UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION

COUNTRYWIDE HOME LOANS, INC.;
BANK OF AMERICA CORPORATION;
BANK OF AMERICA, N.A.,

Plaintiffs,

v.

AMERICA’S WHOLESALE LENDER, INC., a
New York Corporation…

Defendants

Excerpt:

Plaintiff Countrywide Home Loans, Inc. (“CHLI”) will arguably go down in history as the most prolific predatory lenders of all time. One would think this is a matter beyond reasonable dispute by way of a few examples, this point will be illustrated:

PDF LINK BELOW

[AWL v Countrywide]

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IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

________________________
No. 10-14618
________________________
D.C. Docket No. 1:09-cv-02437-JEC

MICHAEL BOURFF,
Plaintiff – Appellant,

versus

RUBIN LUBLIN, LLC,
Defendant – Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(March 15, 2012)

Before EDMONDSON and PRYOR, Circuit Judges, and BOWDRE,* District
Judge.
*

PER CURIAM:
This appeal involves a Fair Dept Collection Practices Act claim in which a
“false representation” has been alleged. Michael Bourff appeals the district
court’s dismissal of his civil action under 15 U.S.C. §1692, the Fair Debt
Collection Practices Act (“FDCPA”), for failure to state a claim. The district court
concluded that Bourff’s claim was covered by the FDCPA but that Bourff did not
allege acts that violated the FDCPA. We vacate the dismissal and remand the case
for further proceedings.

Background

This case involves a $195,000 loan by America’s Wholesale Lender
(“AWL”) to Michael Bourff. The loan was evidenced by a note, was used to
purchase property in Fulton County, Georgia, and was secured by a deed to the
property purchased.1

The basics of this case are not in dispute. In April 2009 Bourff failed to
make a payment on the loan and caused default under the terms of the note. AWL
later assigned the loan and the security deed to BAC Home Loan Servicing, LP
f/k/a Countrywide Home Loans Servicing, LP (“BAC”) for the purpose of
collecting on the note. BAC in turn hired defendant law firm, Rubin Lublin, LLC
(“Rubin Lublin”), to assist in collection efforts. In late May 2009 Rubin Lublin
sent a notice to Bourff stating that they had been retained to help collect on the
loan. The notice clearly stated that it was being sent as “NOTICE PURSUANT
TO FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692[,]” and that
it was “AN ATTEMPT TO COLLECT A DEBT.” The notice also identified BAC
as “the creditor on the above-referenced loan.” (Compl. Ex. A.)

Shortly after receiving the notice, Bourff filed this civil action against Rubin
Lublin pursuant to the FDCPA. Bourff claimed that the notice sent by Rubin
Lublin violated §1692e of the FDCPA by falsely representing that BAC was the
“creditor” on the loan, despite entities in BAC’s position being specifically
excluded from the definition of “creditor” by the language of the FDCPA. Rubin
Lublin filed a motion to dismiss under Rule 12(b)(6), and the district court
dismissed the action for failure to state a claim under the FDCPA. The district
court concluded that BAC was a “creditor” according to the ordinary meaning of
the term and that, even if BAC was no creditor, the error in listing it as such was a
harmless mistake in the use of the term because BAC had the power to foreclose
on the property or otherwise to act as the creditor on the loan. (Order 11.)

Standard of Review

We review the grant of a motion to dismiss de novo; and in so doing, we
accept the allegations in the complaint as true while construing them in the light
most favorable to the Plaintiff. Powell v. Thomas, 643 F.3d 1300, 1302 (11th Cir.
2011). The interpretation of a statute is likewise reviewed de novo as a purely
legal matter. Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009).
A “complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974
(2007)). Stating a plausible claim for relief requires pleading “factual content that
allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged”: which means “more than a sheer possibility that a
defendant has acted unlawfully.” Id.

DISCUSSION

The FDCPA limits what is acceptable in attempting debt collection. The
FDCPA applies to the notice here in question because the notice was an attempt at
debt collection. The notice stated that Rubin Lublin had been retained to “collect
the loan,” stated in bold capital letters that it was “an attempt to collect a debt,”
and advised Bourff to contact Rubin Lublin to “find out the total current amount
needed to either bring your loan current or to pay off your loan in full.” (Compl.
Ex. A.)

The FDCPA, among other things, mandates that, as part of noticing a debt, a
“debt collector” must “send the consumer a written notice containing” — along
with other information — “the name of the creditor to whom the debt is owed[.]”
15 U.S.C. §1692g(a)(2). In addition, the Act prohibits a “debt collector” from
using “any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. §1692e. The use of “or” in §1692e
means that, to violate the FDCPA, a representation by a “debt collector” must
merely be false, or deceptive, or misleading. A false representation in connection
with the collection of a debt is sufficient to violate the FDCPA facially, even
where no misleading or deception is claimed.

Plaintiff claims that Rubin Lublin violated the prohibition on “false,
deceptive, or misleading representation[s]” by falsely stating in its collection
notice that BAC was the “creditor” on Bourff’s loan. The identity of the
“creditor” in these notices is a serious matter. For the FDCPA, “creditor” is
defined this way:

“The term ‘creditor’ means any person who offers or extends credit
creating a debt or to whom a debt is owed, but such term does not include
any person to the extent that he receives an assignment or transfer of a debt
in default solely for the purpose of facilitating collection of such debt for
another.” 15 U.S.C. §1692a(4).

Plaintiff’s complaint alleges that Bourff defaulted on the loan in April 2009
by failing to tender the required monthly payment. The complaint further alleges
that BAC “received an assignment of the security deed and debt on June 19, 2009 .
. ., while the Plaintiff’s loan was in default, for the purpose of facilitating
collection of such debt for another, presently unknown, entity.” (Compl. ¶13)
Accepting Plaintiff’s allegations as true and construing them in the light most
favorable to the Plaintiff, the statement on the May 2009 notice that BAC was
Plaintiff’s “creditor” was a false representation and was made by a “debt collector”
as defined in §1692a of the FDCPA.

The FDCPA provides that “any debt collector who fails to comply with any
provision of this subchapter with respect to any person is liable to such person…”
for potential damages and costs. 15 U.S.C. §1692k(a). The complaint on its face,
taken as true and viewed in the light most favorable to Plaintiff, states a claim
upon which relief may be granted under the FDCPA. As such, we vacate the
dismissal and remand this case to the district court for further proceedings.

VACATED and REMANDED.

Scribd

Remember Michele Sjolander? Well, you can read about her in MERS, Endorsed Note Get SLAMMED by Kings County NY Supreme Court | BANK of NEW YORK v. ALDERAZI -

As well as in ARIZONA BK COURT ORDERS BONY MELLON TO PRODUCE ORIGINAL CUSTODIAN DOCUMENTS

and finally in the FULL DEPOSITION OF BANK OF AMERICA ROBO SIGNER RENEE D. HERTZLER

Fresh off the depo wagon comes her Full Deposition courtesy of 4closurefraud.

Excerpts:

Q It’s employees at Recontrust that stamp the
7 endorsements on the notes in general, including this one;
8 is that right?
9 A Yes.
10 Q And you’ve seen that taking place?
11 A Yes.
12 Q In Simi Valley?
13 A Yes.
14 Q Is there some type of manual or set of
15 instructions?
16 A They have my power of attorney.
17 Q Well, okay. That’s not what I’m asking. But I
18 do want to know about that. But what I’m saying: Is
19 there some sort of manual or instructions or –
20 A If you want to know the desk procedures, you
21 would have to speak with an associate of Recontrust.
22 Q Okay. Okay. Sorry. I’m just reading the notes
23 again. Now, I’m going to try to explain this. I may
24 have to do it a couple of times, but just bear with me.
25 And you’ve been very helpful so far. I appreciate it,
1 there it sat is I guess what I’m asking.
2 A In safekeeping, yes.
3 Q Okay. All right. Now, this is something you
4 touched on a minute ago. I’m going to try to phrase it
5 in a way that makes sense. Who — and let’s just deal
6 with Countrywide in 2007.
7 Who is allowed to be an endorser as you were? I
8 mean, who — let me leave it at that and see if that
9 makes sense to you.
10 A I don’t know what you’re asking.
11 Q What I’m saying is: Are there people other than
12 you at Countrywide in 2007 whose names would appear on a
13 note as an endorsement?
14 A For Countrywide Home Loans, Inc.?
15 Q Yes.
16 A In 2007, I was the endorser for Countrywide Home
17 Loans, Inc.
18 Q Okay. And, I mean, can you explain why you, in
19 particular? I mean, how is that established?
20 A Just lucky.
21 Q I mean, I know this is going to sound silly, but
22 was there some competition for it? Did they come to you
23 and say, “Ms. Sjolander, we choose you?” I mean, how did
24 you come to be designated the person?
25 A It is the position I held within Countrywide.
1 Q Okay. And did you know that going in; you know,
2 if you take this job, you’re going to be the endorser?
3 Was that explained to you at some point?
4 A I knew that my previous boss was the endorser,
5 yes.
6 Q Oh, okay. Now, we covered this, that other
7 people stamped your signature and the other — her name
8 is — oh, it’s Laurie Meder?
9 A Meder.
10 Q Okay. So other people have a stamp with her
11 name and your name on it, and how do those people have
12 the authority to put her name and your name on a note for
13 it to be an effective endorsement?
14 A With my name, they have a power of attorney.
15 Q And what does the power of attorney say?
16 A The power of attorney allows them to place my
17 endorsement stamp on collateral.
18 Q How do they come to have your power of attorney?
19 A I gave that to them.
20 Q But, I mean, in what sort of process? You know,
21 how does someone at Recontrust — I mean, I understand
22 that a power of attorney document exists, I’m assuming;
23 correct?
24 A Yes.
25 Q And how do those people come to operate under
1 it?
2 A It’s common, standard practice.
3 Q I may not be asking it quite right. I guess
4 what I’m asking is: Do they — the people who actually
5 use the stamps — is there more than one, or is there
6 just one stamp? I said “stamps” multiple. Is there only
7 one, or is there –
8 A No, there’s multiple stamps.
9 Q So do these people sign something that says, “I
10 understand I’m under Michele Sjolander’s power of
11 attorney”?
12 A Once again, you would have to look at the desk
13 procedures for Recontrust, and you would have to talk to
14 someone at Recontrust.
15 Q So that’s your understanding that you — did you
16 sign a power of attorney document?
17 A Yes, I did.
18 Q And, I mean, can you explain just in — you
19 know, in general, not word for word what it says, but
20 what does it purport to grant as power of attorney?
21 A It grants Recontrust. They can endorse and
22 assign notes on behalf of myself.
23 Q And do you know if this applies to a select
24 group of people?
25 A I do not have — I would have to read the
1 document.
2 Q Okay. But just to clarify, once again, you
3 don’t actually know the legal mechanism by which these
4 people with the stamps operate under this power of
5 attorney?
6 A As I said, I would have to go back through all
7 of the documentation that surrounds the power of
8 attorney, and Recontrust has desk procedures, and it
9 would be their procedures for them to assign that, to
10 place the stamp on the collateral.
11 Q And this was a procedure in 2007, what we’re
12 talking here is 2007?
13 A Correct.
14 Q And to the present?
15 A No.

<SNIP>

4 Q All of it, okay. Let’s see. Now, you mentioned
5 documents that you had reviewed. The AS-400, that’s a –
6 can you just refresh my memory? What was that again?
7 A A servicing system.
8 Q A servicing system, okay. Now, when you looked
9 over these records and documents before that you
10 mentioned before, where were you when you looked at
11 those?
12 A Simi Valley.
13 Q Simi Valley. And where were the documents that
14 you were looking at?
15 A At that time, they were brought into my office.
16 Q Do you have any idea where they were brought
17 from?
18 A They were printed off the system.
19 Q Printed off the system.
20 A From one of my associates.
21 Q Is that a computer system?
22 A As I said, the collateral tracking is printed
23 off the AS-400, which is our servicing system. The
24 investor number commitment was printed off — it’s a
25 web-based application from secondary marketing. It’s
1 printed off of that. The note was printed off of our
2 imaging system. And I think in this case I asked for a
3 copy of the note showing the endorsements, because in our
4 imaging system it does not — the note is actually imaged
5 prior to my endorsement stamp being in place. So I had
6 my associate contact the bank, which is Recontrust, to
7 get a copy of the original note to show my endorsement
8 stamps, because in imaging it is not shown.
9 Q So if a copy is made of a note that you got from
10 Recontrust, it doesn’t have an endorsement? Is that what
11 you’re saying?
12 A From our bank, it does. In our imaging system,
13 it does not. The note is imaged prior to an
14 endorsement — in ’07, the note is imaged prior to an
15 endorsement being placed on the note. So if you look in
16 our imaging system, you wouldn’t see the chain of title
17 of endorsement.
18 Q And where would you see that?
19 A On the original note.
20 Q Which is — which is where?
21 A In this case, it was in the Fannie Mae vault in
22 Simi Valley, California.
23 Q We’ll come back to the Fannie Mae vault. Okay.
24 So they’re printed off in AS-400 imaging system.
25 A AS-400 and the imaging system are two different
systems.
2 Q Oh, you said AS-400 is a servicing software
3 platform of some type?
4 A Yes.
5 Q And the imaging system, what — can you describe
6 that?
7 A It’s a –
8 Q You know –
9 A It’s when all of the collateral documents and
10 credit file documents are imaged after the closing of a
11 loan, and they are put in our imaging system, and we can
12 go into the system by loan number and pull up the
13 documentation of a loan –
14 Q I guess –
15 A — if you have access to the system.
16 Q But imaging, I mean, I’m imagining a scanner of
17 some sort. Is that what it is?
18 A It is not my area. I cannot tell you.

continue below…

Scribd

H/T Abigail – If you had any doubts about whether ‘your’ federal gov’t works for you or BofA, read Yves Smith’s latest:

One in a while, you can discern a linchpin lie on which other important lies hinge. We can point to quite a few in America: the notion of a permanent war on terror, which somehow justifies vitiating not just the Constitution, but even the Magna Carta, or the idea of an imperial executive branch.

Now the apparently-to-be-filed-in-court-today Federal/state attorneys general mortgage settlement is less consequential than matters of life and limb. But it still show the lengths to which the officialdom is willing to go to vitiate the law in order to get its way.

HUD Secretary Donovan, the propagandist in chief for the Federal/state mortgage pact, has claimed he has investor approval to do the mortgage modifications that are a significant portion of the value of the settlement. We’ll eventually see what is actually in the settlement, but the early PR was that “no less than $10 billion” of the $25 billion headline total was to come from principal reductions. Modifications of mortgages not owned by banks, meaning in securitized trusts, are counted only 50% and before Donovan realized he was committing a faux pas, he said he expected 85% of the mods to be from securitizations, so that means $17 billion.

[NAKED CAPITALISM]

REUTERS-

A federal appeals court on Friday granted Nevada’s request to send its lawsuit alleging mortgage modification and foreclosure abuses against Bank of America Corp back to Nevada state court.

The 9th U.S. Circuit Court of Appeals reversed a decision by a lower court, which had concluded that the lawsuit belonged in federal court.

Nevada’s complaint, filed in Clark County, Nevada, in January 2011, alleges that Bank of America misled consumers about the terms of its home mortgage modification and foreclosure processes.

Nevada also accused the bank of violating terms of a consent judgment it and several of its subsidiaries had entered into with the state in February 2009.

After Bank of America removed the lawsuit to federal court, Nevada’s request to send it back to state court was denied.

Chief Judge Robert Clive Jones of the District of Nevada ruled that the lawsuit belonged in his court because the lawsuit was a class action, which gives federal courts jurisdiction.

[REUTERS]

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Alison Frankel-

Way back in June, a day or so after Bank of America announced its proposed $8.5 billion settlement with Countrywide mortgage-backed securities investors, I wrote about the very peculiar vehicle through which the bank was seeking judicial approval of the arrangement. The settlement was filed by the Countrywide MBS trustee, Bank of New York Mellon, under Article 77 of the New York state code. Article 77, which allows a trustee to seek a judicial endorsement of trust-related decisions, is usually invoked in garden-variety trust disputes, not in an $8.5 billion deal affecting thousands of beneficiaries in 530 trusts. But the law offered distinct advantages for BofA, BNY Mellon, and the group of 22 institutional investors that negotiated the Countrywide MBS settlement. Under New York trust law, trustees have broad discretion to make decisions on behalf of the trusts they oversee. As long as the judge presiding over an Article 77 proceeding determines that the trustee has acted reasonably and hasn’t abused its discretion, the trustee’s decision gets a stamp of judicial approval. Anyone who disagrees with the trustee — and the banks and institutional investors that negotiated the BofA proposed settlement knew that there would be many investors who didn’t like it — bears the heavy burden of proving that the trustee acted outside the bounds of reason.

[REUTERS LEGAL]

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW JERSEY

Re: In re Rodriguez (Chapter 13)
Case No. 07-24687 (MBK)

EXCERPT:

D. The Attorneys’ Fees Requested are Reasonable
Having ruled that the Debtors are entitled to attorneys’ fees, the Court must determine whether the requested fees are reasonable. See Miller, supra, 447 B.R. at 434 (“For Debtors to recover attorneys’ fees, however, such fees must be reasonable and necessary”). Indeed, the policy to discourage willful stay violations is tempered by a reasonableness standard. Id. While such policy guards against excessive litigation, however, it was Countrywide’s actions that created such substantial litigation costs to the Debtors in this case. Moreover, Countrywide has voiced no objection to the reasonableness of the fees requested by Debtors’ counsel. The Court has reviewed the documentation in support of the requested attorneys’ fees and regards the fees to be reasonable in light of the work performed in this case.

V. Conclusion
For the foregoing reasons, this Court: (i) finds that Countrywide willfully violated the
automatic stay pursuant to § 362(k), (ii) awards damages to the Debtors in the form of attorneys’
fees in the amount of $85,033.814, and (iii) directs Countrywide to make payment of the award
to “Francisco and Anna Rodriguez, in care of Abelson & Truesdale, LLC” within 30 days of
entry of this ruling. The Court will enter an order consistent with its findings.

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© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com

Alison Frankel-

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

[REUTERS LEGAL]

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IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA

STATE OF ARIZONA, ex rel. THOMAS C.
HORNE, Attorney General,
Plaintiff,

vs.

COUNTRYWIDE FINANCIAL
CORPORATION, et al.,
Defendants.

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
CENTRAL DIVISION

 In re:
JAMES E ALGER, JR. and
DEBORAH J ALGER
Debtors

JAMES E. ALGER, JR. and DEBORAH J. ALGER, Plaintiffs,

v.

COUNTRYWIDE HOME LOANS, INC., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., and BANK OF NEW YORK MELLON, F/K/A THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC., ALTERNATIVE LOAN TRUST 2006-11CB MORTGAGE PASS-THROUGH CERTIFICATES, 11CB, Defendants.

Excerpt:

Each acknowledgment form that the Algers signed contained the following language: “The undersigned each acknowledge receipt of two copies of NOTICE of RIGHT TO CANCEL and one copy of the Federal Truth in Lending Disclosure Statement.” It is unclear whether the Algers acknowledged that each of them received two copies for a total of four or whether they each acknowledged receipt of two copies in total. In analyzing the identical acknowledgment language in In re Cromwell, Judge Hillman, too, found the language ambiguous:

The placement of the word “each” before “acknowledge” renders the phrase susceptible to two meanings. First, that the Debtors acknowledged each receiving two copies as the Defendants[] assert, or second, that they each acknowledged receipt of a total of two copies as the Debtors suggest. While I understand that Countrywide intended the former as that is what the law required, the average consumer would not have necessarily known that. 2011 WL 4498875, at *17. The existence of this ambiguity neutralizes any presumption created by the acknowledgment in favor of delivery of the requisite number of Notices. See id. (resolving the ambiguity “against the drafter of the Acknowledgment such that it did not create a presumption of adequate delivery of a total of four copies”).

In the absence of a presumption of adequate delivery, the burden shifts to the defendants to prove that the Algers each received two copies of the Notice for a total of four for the couple. See id. While the defendants rely on the deposition testimony of Ms. Manugian as evidence of her general practice during closings to establish that the Algers received four copies, the Algers have attested through their affidavits that the first time their loan file was opened after the closing it contained a total of three Notices. The question of how many copies of the Notice the Algers received remains a genuine and material fact in dispute. The defendants’ motion for summary judgment is therefore DENIED.

[...]

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An 11th-hour settlement is expected to stave off potential class action status in a lawsuit that claims foreclosed borrowers were overcharged for attorneys’ fees that the Mortgage Electronic Registration Systems Inc. did not actually incur.

National Mortgage News-

The plaintiffs, Jose and Lorry Trevino, filed a motion seeking class action status and an amended complaint on Jan. 12. The defendants had until Jan. 17 to respond, but received a two-week extension, “so that the parties can memorialize their settlement,” according to court documents filed Jan. 13.

The parties have agreed to terms, but the settlement is pending final paperwork. The case hasn’t been dismissed and likely won’t until the settlement is finalized.

The suit, originally filed in 2007, names Merscorp and a number of its shareholders, including Citigroup, Countrywide, Fannie Mae, Freddie Mac, GMAC Residential Funding, HSBC, JPMorgan Chase, Washington Mutual and Wells Fargo.

[NATIONAL MORTGAGE NEWS]

Scribd

Washington, DC (Jan. 17, 2012)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Chairman Darrell Issa seeking information about how he plans to proceed with his investigation of Members of Congress who received mortgage loans from Countrywide Financial Corporation under its VIP loan program, also known as the “Friends of Angelo” program after the company’s embattled CEO, Angelo Mozilo. 

In one of his first official acts after becoming Chairman last year, Rep. Issa issued a unilateral subpoena demanding the mortgage files of the Members of Congress who received Countrywide VIP loans.  He stated that “the American people have a right to know the totality of who participated in the Countrywide’s VIP program and what they did in return for access to it,” and that his goal was to “find a way to disclose it all and then get the American people outraged enough to make sure that it never happens again.”

Below is the full letter (click the link for footnotes):

January 17, 2012

The Honorable Darrell E. Issa
Chairman
Committee on Oversight and Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

     I am writing to request information about how you plan to proceed with the Committee’s investigation of Members of Congress who received mortgage loans from Countrywide Financial Corporation under its VIP loan program, also known as the “Friends of Angelo” program after the company’s CEO, Angelo Mozilo.

     Over the past three years, you have waged a high-profile campaign to obtain the mortgage files of Members of Congress who received VIP loans from Countrywide.  You have referred to these loans as “bribes,” “influence buying,” and “public corruption.”  Although two previous Chairmen of the Oversight Committee followed the longstanding practice of referring matters involving Members of Congress directly to the Ethics Committee, you abandoned this practice last February when you issued a unilateral subpoena—your first as Chairman—demanding to see these Member files yourself.

     The documents produced in response to your subpoena reveal four previously undisclosed instances in which Members of Congress received Countrywide VIP loans.  All four instances involve Republican Members, including three current Republican House Members and one former Republican House Member.

     When you issued your subpoena last February, you explained that you had two purposes in demanding these files.  The first was to determine whether any official actions were taken by policymakers to benefit Countrywide.  The second was to make public all of the information obtained by the Committee in order to deter future wrongdoing.  In one of your first public interviews after issuing your subpoena, you stated that your goal was to “find a way to disclose it all and then get the American people outraged enough to make sure that it never happens again.”

     Last month, however, you reversed course.  Rather than publicly identifying the four additional Members who received Countrywide loans or attempting to determine whether they took any official actions on behalf of Countrywide, you chose instead to refer their cases to the Ethics Committee.  This is exactly the approach you criticized when used for Democratic Senators Kent Conrad and Christopher Dodd and precisely the approach you abandoned when you issued your subpoena last February. 

    On January 13, House Armed Services Committee Chairman Howard “Buck” McKeon and Rep. Elton Gallegly reported publicly that you referred them to the House Ethics Committee, although both denied taking inappropriate actions on behalf of Countrywide.  To date, you have declined to publicly identify the two other Republicans who also received Countrywide VIP loans. 

    Despite your decision to refer these cases to the House Ethics Committee, you have now scheduled two transcribed interviews with Countrywide officials to take place this week.  Both of these transcribed interviews will be with the Countrywide officials who oversaw and processed Chairman McKeon’s VIP loan.

    Since you failed to consult with me before taking these actions, I have several questions about how you plan to proceed with this investigation, which are set forth below.

Campaign to Obtain Files on Members of Congress

    You launched your campaign to obtain the files of Members who received loans under the Countrywide VIP loan program on June 17, 2008, when you wrote to former Committee Chairman Henry A. Waxman requesting that “the Committee investigate and hold hearings on allegations that mortgage lenders may have made special deals with Members of Congress.”  Chairman Waxman denied your request, responding that the longstanding practice of the Committee had been to allow the House Ethics Committee to handle allegations regarding Members of Congress.

    Rather than defer to the Ethics Committee, you argued that the Oversight Committee must investigate Members of Congress who were part of a wider conspiracy of “influence buying” and “public corruption.”    You stated:

We’re talking about a vast business enterprise that was buying, currying favor with politicians throughout the country and in fact probably distorted the laws that you and I had to live under.

    You also stated:

We cannot close the book without criminal investigations and likely indictments against Countrywide officials and people who knowingly took subsidized below-cost loans and in return produced, if you will, a deal for Countrywide.

    Even when the Ethics Committee conducted investigations, you dismissed them as limited and inadequate.  After the Senate Ethics Committee found no credible evidence that Senators Kent Conrad or Christopher Dodd knowingly accepted discounted loans, you stated:

This story does not change my approach to the investigation of the Countrywide VIP program.  I will continue to press forward with this investigation and strongly believe that a subpoena to Bank of America [which purchased Countrywide] is a necessary next step to fully expose how Countrywide attempted to use its VIP program to buy influence.

Similarly, on September 30, 2009, you stated:

We’re beyond ethics here.  We are at a point where the American people at least should know who they gave money to or benefit to, how they did it, and so on. … What we do know is there is a level of intended corruption by Countrywide that clearly had an effect on government’s decisions for years, and we are ignoring it.

    Over the past three years, you have stated repeatedly that the Oversight Committee should determine the full scope of the loan program and make this information public.  According to a Washington Post story on March 19, 2009, you stated:  “The full story of Countrywide’s efforts to buy influence hasn’t been told and shouldn’t be swept under the rug because no chairman is prepared to issue a subpoena.”  Similarly, on June 24, 2009, you stated in a press release:  “The American people deserve to know the extent that special benefits co-opted public servants who were supposed to be watchdogs of the mortgage industry.”  And on September 29, 2009, you stated on Fox Business:  “[I]f we don’t get to these individuals and figure out what they did in their official capacity, we’re not going to be able to reasonably undo some of what was done.” 

Information About Additional Republican Members

    In one of your first official acts as Chairman, you issued a unilateral subpoena on February 16, 2011, demanding a wide array of documents, emails, and other communications relating to mortgages offered through the “VIP and/or Friends of Angelo program.”  Unlike the subpoena issued by former Chairman Edolphus Towns, your subpoena demanded that mortgage files for Members of Congress—even those of current Members—be delivered directly to your offices instead of the House Ethics Committee. 

    You reiterated that your goals were to determine whether any official actions were taken by policymakers to benefit Countrywide and to make public information you obtained in order to deter future wrongdoing.  You stated:

This subpoena will allow us to obtain the information needed to answer the outstanding public interest questions regarding the full size and scope of the VIP program.  The American people have a right to know the totality of who participated in the Countrywide’s VIP program and what they did in return for access to it.  Our role is to get all of the facts so that the American people can judge for themselves who should be held responsible and accountable.

     Prior to the issuance of your subpoena, three Democratic Members of Congress had been identified publicly as potentially having received VIP loans from Countrywide:  Senator Kent Conrad, Senator Christopher Dodd, and Congressman Edolphus Towns.  Senators Conrad and Dodd were both cleared by the Senate Ethics Committee, which concluded on August 7, 2009, that there was “no credible evidence” that either Senator “knowingly accepted a gift, including a loan not available to the public.”  Congressman Towns issued several public statements denying that he knowingly received any preferential treatment from Countrywide.

    In response to your subpoena, the Committee obtained information about four previously unknown instances in which Members of Congress received VIP loans, including three current Republican House Members and one former Republican House Member.  After discovering that all of these Members are Republicans, you sent a letter on December 16, 2011, referring their cases to the House Ethics Committee.

    On Friday, House Armed Services Committee Chairman Howard “Buck” McKeon and Rep. Elton Gallegly acknowledged publicly that they are two of the Republican Members you referred to the House Ethics Committee in December.  In particular, a spokesperson for Chairman McKeon said he was “pretty shocked and angry” when you informed him about the VIP loan documents obtained by the Committee.

Interviews with Countrywide Officials Who Processed Chairman McKeon’s VIP Loan

    Although you referred cases involving Members to the House Ethics Committee in December, you have now scheduled two transcribed interviews with Countrywide officials to take place this week.  In particular, Committee investigators are scheduled to conduct transcribed interviews with two officials who oversaw and processed Chairman McKeon’s VIP loan:  Stephen Brandt, a Countrywide Executive Vice President who oversaw the VIP program, and Maritza Cruz, a Countrywide Loan Manager for VIP loans.

     The documents obtained pursuant to your subpoena indicate that Ms. Cruz is listed as the contact person for several of Chairman McKeon’s VIP loan documents.  In addition, she prepared his Uniform Underwriting and Transmittal Summary.  Her signature, as well as Chairman McKeon’s signature, appear on his Notification of Underwriting Approval and Closing Conditions. 

     These documents also indicate that Chairman McKeon appears to have obtained a significant discount on his VIP loan as a direct result of personal intervention by Countrywide CEO Angelo Mozilo.  Specifically, an internal email from Mr. Brandt to Countrywide employees handling this loan states explicitly:

Per Angelo – “take off 1 point, no garbage fees, approve the loan and make it a no
doc”.

     Last week, a spokesperson for Chairman McKeon stated that he had “no inkling” that he received a VIP loan and that, “as far as he knew, never received any special favors on the home loan.”  The documents obtained pursuant to your subpoena do not indicate whether Chairman McKeon was informed about his discount.  However, the documents describe at least three conversations Chairman McKeon had with Countrywide employees, including with an account executive instructed to provide the preferential rate.  That employee’s notes of these conversations state:

FOA [Friends of Angelo] referral, Please order appraisal ASAP.  You may call the borrower at his Washington office [number redacted] and get the Sons phone number for the appraiser contact.  The borrower would like to hear from the appraiser this week. 

The borrower is a bit difficult to deal with.  He seems on the edgy side.

Called Mr. McKeon at work [redacted name] his secretary said she would ask “B” for son’s phone #.  Mr. McKeon called said we could call 1) his home [number redacted] his wifes work [number redacted] campaign office

Borrower wants to close ASAP.  Explained to him demands are not here yet.

     In addition, a follow-up letter sent to Chairman McKeon provided forms for him to sign and stated:  “Thank you for allowing COUNTRYWIDE’s VIP TEAM to assist you with your financing needs on the above referenced property.”

    Finally, the documents obtained pursuant to your subpoena indicate that Chairman McKeon was referred to the VIP program by “Mike Farrell/MBA.”  This notation appears to be a reference to Michael J. Ferrell, who was then the chief lobbyist of the Mortgage Bankers Association of America (MBA).  According to his biography, Mr. Ferrell led MBA’s successful campaign to lobby Congress to block the imposition of higher fees on mortgage lenders.

Request for Information

    When you issued your unilateral subpoena last February, press accounts noted your aggressive approach and your high-profile demands for Member files.  For example, one press report stated that your “maiden subpoena is no-holds-barred Issa” and that the “restraint showed in the prior Congress … is nowhere to be found in this subpoena.”  It also stated:  “Issa could be launching grenades.  If the probe turns up anything and the findings become public, it could provide a degree of discomfort for lawmakers.”

    At the time, you seemed to recognize the possibility that Republicans could be among the Members of Congress who received VIP loans.  On multiple occasions over the past three years, you indicated that you planned to pursue this investigation even if Republican Members were implicated.  For example, on September 29, 2009, you stated:

There’s plenty of high profile Republicans who took these, some might call them bribes, certainly they were inappropriate to take under our laws.  Congressman, key staffers, including on the committees of jurisdiction on the Republican side are involved.   

    After initially driving the Committee down the road of investigating Members of Congress, you appeared to reverse course in December when you referred these cases to the Ethics Committee.  Now, however, you have scheduled transcribed interviews with Countrywide officials who oversaw and processed Chairman McKeon’s VIP loan.  These sudden shifts raise key questions about how you plan to proceed with this investigation:

1. You have stated:  “The American people have a right to know the totality of who participated in the Countrywide’s VIP program and what they did in return for access to it.”  Have you instructed your staff to question Mr. Brandt and Ms. Cruz about their roles in overseeing and processing Chairman McKeon’s VIP loan?  
2. You have stated:  “The full story of Countrywide’s efforts to buy influence hasn’t been told and shouldn’t be swept under the rug because no chairman is prepared to issue a subpoena.”  Do you intend to publicly release the identities of the remaining two Republican lawmakers, one current and one former, who your investigation has revealed were also beneficiaries of Countrywide VIP loans? And do you intend to conduct a transcribed interview with the former chief lobbyist of the Mortgage Bankers Association of America?
3. You have stated:  “The American people deserve to know the extent that special benefits co-opted public servants who were supposed to be watchdogs of the mortgage industry.”  Do you intend to hold public hearings on these issues?  If so, do you intend to call as a witness former Countrywide CEO Angelo Mozilo?

    Thank you in advance for your prompt answers to these critical questions.

                        Sincerely,
                        Elijah E. Cummings
                        Ranking Member

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source:http://democrats.oversight.house.gov

GE’s slogan couldn’t have been much truer than this.

The D & O Diary-

In a January 12, 2012 opinion that quotes from (and relies upon) former Treasury Secretary Henry Paulson’s credit crisis memoirs, Southern District of New York Judge Richard Holwell granted in part and denied in part the motion to dismiss in the subprime and credit crisis related securities class action lawsuit that investors had filed against General Electric, certain of its directors and officers, and its offering underwriters. A copy of Judge Holwell’s opinion can be found here.

Background

As discussed in greater detail here, the plaintiffs first filed their action in March 2009, alleging that the company had failed to disclose information regarding the company’s health and the health of its financial subsidiary, GE Capital, at the height of the financial crisis. As Judge Holwell summarized it, the plaintiffs allege that “during a time when the financial markets were crumbling and companies across the United States were scrambling to disclose their holdings in subprime loans, GE withheld information regarding its substantial holdings in subprime and non-investment grade loans and touted GE as safe in comparison to its competitors, despite the fact that GE was also feeling the impact of the financial crisis.”

[THE D & O DIARY]

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