-Backed Securities

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

NATIONAL CREDIT UNION
ADMINISTRATION BOARD,
as Liquidating Agent of U.S. Central Federal
Credit Union, Western Corporate Federal Credit
Union, Members United Corporate Federal
Credit Union, Southwest Corporate Federal
Credit Union, and Constitution Corporate
Federal Credit Union,

Plaintiffs,

v.

U.S. BANK NATIONAL ASSOCIATION, and
BANK OF AMERICA, NATIONAL
ASSOCIATION,
Defendants.

COMPLAINT

The National Credit Union Administration Board (“NCUA Board”), acting in its capacity as liquidating agent for each of U.S. Central Federal Credit Union (“U.S. Central”), Western Corporate Federal Credit Union (“WesCorp”), Members United Corporate Federal Credit Union (“Members United”), Southwest Corporate Federal Credit Union (“Southwest”), and Constitution Corporate Federal Credit Union (“Constitution”), (collectively, the “CCUs” and the NCUA Board as liquidating agent for each, the “Plaintiffs”), by and through their attorneys, for this action against U.S. Bank National Association (“U.S. Bank”) and Bank of America, National Association (“Bank of America,” and collectively with U.S. Bank, “Defendants”), alleges as follows:

I. NATURE OF THE ACTION
1. Plaintiffs bring this action against Defendants for violating the Trust Indenture Act of 1939 (the “TIA”), 15 U.S.C. § 77aaa et seq., and, regarding the New York trusts, for violating New York Real Property Law § 124 et seq. (the “Streit Act”) to recover the damages they have suffered because of Defendants’ violations of their statutory and contractual obligations.
2. This action arises out of Defendants’ roles as trustees for 99 trusts identified on Exhibit A that issued residential mortgage-backed securities (“RMBS”).1 Each trust consists of hundreds of individual residential mortgage loans that were pooled together and securitized for sale to investors. Investors purchased certificates issued by the RMBS trust that entitled the investors (or “certificateholders”) to fixed principal and interest payments from the income stream generated as borrowers made monthly payments on the mortgage loans in the trusts.
3. The CCUs purchased the certificates in the trusts identified on Exhibit A at an original face value of approximately $5.8 billion.
4. The certificates’ value was dependent on the quality and performance of the mortgage loans in the trusts and swift correction of any problems with the loans. But, because of the structure of the securitization, certificateholders do not have access to the mortgage loan files or the power to remedy or replace any defective loans. Instead, certificateholders must rely on the trustees to protect their interests.
5. Defendants, as the trustees for the trusts, had contractual and statutory duties to address and correct problems with the mortgage loans and to protect the trusts’ and the certificateholders’ interests. The trustee for each trust has three primary duties. First, the trustee must take possession and acknowledge receipt of the mortgage files, review the documents in the mortgage files, identify any mortgage files that lack a complete chain of title or that have missing documents, and then certify that the mortgage files are complete and accurate. If the trustee identifies defects in the mortgage files, it must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase any mortgage loans with defective mortgage files.
6. Second, if the trustee discovers a breach of the representations and warranties concerning the mortgage loans, including but not limited to representations concerning the characteristics of the mortgage borrowers, the collateral for the mortgage loans, and assurances that the mortgage loans were originated in accordance with applicable underwriting criteria, the trustee must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase the defective mortgage loans. If the trustee fails to exercise this duty, then the trusts and the certificateholders will suffer losses properly borne by the party responsible for the defective loans.
7. Third, the trustee must act to protect the interests of the trust and the certificateholders when it becomes aware of defaults concerning the trust. Thus, when the trustee discovers a default, or is notified by other parties, such as servicers, of defaults like breaches of representations and warranties with respect to the underlying mortgage loans, the trustee must act prudently to investigate those defaults, notify certificateholders of the defaults, and take appropriate action to address the defaults.
8. Here, Defendants even failed to perform the threshold duties of taking full possession of the original notes and mortgages and properly reviewing the mortgage loan files for irregularities. If they had fulfilled their obligations, a significant percentage of the mortgage loans in the trusts would have been repurchased or substituted.
9. Moreover, an overwhelming number of events alerted Defendants to the fact that the trusts suffered from numerous problems, yet they did nothing. First, the trusts suffered identifies defects in the mortgage files, it must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase any mortgage loans with defective mortgage files.
6. Second, if the trustee discovers a breach of the representations and warranties concerning the mortgage loans, including but not limited to representations concerning the characteristics of the mortgage borrowers, the collateral for the mortgage loans, and assurances that the mortgage loans were originated in accordance with applicable underwriting criteria, the trustee must notify the appropriate parties and take steps to enforce the responsible party’s obligation to cure, substitute, or repurchase the defective mortgage loans. If the trustee fails to exercise this duty, then the trusts and the certificateholders will suffer losses properly borne by the party responsible for the defective loans.
7. Third, the trustee must act to protect the interests of the trust and the certificateholders when it becomes aware of defaults concerning the trust. Thus, when the trustee discovers a default, or is notified by other parties, such as servicers, of defaults like breaches of representations and warranties with respect to the underlying mortgage loans, the trustee must act prudently to investigate those defaults, notify certificateholders of the defaults, and take appropriate action to address the defaults.
8. Here, Defendants even failed to perform the threshold duties of taking full possession of the original notes and mortgages and properly reviewing the mortgage loan files for irregularities. If they had fulfilled their obligations, a significant percentage of the mortgage loans in the trusts would have been repurchased or substituted.
9. Moreover, an overwhelming number of events alerted Defendants to the fact that the trusts suffered from numerous problems, yet they did nothing. First, the trusts suffered enormous losses due to the high number of mortgage defaults, delinquencies, and foreclosures caused by defective loan origination and underwriting. Second, highly publicized government investigations and enforcement actions, public and private litigation, and media reports highlighted the mortgage originators’ systematic abandonment and disregard of underwriting guidelines and the deal sponsors’ poor securitization standards in the years leading up to the financial crisis. As summarized below, these actions and reports detail the incredible volume of defective loans and notorious activities of the originators, sponsors, and other players in the RMBS industry. Yet Defendants failed to take steps to preserve their rights or hold the responsible parties accountable for the repurchase or substitution of defective mortgage loans in direct contravention of their obligations as trustees.
10. Finally, Defendants failed to address servicer and/or master servicer defaults and events of default. Defendants knew that the master servicers and servicers were ignoring their duty to notify other parties, including Defendants as trustees, upon the master servicers’ and servicers’ discovery of breaches of the mortgage loan representations and warranties. Despite Defendants’ knowledge of these ongoing defaults and events of default, Defendants failed to act prudently to protect the interests of the trusts and the certificateholders.
11. Defendants’ failures resulted in the trusts and certificateholders suffering losses rightfully borne by other parties. Had Defendants adequately performed their contractual and statutory obligations, breaching loans would have been removed from the loan pools underlying the certificates and returned to the responsible party. Defendants’ improper conduct directly caused losses to certificateholders like the Plaintiffs.
12. Even after ample evidence came to light that the trusts were riddled with defective loans, Defendants shut their eyes to such problems and failed to take the steps necessary to protect the trusts and certificateholders. Defendants failed to act in part because protecting the best interests of the trusts and the certificateholders would have conflicted with Defendants’ interests. As participants in many roles in the securitization process, Defendants were economically intertwined with the parties they were supposed to police.
13. Because of the widespread misconduct in the securitization process, Defendants had incentives to ignore other parties’ misconduct in order to avoid drawing attention to their own misconduct. Thus, Defendants failed and unreasonably refused to take action to protect the trusts and certificateholders against responsible party breaches.
14. Indeed, it is precisely this type of trustee complicity and inaction that led Congress to enact the TIA to “meet the problems and eliminate the practices” that plagued Depression-era trustee arrangements and provide investors with a remedy for trustees that utterly neglect their obligations. See, e.g., 15 U.S.C. § 77bbb(b) (explaining purposes of the TIA in light of problems identified in 15 U.S.C. § 77bbb(a)).
15. To that end, several sections of the TIA impose duties on trustees. First, TIA Section 315(a) provides that, prior to default (as that term is defined in the governing documents), the trustee is liable for any duties specifically set out in the governing documents. 15 U.S.C. § 77ooo(a)(1). Second, TIA Section 315(b) provides that the trustee must give holders of covered securities “notice of all defaults known to the trustee, within ninety days after the occurrence thereof.” 15 U.S.C. § 77ooo(b). Third, Section 315(c) requires a trustee to act prudently in the event of a default (as that term is defined in the governing documents). 15 U.S.C. § 77ooo(c). Finally, the TIA states that “[n]otwithstanding any other provision of the indenture to be qualified, the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security, on or after the respective due dates expressed in such indenture security . . . shall not be impaired or affected without the consent of such holder.” 15 U.S.C. § 77ppp(b).
16. In addition, Section 124 of the Streit Act imposes a duty upon the trustee to discharge its duties under the applicable indenture with due care to ensure the orderly administration of the trust and to protect the trust beneficiaries’ rights. N.Y. Real Prop. Law § 124. Like the TIA, following an event of default, the Streit Act provides that the trustee must exercise the same degree of skill and care in the performance of its duties as would a prudent person under the same circumstances. N.Y. Real Prop. Law § 126(1).
17. Finally, upon awareness of the various failures discussed in this complaint, the governing agreements require Defendants to exercise their rights and powers using the same degree of care and skill as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
18. Defendants’ failure to perform their duties under the TIA, the Streit Act, and the governing agreements has caused Plaintiffs to suffer enormous damages.

[...]

Down Load PDF of This Case

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U.S. Bank, Bank of America sued over mortgage securities

U.S. Bank, Bank of America sued over mortgage securities

Of course!


REUTERS-

The U.S. credit union regulator said on Wednesday it filed a lawsuit against U.S. Bank and Bank of America over mortgage securities sold in the years leading up to the financial crisis.

The National Credit Union Administration (NCUA) said the banks broke state and federal laws by failing their duties as trustees for 99 residential mortgage-backed securities trusts.

The banks sold $5.8 billion in securities to five corporate credit unions that later failed after the products lost value. The regulator accused U.S. Bank and Bank of America of knowing about defects in the mortgage loans but not providing required notices to the investors.

[REUTERS]

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Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

For immediate release:
December 16, 2014

Contact:
Hannah Harrill
919-508-7821

Monitor: Banks Fail Three Tests, Issues Discovered at Ocwen Joseph Smith reports on NMS compliance, Ocwen consumer relief, and Chase RMBS Settlement

RALEIGH, N.C. – Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement (NMS), the Ocwen National Servicing Settlement, and JP Morgan Chase Residential Mortgage-Backed Securities Settlement (Chase RMBS Settlement), today released updates on six mortgage servicers’ compliance with the NMS servicing standards, Ocwen’s self-reported progress toward fulfilling its consumer relief requirement under the Ocwen National Servicing Settlement, and JP Morgan Chase’s progress toward fulfilling the consumer relief requirements of the Chase RMBS Settlement.

NMS Compliance
Smith’s Continued Oversight report is a summary of six compliance reports he filed with the United States District Court for the District of Columbia as part of his duties monitoring the NMS. This summary details the results of his tests to determine compliance by Bank of America, Chase, Citi, Green Tree, Ocwen and Wells Fargo with the NMS servicing rules from Jan. 1, 2014 to June 30, 2014.

This is the first report with results for Smith’s four additional metrics created to supplement the original 29 NMS metrics. “The new metrics addressed concerns related to issues involving the loan modification process, single points of contact and billing statement accuracy,” said Smith. “I found that all the servicers tested on these new metrics passed them.”

There were three fails of other metrics.

Ocwen Compliance
“In May, an Ocwen employee contacted me through the Monitoring Committee and identified serious deficiencies in Ocwen’s internal review group process,” said Smith. “The Monitoring Committee and I took the claims seriously, and I launched an investigation, during which my team and I reviewed thousands of documents and interviewed nine Ocwen executives and employees. As a result, I retained an independent auditing firm to review and retest the Ocwen internal review group (IRG)’s work. This work is ongoing, and I will report on Ocwen’s performance for the period covered in these reports when it is complete. I appreciate this whistle-blower’s integrity.

“I have since further strengthened my review process of all servicers’ IRGs. Among other enhancements, I added interviews with multiple employees at various levels, additional reviews at various steps in the testing process, and the establishment of an Ethics Hotline so that any concerned IRG employee can reach my team quickly and anonymously if he or she has any concerns.

“The Monitoring Committee has been active and constructive in the monitoring process since the beginning of the NMS and I consulted with it during the course of my investigation into Ocwen’s practices.” The Monitoring Committee is composed of representatives from 15 states, the U.S. Department of Housing and Urban Development and the U.S. Department of Justice.

Smith also engaged Ocwen about the New York State Superintendent of Financial Services’ concerns about incorrect dates on some of Ocwen’s correspondence with customers, as this letter dating issue impacts the NMS.

“Many NMS standards and metrics have timeline requirements, so it was important to me to investigate Ocwen’s work in this area,” said Smith. “Ocwen has agreed to five remedial actions to date, which I include in this report. I also charged the same independent firm with determining the scope of the issue, assessing the reliability of Ocwen’s systems, and retesting relevant metrics.

“Ocwen has cooperated throughout the IRG and letter dating investigations and the ongoing work.”

Ocwen Consumer Relief under the Ocwen National Servicing Settlement
Smith also released an update on Ocwen’s $2 billion in first lien principal reduction obligation. Ocwen self-reported that it has completed $1.5 billion to borrowers through September 30, 2014. This is the first update on Ocwen’s consumer relief progress, and the Monitor has not yet credited these numbers. The Ocwen consumer relief data can be found here.

Chase RMBS Consumer Relief
In addition, Smith released a report on Chase’s progress toward providing $4 billion in consumer relief as part of the Chase RMBS Settlement. Chase’s review group asserted to the Monitor that it provided almost $1.4 billion in credited relief in the third quarter of 2014 and more than $2.2 billion in credited relief to date. Chase reports that it has provided $13.8 billion dollars in gross modifications and lending to 111,924 borrowers as of September 30, 2014. The Monitor has credited more than $868 million and is reviewing the additional work Chase and its internal review group (HRG) asserted. He will report the results of his testing in his report to the public next quarter.

About the Office of Mortgage Settlement Oversight More information about the National Mortgage Settlement and the Ocwen National Servicing Settlement is available at www.nationalmortgagesettlement.com. Further information about Joseph Smith and the Office of Mortgage Settlement Oversight is available at www.mortgageoversight.com.

About the Chase RMBS Settlement
More information about the Chase RMBS Settlement is available at https://www.jasmithmonitoring.com/chase. Further information about Joseph A. Smith, Jr. is available a https://www.jasmithmonitoring.com.

REPORT:

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J.P. Morgan Says It’s More Than Half Done With Mortgage-Settlement Consumer Relief

J.P. Morgan Says It’s More Than Half Done With Mortgage-Settlement Consumer Relief

WSJ-

J.P. Morgan Chase JPM & Co. has told an independent monitor it has provided more than half of the $4 billon in consumer aid mandated under its 2013 mortgage-securities settlement with the Justice Department.

The bank calculates it should receive about $2.25 billion of credit for such actions as cutting mortgage debts for struggling homeowners and lending to low-income home buyers, according to a report released Tuesday by the independent monitor of the bank’s $13 billion settlement.

Joseph Smith, the former North Carolina bank regulator hired to make sure J.P. Morgan follows the consumer-relief terms of the settlement, still needs to validate J.P. Morgan’s calculations before the bank can get credit.

[WALL STREET JOURNAL]

image: Diane Bondare AP

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Billionaire investors at OneWest Bank rec’d $1 billion from FDIC. Expected to receive $1.4 billion more

Billionaire investors at OneWest Bank rec’d $1 billion from FDIC. Expected to receive $1.4 billion more

via: CalReInvest

Fact Sheet: OneWest Bank Expected to Receive Over $2.4 billion from the FDIC

CALIFORNIA
REINVESTMENT
COALITION

Background: When the Federal Deposit Insurance Corporation (FDIC) sold IndyMac in 2009 and La Jolla Bank in 2010, it agreed to share losses from bad loans with the billionaire investors who bought the two banks. Under the shared loss agreements, once a certain threshold of loans goes bad, the FDIC agrees to share in the costs of future losses. In July of 2014, OneWest Bank, which has the IndyMac and La Jolla shared loss agreements, announced plans to merge with CIT Group, creating a Systemically Important Financial Institution (SIFI). While executives from the two banks told community leaders they would answer any questions about the proposed merger, they later refused to answer questions about the shared loss agreements. The California Reinvestment Coalition (CRC), a non-profit coalition of over 300 member organizations, was forced to submit a Freedom of Information Act (FOIA) request to the FDIC to obtain the information.

Down Load PDF of This Case

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.






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Dan Alter: The legal mastermind behind New York’s record bank fines

Dan Alter: The legal mastermind behind New York’s record bank fines

WOW! Good for him. I supplied him with a ton of info at one point and then it went silent.

I’m glad to hear he was behind this!


Reuters-

Billions of dollars have flowed to New York state coffers thanks to headline-grabbing settlements with global banks announced by Governor Andrew Cuomo and Benjamin Lawsky, New York’s first superintendent of financial services.

But little attention has been focused on Daniel Alter, the 49-year-old legal mastermind behind many of the deals.

Sources close to the settlements describe Alter, general counsel at New York’s Department of Financial Services (DFS), as instrumental to crafting strategies that leverage the three-year-old agency’s unique powers to extract large and sometimes painful penalties from major banks.

[REUTERS]

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