derivative mortgage-backed securities - FORECLOSURE FRAUD

Tag Archive | "derivative mortgage-backed securities"

GASTINEAU v. GIFFORD, BANK OF AMERICA | VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY

GASTINEAU v. GIFFORD, BANK OF AMERICA | VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY


UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

DORIS GASTINEAU, an individual,
Plaintiff,

vs.

CHARLES K. GIFFORD, THOMAS J.
MAY, BRIAN T. MOYNIHAN,
CHARLES O. HOLLIDAY, JR.,
MUKESH D. AMBANI, SUSAN S. BIES,
FRANK P. BRAMBLE, SR., VIRGIS W.
COLBERT, D. PAUL JONES, JR.,
MONICA C. LOZANO, DONALD E.
POWELL, CHARLES O. ROSSOTTI,
ROBERT W. SCULLY, WILLIAM P.
BOARDMAN, BARBARA J. DESOER
and KENNETH D. LEWIS,
Defendants,

and

BANK OF AMERICA CORPORATION,
Nominal Defendant.

[…]

This is a shareholder derivative action brought on behalf and for the benefit of Bank of America against certain of its current and former directors. Bank of America is a global financial services company, and provides consumers, corporations, governments and institutions with a range of financial products and services. Plaintiff seeks to remedy the serious financial and reputational harm that Bank of America has suffered, and will continue to suffer, from the inadequate servicing of its troubled residential mortgage loans. Plaintiff also seeks redress for the Company’s false and  misleading Schedule 14A definitive proxy statement filed with the SEC on March 30, 2011 (the “Proxy”).

[…]

[ipaper docId=60830442 access_key=key-2ojzndxj7anp8ae5fs0v height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

With Banks Under Fire, Some Expect a Settlement: NYTimes.com

With Banks Under Fire, Some Expect a Settlement: NYTimes.com


From left, Chester Higgins Jr./The New York Times; Andrew Harrer/Bloomberg News; Ramin Talaie for The New York Times

From left, Andrew Cuomo, the New York attorney general; Robert Khuzami, of the S.E.C.; and Preet Bharara, of the United States attorney’s office. The agencies are investigating Wall Street.

By NELSON D. SCHWARTZ and ERIC DASH

Published: May 13, 2010

It is starting to feel as if everyone on Wall Street is under investigation by someone for something.

News on Thursday that New York State prosecutors are examining whether eight banks hoodwinked credit ratings agencies opened yet another front in what is fast becoming the legal battle of a decade for the big names of finance.

Not since the conflicts at the center of Wall Street stock research were laid bare a decade ago, eventually resulting in a $1.4 billion industrywide settlement, have so many investigations swirled across the financial landscape.

Nearly two years after Washington rescued big banks with billions of taxpayer dollars, half a dozen government agencies are still trying, with mixed success, to peel back the layers of the collapse to determine who, if anyone, broke the rules.

The Securities and Exchange Commission, the Justice Department, the United States attorney’s office and more are examining how banks created, rated, sold and traded mortgage securities that turned out to be some of the worst investments ever devised.

Virtually all of the investigations, criminal as well as civil, are in their early stages, and investigators concede that their job is daunting. The S.E.C. has been examining major banks’ mortgage operations since last summer, but so far, it has filed a civil fraud claim against just one big player: Goldman Sachs. Goldman has vowed to fight.

But legal experts are already starting to handicap potential outcomes, not only for Goldman but for the broader industry as well. Many suggest that Wall Street banks may seek a global settlement akin to the 2002 agreement related to stock research. Indeed, Wall Street executives are already discussing among themselves what the broad contours of such a settlement might look like.

“I would be stunned if any of these cases go to trial,” said Frank Partnoy, a professor of law at the University of San Diego. “I think Wall Street needs to put this scandal behind it as quickly as possible and move on.”

As part of the 2002 settlement, 10 banks paid $1.4 billion total and pledged to change the way their analysts and investment bankers interacted to prevent conflicts of interest. This time, the price of any settlement would probably be higher and also come with a series of structural reforms.

David Boies, chairman of the law firm Boies, Schiller & Flexner, represented the government in its case against Microsoft and is now part of a federal challenge to California’s same-sex marriage ban. He said a settlement by banks might be painful but would ultimately be something Wall Street could live with. “The settlement may be bad for everyone, but not disastrous for anyone,” he said.

A settlement also would let the S.E.C. declare victory without having to bring a series of complex cases. The public, however, might never learn what really went wrong.

“The government doesn’t have the personnel to simultaneously prosecute several investment banks,” said John C. Coffee, a Columbia Law School professor.

The latest salvo came on Thursday from Andrew M. Cuomo, the New York attorney general. His office began an investigation into whether banks misled major ratings agencies to inflate the grades of subprime-linked investments.

Many Americans are probably already wondering why this has taken so long. The answer is that these cases are tricky, like the investments at the center of them.

But regulators also concede that they were reluctant to pursue banks aggressively until the financial industry stabilized. The S.E.C., for one, is now eager to prove that it is on its game after failing to spot the global Ponzi scheme orchestrated by Bernard L. Madoff, or head off the Wall Street excesses that nearly sank the entire economy.

The stakes are high for both sides. At a minimum, the failure to secure a civil verdict, or at least a mammoth settlement, would be another humiliation for regulators.

Wall Street wants to put this season of scandal behind it. That is particularly so given the debate over new financial regulations that is under way on Capitol Hill. The steady flow of new allegations could strengthen calls for tougher rules.

Even worse would be a criminal charge, which could put a firm out of business even if that firm were ultimately found not guilty, as was the case with the accounting giant Arthur Andersen after the fraud at Enron.

“No firm in the financial services field has the stomach for a criminal trial,” Mr. Coffee said.

Bankers have been reluctant until now to take their case to the public. But that is changing as Wall Street chieftains like Lloyd C. Blankfein of Goldman take to the airwaves and New York politicians warn that the city’s economy will be endangered by the attack on some of the city’s biggest employers and taxpayers.

“In New York, Wall Street is Main Street,” Gov. David A. Paterson has said. “You don’t hear anybody in New England complaining about clam chowder.”

There are broader political consequences as well. At the top, there is President Obama, who was backed by much of Wall Street in 2008. Many of those supporters now privately say they are disillusioned and frustrated by his attacks on their industry, which remains a vital source of campaign contributions for both parties.

Closer to home, the man who hopes to succeed Mr. Paterson, Mr. Cuomo, is painting himself as the new sheriff of Wall Street. Another attorney general, Eliot Spitzer, rode a series of Wall Street investigations to the governor’s mansion in 2006.

But ultimately, it is what Wall Street does best — making money — that is already on trial in the court of public opinion.

Put simply, the allegations against Wall Street were prompted by evidence that the firms may have devised and sold securities to investors without telling them they were simultaneously betting against them.

Wall Street firms typically play both sides of trades, whether to help buyers and sellers of everything from simple stocks to complicated derivatives complete their transactions, or to make proprietary bets on whether they would rise or fall.

These activities form half of the four-legged stool on which Wall Street’s profits and revenue rest, the others being advising on mergers and acquisitions and helping companies issue stocks, bonds and other securities.

“This case is a huge deal. It has the potential to be the mother of all Wall Street investigations,” said Mr. Partnoy of the University of San Diego. “The worry is that the government will go after dealings that Wall Street thought were insulated from review.”

Even some Wall Street executives concede that all the scrutiny makes proprietary trading a bit dubious. “The 20 guys in the room with the shades drawn are toast,” one senior executive of a major bank said.

Posted in conspiracy, foreclosure fraud, goldman sachs, investigation, S.E.C., securitizationComments (0)

Securities and Investments: Fraud Digest

Securities and Investments: Fraud Digest


Securities and Investments 

Morgan Stanley

Action Date: May 12, 2010 
Location: New York, NY 

EDITORIAL: On May 12, 2010, Morgan Stanley’s Chief Executive announced in response to a Wall Street Journal article that he was unaware of any criminal investigation by the Justice Department that his firm, like Goldman Sachs, misled investors about mortgage-backed derivative deals. The WSJ had reported that Morgan Stanley was the subject of such an investigation. In addition to determining whether the firm was betting against the very products it was promoting to investors, the Justice Department COULD investigate whether Morgan Stanley and other securities firms exercised secret control over the rating agencies, causing risky investments to get the highest ratings by these firms. The Justice Department COULD also investigate whether the mortgage-backed trusts put together by Morgan Stanley were comprised of much riskier mortgages than represented to investors. Another investigation COULD be conducted regarding the pay-outs from the insurance policies behind the CDOs and whether the servicing companies working for the trusts are collecting twice – from the insurance and from the foreclosures – and then turning around, acquiring the foreclosed properties for $10 – and profiting yet a third time. Investigators COULD even determine whether foreclosure mills working for trusts created by Morgan Stanley are now using forged proof of ownership to foreclose because Morgan Stanley never acquired the mortgages, notes and assignments they claimed to have in their vaults, backing the mortgage-backed securities. In the battle between the Justice Department and Wall Street, Goliath is in New York, not D.C. 

Posted in cdo, concealment, conspiracy, foreclosure, foreclosure fraud, fraud digest, goldman sachs, Lynn Szymoniak ESQ, S.E.C., securitizationComments (0)

New MERS Standing Case Splits Note and Mortgage: Bellistri v Ocwen Loan Servicing, Mo App.20100309

New MERS Standing Case Splits Note and Mortgage: Bellistri v Ocwen Loan Servicing, Mo App.20100309


Source: Livinglies

From Max Gardner – QUIET TITLE GRANTED

Mortgage Declared Unenforceable in DOT Case: NOTE DECLARED UNSECURED

“When MERS assigned the note to Ocwen, the note became unsecured and the deed of trust became worthless”

Editor’s Note:

We know that MERS is named as nominee as beneficiary. We know that MERS is NOT named on the note. This appellate case from Missouri, quoting the Restatement 3rd, simply says that the note was split from the security instrument, and that there is no enforcement mechanism available under the Deed of Trust. Hence, the court concludes, quiet title was entirely appropriate and the only remedy to the situation because once the DOT and note are split they is no way to get them back together.

NOTE: THIS DOES NOT MEAN THE NOTE WAS INVALIDATED. BUT IT DOES MEAN THAT IN ORDER TO PROVE A CLAIM UNDER THE NOTE OR TO VERIFY THE DEBT, THE HOLDER MUST EXPLAIN HOW IT ACQUIRED ANY RIGHTS UNDER THE NOTE AND WHETHER IT IS ACTING IN ITS OWN RIGHT OR AS AGENT FOR ANOTHER.

The deed of trust, …did not name BNC [AN AURORA/LEHMAN FRONT ORGANIZATION TO ORIGINATE LOANS] as the beneficiary, but instead names Mortgage Electronic Registration System (MERS), solely as BNC’s nominee. The promissory note does not make any reference to MERS. The note and the deed of trust both require payments to be made to the lender, not MERS.

a party “must have some actual, justiciable interest.” Id. They must have a recognizable stake. Wahl v. Braun, 980 S.W.2d 322 (Mo. App. E.D. 1998). Lack of standing cannot be waived and may be considered by the court sua sponte. Brock v. City of St. Louis, 724 S.W.2d 721 (Mo. App. E.D. 1987). If a party seeking relief lacks standing, the trial court does not have jurisdiction to grant the requested relief. Shannon, 21 S.W.3d at 842.

A Missouri appellate court, without trying, may have drawn a map to a defense to foreclosures-if borrowers can figure it out before the Missouri Supreme Court overturns the decision in Bellistri v Ocwen. The opinion shows how an assignment of a loan to a servicing company for collection can actually make the loan uncollectible from the mortgaged property.

This case concerns the procedures of MERS, which is short for Mortgage Electronic Registration Service, created to solve problems created during the foreclosure epidemic of the 1980s, when it was sometimes impossible to track the ownership of mortgages after several layers of savings and loans and banks had failed without recording assignments of the mortgages. The MERS website contains this explanation:

MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.

MERS is the named mortgage holder in transactions having an aggregate dollar value in the hundreds of billions, and its service of providing a way to trace ownership of mortgages has played a large role in the securitization of mortgages and the marketability of derivative mortgage-backed securities, because it seemed to eliminate the necessity of recording assignments of mortgages in county records each time the ownership of a mortgage changed, allowing mortgage securities (packages of many mortgages) to be traded in the secondary market, with less risk.

This case began as a routine quiet title case on a collector’s deed, also known as a tax deed. Following the procedure by which people can pay delinquent property taxes and obtain the ownership of the delinquent property if the owner or lien holder fails after notice to redeem, Bellistri obtained a deed from the Jefferson County (Mo.) collector.

Because of the possibility of defects in the procedures of the county collectors and in the giving of proper notices, the quality of title conferred by a collector’s deed is not insurable.

A suit to cure the potential defects (called a “quiet title suit”) is required to make title good, so that the property can be conveyed by warranty deed and title insurance issued to new lenders and owners. The plaintiff in a quiet title suit is required to give notice of the suit to all parties who had an interest in the property identified in the collector’s deed.

A borrower named Crouther had obtained a loan from BCN Mortgage. The mortgage document (called a deed of trust) named MERS as the holder of the deed of trust as BCN’s nominee, though the promissory note secured by the deed of trust was payable to BCN Mortgage and didn’t mention MERS.

Crouther failed to pay property taxes on the mortgaged property.

Bellistri paid the taxes for three years, then sent notice to Crouther and  BNC that he was applying for a collector’s deed. After BNC failed to redeem (which means “pay the taxes with interest and penalties,” so that Bellistri could be reimbursed), the county collector issued a collector’s deed to Bellistri, in 2006.

Meanwhile, MERS assigned the promissory note and deed of trust to Ocwen Servicing, probably because nobody was making mortgage payments, so that Ocwen would be in a position to attempt to (a) get Crouther to bring the loan payments up to date or (b) to foreclose, if necessary. But this assignment, as explained below, eliminated Ocwen’s right to foreclose and any right to the property.

Bellistri filed a suit for quiet title and to terminate any right of Crouther to possess the property. After discovering the assignment of the deed of trust to Ocwen, Bellistri added Ocwen as a party to the quiet title suit, so that Ocwen could have an opportunity to prove that it had an interest in the property, or be forever silenced.

Bellistri’s attorney Phillip Gebhardt argued that Ocwen had no interest in the property, because the deed of trust that it got from MERS could not be foreclosed. As a matter of law, the right to foreclose goes away when the promissory note is “split”  from the deed of trust that it is supposed to secure. The note that Crouther signed and gave to BNC didn’t mention MERS, so MERS had no right to assign the note to Ocwen. The assignment that MERS made to Ocwen conveyed only the deed of trust, splitting it from the note.

When MERS assigned the note to Ocwen, the note became unsecured and the deed of trust became worthless. Ironically, the use of MERS to make ownership of the note and mortgage easier to trace also made the deed of trust unenforceable. Who knows how many promissory notes are out there that don’t mention MERS, even though MERS is the beneficiary of the deed of trust securing such notes?

O. Max Gardner III

Gardner & Gardner PLLC

PO Box 1000

Shelby NC 28151-1000

704.418.2628 (C)

704.487.0616 (O)

888.870.1647 (F)

704.475.0407 (S)

maxgardner@maxgardner.com
max@maxinars.com
www.maxgardnerlaw.com
www.maxbankruptcybootcamp.com
www.maxinars.com
www.governoromaxgardner.com
Next Boot Camp:  May 20 to May 24, 2010

[ipaper docId=30265165 access_key=key-2h0dbrb0moblvjinvom height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure fraud, foreclosure mills, forensic mortgage investigation audit, livinglies, Mortgage Foreclosure Fraud, neil garfieldComments (4)


Advert

Archives

Please Support Me!







Write your comment within 199 characters.

All Of These Are Troll Comments