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Wall Street’s New Nightmare: The Next Wave Of Mortgage-Backed Securities Claims

Wall Street’s New Nightmare: The Next Wave Of Mortgage-Backed Securities Claims


In case you want a refresher of Attorney Kathy Patrick you can read a letter from Attorneys for Bank of America, who fired back at her on November 4, 2010 about her “baseless allegations”.

Her $8.5 billion Bank of America settlement over bad mortgage deals was just the beginning. Now, backed by bond giants Pimco and BlackRock, Texas lawyer Kathy Patrick is gearing up for a new legal assault on the financial industry.

[FORBES]

Hmmmm…. Could we get any warmer?

 IN RE WELLS FARGO MORTGAGE-BACKED CERTIFICATES LITIGATION.

Consolidated Class Action No. 09-CV-1376-LHK (PSG).
United States District Court, N.D. California, San Jose Division.
October 13, 2011.

Kathy D. Patrick-Texas Bar No. 15581400, Scott A. Humphries-Texas Bar No. 00796800, Gibbs & Bruns LLP, Houston, Texas, Email: kpatrick@gibbsbruns.com, Email: shumphries@gibbsbruns.com.
.

(Pending Pro Hac Vice Admission), Charles M. Kagay-CBN 73377, Spiegel Liao & Kagay, LLP, San Francisco, California, Email: cmk@slksf.com, Attorneys for Neuberger Berman Europe, Ltd. and Bayerische Landesbank.

ORDER GRANTING APPLICATION FOR ADMISSION OF ATTORNEY ATTORNEY PRO HAC VICE

LUCY H. KOH, District Judge.

Kathy D. Patrick, whose business address and telephone number is 1100 Louisiana Street, Suite 5300, Houston, Texas 77002, (713) 650-8805 and who is an active member in good standing of the bar of Texas having applied in the above-entitled action for admission to practice in the Northern District of California on a pro hac vice basis, representing Neuberger Berman Europe, Ltd., as Agent for Sealink Funding, Ltd. and Bayerische Landesbank.

IT IS HEREBY ORDERED THAT the application Is granted, subject to the terms and conditions of Civil L.R. 11-3. All papers filed by the attorney must indicate appearance pro hac vice. Service of papers upon and communication with co-counsel designated in the application will constitute notice to the party. All future filings in this action are subject to the requirements contained in General Order No. 45, Electronic Case Filing.

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BlackRock CEO Fink Defends ‘Occupy Wall Street’ Demonstrators

BlackRock CEO Fink Defends ‘Occupy Wall Street’ Demonstrators


Glad to see some coming out to defend the 99%.

 

Bloomberg-

BlackRock Inc. (BLK) Chief Executive Officer Laurence D. Fink, head of the world’s largest asset manager, said he understands the concerns of protesters speaking out against financial firms in New York and other cities.

“The protesting is a statement the future is very clouded for a lot of people,” Fink, 58, said yesterday during an event in Toronto. “These are not lazy people sitting around looking for something to do. We have people losing hope and they’re going into the street, whether it’s justified or not.”

[BLOOMBERG]

image: DailyNews

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New York Attorney General Probing Bank of America Accord, Seeks Client Data

New York Attorney General Probing Bank of America Accord, Seeks Client Data


“Leaders do what needs to be done, when it needs to be done, whether they want to or not, without being asked”

Bloomberg-

Bank of America Corp. (BAC)’s proposed $8.5 billion settlement over mortgage-securitization trusts is being probed by New York Attorney General Eric Schneiderman, who is seeking client information from more than 20 companies.

Schneiderman’s office sent letters dated July 7 to the companies, including Goldman Sachs Group Inc. (GS), BlackRock Inc. (BLK) and TCW Group Inc., regarding their participation in Bank of America’s proposed deal. He is asking for the information by tomorrow.

The information was requested in connection with an investigation by the office “into certain matters related to securitization of residential mortgages,” according to the letters.

[BLOOMBERG]

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The Swindler and the Home Loans – Gretchen Morgenson

The Swindler and the Home Loans – Gretchen Morgenson


NYT

HOLDING banks accountable for all those disastrous mortgages has been remarkably difficult. But last week, a big bank agreed to pay a price: Bank of America announced that it would part with $8.5 billion to settle claims that its Countrywide Financial unit had packaged garbage loans into investments that were said to be safe.

That is good news for investors, as these things go. But another, lesser-known case now winding its way through the courts may help others recover losses from lenders who dealt in risky mortgages and claimed that they had no duty to their customers.

Continue reading [NEW YORK TIMES]

[ipaper docId=59212998 access_key=key-2iecrsh12607lpl0er9o height=600 width=600 /]

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READ | Bank of America Settlement Agreement w/ Mortgage Bondholders Investors 6/29/2011

READ | Bank of America Settlement Agreement w/ Mortgage Bondholders Investors 6/29/2011


SETTLEMENT AGREEMENT

This Settlement Agreement is entered into by and among (i) The Bank of New York Mellon (f/k/a The Bank of New York) in its capacity as trustee or indenture trustee of certain mortgage-securitization trusts identified herein (“BNY Mellon” or the “Trustee”), and (ii) Bank of America Corporation (“BAC”), and BAC Home Loans Servicing, LP (“BAC HLS”) (collectively, “Bank of America”) and Countrywide Financial Corporation (“CFC”) and Countrywide Home Loans, Inc. (“CHL”) (collectively, “Countrywide”).

WHEREAS, BNY Mellon is the trustee or indenture trustee for the trusts corresponding to the five hundred and thirty (530) residential mortgage-backed securitizations listed on Exhibit A hereto (the “Covered Trusts”);

WHEREAS, Countrywide sold Mortgage Loans, which served as collateral for the Covered Trusts;

WHEREAS, the Trustee, CHL, and/or BAC HLS are parties to the Pooling and Servicing Agreements and in some cases Sale and Servicing Agreements and Indentures governing the Covered Trusts (as amended, modified, and supplemented from time-to-time, the “Governing Agreements”), and CHL, Countrywide Home Loans Servicing, LP, and/or BAC HLS has acted as Master Servicer for the Covered Trusts (“Master Servicer”);

WHEREAS, certain significant holders of certificates or notes representing interests in certain of the Covered Trusts and investment managers of accounts holding such certificates or notes (the “Institutional Investors,” as defined in more detail in the Institutional Investor Agreement) have entered into a separate Institutional Investor Agreement with the Trustee, Bank of America and Countrywide, the due execution of which is a condition to the effectiveness of this Settlement Agreement;

WHEREAS, allegations have been made of breaches of representations and warranties contained in the Governing Agreements with respect to the Covered Trusts (including alleged failure to comply with underwriting guidelines (including limitations on underwriting exceptions), to comply with required loan-to-value and debt-to-income ratios, to ensure appropriate appraisals of mortgaged properties, and to verify appropriate owner-occupancy

[…]

http://www.sec.gov/Archives/edgar/data/70858/000119312511176452/dex992.htm

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BofA near $8.5 billion settlement on securities

BofA near $8.5 billion settlement on securities


Lets do some math:

$8.5 Billion Settlement for (1) Investor case

$20-25 Billion Settlement for (1,xxx,xxx…) of Foreclosure Fraud cases

NOPE! Don’t add up!

Reuters

Bank of America Corp is close to a deal to pay $8.5 billion to settle claims from a group of powerful investors that lost money on mortgage-backed securities, a person familiar with the matter said on Tuesday.

The deal could embolden investors holding mortgage-backed securities filled with now-toxic home loans to pursue claims against other large mortgage lenders such as Wells Fargo & Co and JPMorgan Chase & Co, analysts said.

A settlement, first reported by The Wall Street Journal, would be the largest in the banking industry to date. It would also require approval by Bank of America’s board, which met on Tuesday to discuss it, according to the source.

Continue reading [REUTERS]

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Bank of America Lawyers Demand Names in Mortgage-Bond Fight With Investors

Bank of America Lawyers Demand Names in Mortgage-Bond Fight With Investors


By Jody Shenn and David Mildenberg – Nov 5, 2010 4:21 PM ET

Bank of America Corp., responding to the attorney for a bondholder group that’s pushing the bank to repurchase soured home loans, demanded proof the lawyer is authorized to mount an attack on behalf of investors including units of BlackRock Inc. and MetLife Inc.

Wachtell, Lipton, Rosen & Katz’s Theodore N. Mirvis is among lawyers for Bank of America who said in a letter yesterday to Houston-based Gibbs & Bruns LLP’s Kathy Patrick that they want the names of individuals who approved signatures on a letter Patrick sent the Charlotte, North Carolina-based lender last month. They also want to know whether the board of directors for the bondholders Patrick said she represents approved signing of her correspondence.

“Troubling aspects of your letter strongly suggest that it was written for an improper purpose, or in furtherance of an ulterior agenda,” Bank of America’s attorneys wrote, saying they see no need to take action in response to Patrick’s letter.

Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Bank of America Chief Executive Officer Brian T. Moynihan said Oct. 19 the lender will “defend our shareholders” by disputing any unjustified demands for mortgage buybacks.

Bank of America’s lawyers said they couldn’t determine “whether any investigation of your allegations is warranted” unless Patrick proves her clients own as much of the bonds created by the bank’s Countrywide Financial Corp. unit as they claim. Patrick also needs to show on a deal-by-deal basis how the bank is falling short of its responsibilities in servicing the home loans in the 115 securitizations at issue, they said.

Moynihan’s Surprise

Moynihan, 51, said yesterday that he was surprised by the Oct. 19 letter from investors, which included the Federal Reserve Bank of New York.

Moynihan’s company has resolved other debt disputes with the investors, and he has called BlackRock CEO Larry Fink to discuss the mortgage buyback issue, he said.

Patrick declined to comment.

Jerry Dubrowski, a spokesman for Bank of America, confirmed the letter’s authenticity and declined to comment further.

Lawyers Brian E. Pastuszenski of Goodwin Procter LLP and Marc T.G. Dworsky of Munger, Tolles & Olson LLP also signed the yesterday’s letter to Patrick, which was reported earlier today by the New York Times.

Do Not Print Letter Below (Poor quality and might not come out)

[ipaper docId=41405566 access_key=key-1ajd5uhf38y18hutsz68 height=600 width=600 /]

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Fed’s `Pit Bull’ Takes on Bank of America in BuyBack Battle

Fed’s `Pit Bull’ Takes on Bank of America in BuyBack Battle


By Thom Weidlich, Laurel Brubaker Calkins and Jody Shenn – Oct 26, 2010 12:01 AM ET

Kathy D. Patrick is a Houston lawyer who spends her Sundays teaching children about God. The rest of the week, according to one attorney who knows her, she can be “as frightening as a pit bull on steroids.”

That’s bad news for issuers of mortgage-backed securities like Bank of America Corp. Patrick represents bond investors including the Federal Reserve Bank of New York and BlackRock Inc. who are seeking to force the bank to buy back bad home loans, claiming the debt failed to match contractual promises about its quality.

Her law firm, Gibbs & Bruns LLP, is a 30-lawyer outfit that says it specializes in “bet the company” litigation. This month, it reached a settlement with JPMorgan Chase & Co. and Bank of Montreal stemming from an alleged fraud at a Canadian gold company. Earlier this year, Goldman Sachs Group Inc. and UBS AG settled with the firm over the sale of $550 million in mortgage-backed securities. Patrick reached that settlement on behalf of her clients just two months after filing suit.

Patrick, 50, is “fearless and tenacious,” said Dan Cogdell, a Houston criminal-defense lawyer who said she is capable of pit bull-like aggressiveness “if the need be.” If she succeeds in getting Bank of America to settle, it may trigger more calls for buybacks in the $1.4 trillion market for so-called non-agency mortgage securities, which lack government backing.

Bank costs from repurchasing mortgages in such securities may total as much as $179.2 billion, including expenses related to suits against bond underwriters, Chris Gamaitoni, a Compass Point Research and Trading LLC analyst, estimated in August.

$1.73 Billion

In June 2009, Patrick got Credit Suisse Group AG and Deutsche Bank AG to agree to pay $1.73 billion to end litigation over their decision to back out of the leveraged buyout of Huntsman Corp. Her firm is suing Zurich-based Credit Suisse as bond underwriter for a now-defunct Ohio company that sold securities based on health-care providers’ unpaid bills.

“She has a deep understanding of the banking process and the constraints, motivations and incentives of the banking industry,” said Harry M. Reasoner, a partner at Vinson & Elkins LLP in Houston, who also represented Huntsman.

In the fight against Charlotte, North Carolina-based Bank of America, Patrick represents the biggest bond investors in the U.S., including Pacific Investment Management Co., which runs the world’s biggest bond fund.

$47 Billion

On Oct. 18, she wrote Bank of America and Bank of New York Mellon Corp., the trustee for $47 billion of bonds created by Bank of America’s Countrywide Financial unit. In the letter, she accused Countrywide of failing to service the home loans properly. Her clients want Bank of America, which bought Countrywide in 2008, to take back some of the underlying loans, and are questioning its servicing as a way to broaden their legal options, Patrick said the next day.

“We continue to review and assess the letter, and have a number of questions about its content, including whether these investors have standing to bring these claims,” Bank of America Chief Financial Officer Charles H. Noski said Oct. 19 on a conference call with analysts. “We continue to believe the servicer is in compliance with the servicing obligations.”

.

?

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DEFECTIVE MORTGAGES| CITIGROUP, Trouble For Other Banks

DEFECTIVE MORTGAGES| CITIGROUP, Trouble For Other Banks


One by one these will soon all come out…

Fraction of an Excerpt from BLOOMBERG:

Richard M. Bowen, former chief underwriter for Citigroup’s consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.

In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”

<SNIP>

“The potential for owners to challenge lenders on foreclosure improprieties certainly is there,” Pallotta said. “Even if it turns out that the banks were right in 99 percent of these foreclosures, the additional diligence on their part, going forward, is going to cost them more money.”

The litigation over buybacks, also known as putbacks, can also pit big banks against each other. Last month, Deutsche Bank AG, acting as a trustee, refiled a lawsuit over misrepresented mortgages in $34 billion of Washington Mutual Inc. mortgage securities, with $165 billion in original balances.

The new suit in the U.S. District Court for the District of Columbia included JPMorgan as a defendant, after the Federal Deposit Insurance Corp. said that JPMorgan was wrongly claiming its insurance fund had agreed to cover the liabilities, according to the amended complaint.

Continue reading…BLOOMBERG

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Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages

Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages


By Jody Shenn – Oct 19, 2010 5:27 PM ET

Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.

A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.

Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.

“We now are in a position where we have to start a clock ticking,” Patrick, who is based in Houston, said today in a telephone interview.

If the issues aren’t fixed within 60 days, BNY Mellon should declare Countrywide in default on its servicing contracts, Patrick said.

Continue reading…BLOOMBERG

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