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Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite

Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite


by Paul Kiel ProPublica, Oct. 4, 2011, 11:26 a.m.

Why has the administration’s flagship foreclosure prevention program been so ineffective in helping struggling homeowners get loan modifications and stay in their homes? One reason: The government’s supervision of the program has apparently ranged from nonexistent to weak.

Documents obtained by ProPublica – government audit reports of GMAC, the country’s fifth largest mortgage servicer – provide the first detailed look at the program’s oversight. They show that the company operated with almost no oversight for the program’s first eight months. When auditors did finally conduct a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications – miscalculating homeowner income in more than 80 percent of audited cases, for example. Yet GMAC suffered no penalty. GMAC itself said it hasn’t reversed a single foreclosure as a result of a government audit.

The documents also reveal that government auditors signed off on GMAC loan-modification denials that appear to violate the program’s own rules, calling into question the rigor and competence of the reviews.

Some of the auditors’ mistakes are “appalling,” said Diane Thompson of the National Consumer Law Center, an advocacy group. “It suggests the government isn’t taking the auditing process seriously.”

In a written response to ProPublica questions [1], a spokeswoman for the Treasury Department, which runs the program, denied there were serious flaws in its oversight system, calling it “effective and unprecedented in many ways.”

The audits of GMAC, though revealing, give only a limited view into the program, because the Treasury has refused to release the documents for other servicers. For more than a year, ProPublica has sought the audits for ten of the largest program participants through a Freedom of Information Act request. The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports.

Abuses of the foreclosure process, in which banks and mortgage servicers cut corners or even created false documents [2] to move trouble borrowers out of their homes, have been extensively documented [3], along with failures by government [4] to regulate the industry. But the lapses revealed in the documents obtained by ProPublica stand out because they occurred within the government’s main effort to prevent foreclosures, the Home Affordable Modification Program, or HAMP.

Oversight Shrouded in Secrecy

For HAMP’s first two years, the government offered very little public detail about its oversight efforts. It was virtually impossible for the public – or even Congress – to know how well the banks and mortgage servicers were complying with the government’s effort to prevent struggling homeowners from losing their homes. Those years were crucial, because that’s when the vast majority of homeowners eligible for a modification – about three million – were evaluated by servicers.

The documents obtained by ProPublica show auditors finding serious problems at a major servicer during that time. Instead of publicly revealing the findings, Treasury chose to privately request that GMAC fix the problems.

“For two years, they’ve known how abysmal servicers were performing and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.

“It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference,” he continued. “It’s why the program has been a colossal failure.”

Treasury continued to release few details about its audits until this June, when it began publishing quarterly reports based on the audits’ results. The public report showed what Treasury called “substantial” problems at four of the ten largest servicers – Bank of America, JPMorgan Chase, Wells Fargo, and Ocwen – and Treasury for the first time [5] withheld taxpayer subsidies from three of them.

Mortgage servicers that signed up for the program agreed to follow strict guidelines on how to evaluate struggling homeowners seeking a reduced mortgage payment. In exchange, they’d receive taxpayer subsidies. But as we’ve reported extensively, the largest servicers haven’t abided by the guidelines [6]. Homeowners have often been foreclosed on in the midst of review for a modification [7] or been denied due to the servicer’s error. For many homeowners, navigating what was supposed to have been a simple, straightforward program has proven a maddening ordeal [6].

Meanwhile, HAMP has fallen dramatically short of the administration’s initial goals to help three to four million homeowners. So far, fewer than 800,000 homeowners have received a loan modification through HAMP, less than one in four of those who applied [8].

Part of the $700 billion TARP, HAMP launched in early 2009 with a $50 billion budget to encourage loan modifications by paying subsidies to servicers, investors, and homeowners. But in another example of how the program has fallen short, only about $1.6 billion has gone out so far [9].

GMAC said it agreed to release its audits under the program because the company “believes in honoring the spirit of the Freedom of Information Act process” and “elected to be transparent on our work with the [modification] program,” spokeswoman Gina Proia said.

GMAC has changed its parent company’s name to Ally Financial, but its mortgage division is still called GMAC. The government owns a majority stake in Ally, because it rescued the company with TARP funds, but both the company and the Treasury said that didn’t factor into the company’s decision to allow the documents to be released.

ProPublica contacted all nine servicers who objected to the reports’ release. All either declined to comment on why they wanted the audits kept secret or defended keeping them out of the public domain by saying the reports contained confidential information. Collectively, these companies have so far been paid more than $471 million in cash – dubbed “servicer incentive payments” – through the program. They are eligible for hundreds of millions more. The country’s four largest banks – Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup – are also the largest servicers of mortgage loans.

In its written response, Treasury’s spokeswoman said it agreed to withhold the records in part because they could undermine “frank communications between mortgage servicers and compliance examiners” and hurt the program’s effectiveness. The department declined to provide either redacted versions or an index of the documents.

Early Reviews “Useless” and Flawed

Since the program’s beginning, homeowner advocates have wondered where HAMP’s watchdog was [10] and why it was having so little effect. That watchdog is Freddie Mac, tapped by Treasury in February 2009 and working under a contract worth $116 million and rising. The Freddie Mac unit, now staffed with 121 employees and employing about 150 more through contractors, is supposed to regularly audit servicers in the program to make sure they are following the rules. Treasury is ultimately responsible for deciding whether to punish a servicer, but it relies on auditors’ findings to make that decision.

It took several months for the unit to even get off the ground. In August of 2009, Treasury rejected Freddie Mac’s first reviews of servicers as inadequate [10], because they were “inconsistent and incomplete” and its staff was “unqualified,” according to a report by the TARP’s special inspector general. Freddie Mac promised to improve. That process took several more months.

As a result, for the program’s crucial first eight months there effectively was no watchdog. Nationwide, servicers filed to pursue foreclosure on about two million loans during that time.

Treasury disputed the idea that there was no watchdog for those months, saying that auditors had performed “readiness reviews” of servicers as early as the May of 2009, one month after the program began. The documents obtained by ProPublica show, however, that Freddie Mac’s auditing unit, called Making Home Affordable – Compliance (MHA-C), didn’t issue its first report for GMAC until early December, 2009 [11].

That audit was a modest effort that involved collecting a sample of 323 loans handled by GMAC and determining whether they’d been properly reviewed for the program. Because of the delays in starting the reviews, the report was based on a sample of loans that was five months old [12]. Such delays continued into 2010. Another Freddie Mac review, completed at the end of March 2010, was based on GMAC loans selected in October of the previous year [13].

The delays make those reviews “largely useless to homeowners,” said Thompson of the National Consumer Law Center. If a homeowner lost the house to foreclosure in July, it wouldn’t help to have an auditor notice that several months later, she explained.

The December 2009 audit notes that GMAC might have already foreclosed on loans auditors had flagged as potentially mishandled, but didn’t order remedial steps. It only requests that GMAC not take “further action.” [14]

GMAC said it had never reversed a foreclosure action as a result of a HAMP audit. ProPublica asked the other nine servicers who objected to the audits’ release the same question. American Home Mortgage Servicing, the only other servicer that answered the question, said it had also never reversed a foreclosure action due to a HAMP audit.

American Home handles about 384,000 loans [15], putting it among the ten largest servicers in the program.

A Treasury spokeswoman said that auditors have reviewed more than 50,000 loan files, but did not directly answer whether a servicer had ever reversed a foreclosure action because of a HAMP audit. Where auditors have found problems, she wrote, the department has “required servicers to take steps to tighten controls” and “re-evaluate any borrowers who may have been potentially impacted.”

In early 2010, around the same time that the auditing unit was issuing its first reports, auditors complained that servicers’ lack of responsiveness to their requests was hampering their efforts. Getting the right documents from servicers was “a cumbersome process,” the head of Freddie Mac’s audit team, Paul Heran, said in February 2010 at a mortgage industry conference. It seemed, he added, that servicers often relegated responding to the auditors to low-level staff who didn’t understand the requests. Another manager in the unit, Vic O’Laughlen, said servicers tended to respond with “at best fifty percent of what we’re expecting to see.”

However uncooperative the banks and mortgage services may have been, Freddie Mac’s auditing reports contain errors that call into question their reliability.

Every few months, the auditors examine a sample of the servicer’s loans that have been denied a HAMP modification to check whether the denials are legitimate. In each GMAC report reviewed by ProPublica, auditors found that the servicer had, with very few exceptions, given the homeowner fair and appropriate consideration. But among the justifications listed in the audits are some that violate the program’s rules or simply don’t make sense.

For instance, the December 2009 review says that 35 of the 247 loans auditors reviewed were denied because the homeowner was “less than 60 days delinquent.” [16] In the report, auditors said that was the right decision in all but one case. But being less than 60 days delinquent is never on its own a legitimate reason for a servicer to deny a modification, according to the program rules. Homeowners are eligible for a modification even if they’re current on their loans, as long as they can show they’re in imminent danger of defaulting.

Another example: Auditors agreed that GMAC had correctly denied a homeowner because of a failure to sign a trial modification offer by Dec. 31, 2012, HAMP’s end date [17]. That makes no sense, because the review took place in 2009. Treasury’s spokeswoman said this was a typo and that the homeowner was denied for a completely different reason.

There are several other examples in later reports of auditors signing off on denial reasons that have no apparent basis in the program’s rules. For instance, auditors cited “grandfathered foreclosure” [18] as a legitimate reason for some denials. The spokeswoman said such loans had been in the foreclosure process before GMAC signed up for the program, but the program rules explicitly stated at the time that such loans were eligible.

When ProPublica asked GMAC if it had denied homeowners loan modifications for these reasons, the company said it couldn’t comment because auditors, not GMAC, had generated those descriptions of why homeowners had been denied. In some cases, Proia said, the descriptions were simply wrong: GMAC had never denied homeowners simply because they weren’t 60 days delinquent.

But Treasury defended the questionable denials, and in so doing raised even more questions. For instance, the spokeswoman said HAMP “does not specifically require servicers to evaluate loans that are less than 60 days delinquent.” But Treasury’s official guidance to servicers said such borrowers “must be screened.”

“It makes you wonder if the Treasury even knows the rules for their own program,” said National Consumer Law Center’s Thompson.

A Congressionally-appointed panel, among others, has pointed to a fundamental flaw in the way the oversight was carried out: Auditors have had no direct contact with homeowners. The program has been dogged by servicers’ inadequate document systems. Borrowers have long reported [6] faxing and mailing the same documents over and over, because servicers kept losing them. Servicers have denied about a quarter of all modification applications due to an alleged lack of documentation [19]. Because HAMP’s auditors do not contact borrowers, there’s no way for them to ascertain if a denial for inadequate documentation was correct.

In response to this criticism from the Congressional Oversight Panel for the TARP last December [20], Treasury said auditors did not contact homeowners to avoid giving them added stress. The panel rejected that reason, saying that contacting borrowers was “critical to assessing the accuracy of a servicer’s determination.”

Instead of talking with borrowers, auditors conduct on-site reviews of mortgage servicing companies, Treasury’s spokeswoman said in her written response to ProPublica. Treasury believes that focusing “on servicer processes and internal controls is the most effective deployment of our compliance efforts,” she wrote.

Detailed Audit Shows Serious Problems

It wasn’t until July 2010, sixteen months after HAMP launched, that the unit performed their first major audit of GMAC. The review included a visit to GMAC’s offices and a detailed review of a sample of loans.

The report enumerated various rule violations, including in how GMAC evaluated homeowners for modifications. GMAC’s practice was to begin the foreclosure process too quickly [21]: The program required the servicer to give the homeowner 30 days to respond to a trial modification offer, but GMAC’s procedure was to wait only 20.

GMAC’s Proia said no homeowners were “negatively impacted by this issue.”

Auditors also found that GMAC was regularly miscalculating the homeowner’s income. In a review of 25 loan files of homeowners who had received a modification, the auditors said 21, or 84 percent, involved a miscalculation of income [22]. Since the borrower’s income is a key factor in whether the homeowner qualifies for a modification, the high error rate raises obvious questions about whether GMAC was accurately evaluating homeowners’ applications.

Asked about this the frequent income miscalculations, GMAC’s Proia said that the “issue was identified in the early stages of the program,” that calculating the borrower’s income is a “complicated process,” and that GMAC has improved since the mid-2010 review – an assertion backed up by recent audit results published by the Treasury.

The July 2010 review also found that GMAC had been aware of certain problems such as “incorrect income and expense calculations,” [23] but had not fixed them. Proia said the company does its best to fix problems when it becomes aware of them.

Penalties: Late and Weak

Typical of the Treasury’s oversight of the program, GMAC was never penalized for any of the rule violations. For the first two years of the program, Treasury officials publicly threatened servicers with the possibility of penalties, but instead followed a cooperative approach [24]. When auditors found problems, servicers were asked to fix them.

The documents illustrate that back and forth. In response to the auditors’ findings, GMAC was required to develop an “action plan.” GMAC refused to provide the action plan to ProPublica and recommended seeking it and other similar documents by filing a Freedom of Information Act request with the Treasury.

Treasury has sent mixed messages about its ability to penalize banks over the course of the program [24], threatening “monetary penalties and sanctions” in late 2009, and then later saying it lacked the power to enforce such penalties. Treasury finally departed from its cooperative approach this June, when it withheld incentive payments [5] from three of the top ten servicers. (GMAC was not among them.) The companies would not receive the public subsidies for completing modifications until they made certain changes. The companies were cited for some of the same problems for which auditors had criticized GMAC, such as regularly miscalculating the borrower’s income. JPMorgan Chase, for instance, had erred in estimating income in about a third of the homeowner loan files reviewed.

The punishment hasn’t had much sting to it. Two of the three companies had their incentive payments restored when Treasury’s most recent report [25] declared they’d improved. Only Chase and Bank of America, the country’s largest servicer, would continue to have their incentives withheld, Treasury said.

But while those incentives have slowed, they have not stopped, according to Treasury’s monthly TARP reports [26]. Since June, when Treasury first announced it would be withholding incentives, Bank of America has received $2.5 million in taxpayer incentives. While that’s a steep reduction from the roughly $7.5 million it had been receiving monthly, the bank is supposed to be receiving nothing. Chase received $404,000 during that same time.

Treasury responded that it has programs to encourage modifications on both first and second mortgages, and that the payments Bank of America and Chase received were related to second mortgages. “Current system limitations” meant the Treasury couldn’t withhold these payments, according to the Treasury spokeswoman. Treasury is working to fix the problem, she said.

 

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The Rescue That Missed Main Street – Gretchen Morgenson

The Rescue That Missed Main Street – Gretchen Morgenson


But NOT Wall Street

Fair Game-

FOR the last three years we have been told repeatedly by government officials that funneling hundreds of billions of dollars to large and teetering banks during the credit crisis was necessary to save the financial system, and beneficial to Main Street.

But this has been a hard sell to an increasingly skeptical public. As Henry M. Paulson Jr., the former Treasury secretary, told the Financial Crisis Inquiry Commission back in May 2010, “I was never able to explain to the American people in a way in which they understood it why these rescues were for them and for their benefit, not for Wall Street.”

The American people were right to question Mr. Paulson’s pitch, as it turns out. And that became clearer than ever last week when Bloomberg News published fresh and disturbing details about the crisis-era bailouts.

[NEW YORK TIMES]

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TAIBBI | The REAL Housewives of WALL STREET

TAIBBI | The REAL Housewives of WALL STREET


Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs? 

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MATT TAIBBI | Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?

MATT TAIBBI | Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?


The Real Housewives of Wall Street

via Rolling Stone

America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.

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GRETCHEN MORGENSON | The Bank Run We Knew So Little About

GRETCHEN MORGENSON | The Bank Run We Knew So Little About


From New York Times

That Aug. 20, Commerzbank of Germany borrowed $350 million at the Fed’s discount window. Two days later, Citigroup, JPMorgan Chase, Bank of America and the Wachovia Corporation each received $500 million. As collateral for all these loans, the banks put up a total of $213 billion in asset-backed securities, commercial loans and residential mortgages, including second liens.

Thus began the bank run that set off the financial crisis of 2008. But unlike other bank runs, this one was invisible to most Americans.

[…]


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BLOOMBERG | JPMorgan Borrowed at Least $5.9 Billion From Fed Discount Window

BLOOMBERG | JPMorgan Borrowed at Least $5.9 Billion From Fed Discount Window


JPMorgan Chase & Co. (JPM), the second- largest U.S. bank by assets, borrowed at least $5.9 billion from the Federal Reserve’s discount window over six months during the height of the financial crisis.

JPMorgan had previously disclosed it borrowed $500 million on Aug. 22, 2007, as similar loans were made to Bank of America Corp. (BAC) and Wachovia Corp. “to display the effectiveness of the facility,” according to a joint statement at the time. JPMorgan accessed the program at least four more times through April 2008, according to documents released today under a Freedom of Information Act request by Bloomberg News and Fox News.

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BLOOMBERG | Fed Must Release Data on Emergency Bank Loans as High Court Rejects Appeal

BLOOMBERG | Fed Must Release Data on Emergency Bank Loans as High Court Rejects Appeal


“I can’t recall that the Fed was ever sued and forced to release information” in its 98-year history, said Allan H. Meltzer, the author of three books on the U.S central bank and a professor at Carnegie Mellon University in Pittsburgh.

By Greg Stohr and Bob Ivry – Mar 21, 2011 12:22 PM ET

The Federal Reserve will disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view.

The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene.

“The board will fully comply with the court’s decision and is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.

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Gov’t Has Spent Small Fraction of $50 Billion Pledged for Loan Mods

Gov’t Has Spent Small Fraction of $50 Billion Pledged for Loan Mods


By Paul Kiel
updated 11/11/2010 4:54:34 PM ET
.

When the Obama administration launched its flagship foreclosure prevention program in early 2009, it pledged to spend up to $50 billion helping struggling homeowners. But the government has so far only spent a tiny fraction of that.

A recent Treasury Department report summarizing TARP spending put the total at $600 million through October.

Although the Treasury Department posts the maximum amount that could go to each mortgage servicer on its website, it doesn’t report the details of the spending. So we filed a Freedom of Information request for the data, and can now show for the first time exactly how much money has gone to each servicer. (A Treasury Department spokeswoman said they’re considering regularly releasing the information going forward.)

The program, which uses TARP money, tries to prevent foreclosures by paying mortgages servicers incentives to make loan modifications. The largest payout, $79 million, has gone to JPMorgan Chase. Next on the list is Bank of America with $45.1 million. That’s a drop in the bucket for BofA, which reported net servicing income of $780 million in the third quarter. (You can use our bailout tracker to see how much money has gone to each mortgage servicer. The figures, which come from our FOIA request, only go through August.)

With the government’s program showing signs of slowing down, the small payout so far shows that Treasury won’t come close to using the full $50 billion, said Guy Cecala, publisher of Inside Mortgage Finance. “It’s a joke, because everyone’s asking ‘is [the program] really worth the $50 billion we’ve committed?’” he said. “We’ll never spend anywhere near that.”

There are two main reasons why so little money has been paid out. First, there have been few modifications done through the program. The government only pays incentives for finalized modifications, not trials. For instance, even though $8.3 billion has been set aside for Bank of America, it won’t get that money unless it provides modifications.

Second, incentives are paid out over time. For instance, homeowners in the program receive a $1,000 reduction to their mortgage each year for five years if they stay current on the modified loan. The program is less than two years old, and few modifications were given during the first year.

Incentives are paid to three different groups: homeowners, investors, and banks and other companies who service the loans (The four biggest servicers of mortgages are also the U.S.’s largest banks: Bank of America, Wells Fargo, JPMorgan Chase and Citigroup.) So far, the servicers have kept most of the money paid out: $231.5 million all told. Investors (lenders and mortgage-backed securities investors) and homeowners have received $129.2 million and $34.7 million, respectively. Our database breaks those amounts down for each servicer.

It’s hard to estimate just how much Treasury will ultimately use of the $50 billion. One reason is that a portion of the modifications will default, so all the incentives for each modification will not be paid out. Of modifications completed a year ago, about 21 percent have already defaulted, according to Treasury data.

If a homeowner keeps up payments on a modified mortgage for the full five years, it could cost the government in the range of $20,000 over five years, according to a ballpark estimate provided by the Treasury spokeswoman. But many homeowners in the program are expected to default on their mortgages well before that.

The government has set aside billions of dollars from the TARP for other, related programs – but it also remains to be seen how much of that money will be spent. The government pays incentives for other ways of avoiding foreclosure, like short sales, but those programs started relatively recently. It’s also allocated $7.6 billion to 18 different states (plus Washington, D.C.) for local plans to avert foreclosure. Another $8.1 billion has been reserved for a plan to refinance homeowners in underwater mortgages into Federal Housing Agency loans.

Separate from the TARP, Fannie Mae and Freddie Mac, both under government control, also participate in the loan modification program. Administration officials have said Fannie and Freddie could pay up to $25 billion in incentives to their servicers and homeowners, but it’s also doubtful that whole amount will be spent. As the TARP inspector general recently noted, they’ve only paid out $451 million through September.

© Copyright 2010 ProPublica Inc. All rights reserved.

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Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com

Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com


SHOCK & AWE …I’m betting! Thanks to Bloomberg for the lawsuit to DISCLOSE! Notice how both Bloomberg & Huffington are always the ones who go after the banksters…Because they probably don’t use the banksters to fund them!

By David Glovin and Bob Van Voris

March 19 (Bloomberg) — The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.

The U.S. Freedom of Information Act, or FOIA, “sets forth no basis for the exemption the Board asks us to read into it,” U.S. Circuit Chief Judge Dennis Jacobs wrote in the opinion. “If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”

The opinion may not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed may seek a rehearing or appeal to the full appeals court and eventually petition the U.S. Supreme Court.

Right to Know

If today’s ruling is upheld or not appealed by the Fed, it will have to disclose the requested records. That may lead to “catastrophic” results, including demands for the instant disclosure of banks seeking help from the Fed, resulting in a “death sentence” for such financial institutions, said Chris Kotowski, a bank analyst at Oppenheimer & Co. in New York.

“Whenever the Fed extends funds to a bank, it should be disclosed in private to the Congressional oversight committees, but to release it to the public I think would be a horrific mistake,” Kotowski said in an interview. “It would stigmatize the banks, it would lead to all kinds of second-guessing of the Fed, and I don’t see what public purpose is served by it.”

Senator Bernie Sanders, an Independent from Vermont, said the decision was a “major victory” for U.S. taxpayers.

“This money does not belong to the Federal Reserve,” Sanders said in a statement. “It belongs to the American people, and the American people have a right to know where more than $2 trillion of their money has gone.”

Fed Review

The Fed is reviewing the decision and considering its options for reconsideration or appeal, Fed spokesman David Skidmore said.

“We’re obviously pleased with the court’s decision, which is an important affirmation of the public’s right to know what its government is up to,” said Thomas Golden, a partner at New York-based Willkie Farr & Gallagher LLP and Bloomberg’s outside counsel.

The court was asked to decide whether loan records are covered by FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets.

The Fed had argued that it could withhold the information under an exemption that allows federal agencies to refuse disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

Payment Processors

The Clearing House Association, which processes payments among banks, joined the case and sided with the Fed. The group includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc, Bank of America Corp., The Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., US Bancorp and Wells Fargo & Co.

Paul Saltzman, general counsel for the Clearing House, said the decision did not address the “fundamental issue” of whether disclosure would “competitively harm” borrower banks.

“The Second Circuit declined to follow the decisions of other circuit courts recognizing that disclosure of certain confidential information can impair the effectiveness of government programs, such as lending programs,” Saltzman said in a statement.

The Clearing House is considering whether to ask for a rehearing by the full Second Circuit and, ultimately, review by the U.S. Supreme Court, he said.

Deep Crisis

Oscar Suris, a spokesman for Wells Fargo, JPMorgan spokeswoman Jennifer Zuccarelli, Bank of New York Mellon spokesman Kevin Heine, HSBC spokeswoman Juanita Gutierrez and RBS spokeswoman Linda Harper all declined to comment. Deutsche Bank spokesman Ronald Weichert couldn’t immediately comment. Bank of America declined to comment, Scott Silvestri said. Citigroup spokeswoman Shannon Bell declined to comment. U.S. Bancorp spokesman Steve Dale didn’t return phone and e-mail messages seeking comment.

Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under its lending programs. Most of the loans were made in response to the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

“Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Golden wrote in court filings.

Potential Harm

Banks and the Fed warned that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell- off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued.

Much of the debate at the appeals court argument on Jan. 11 centered on the potential harm to banks if it was revealed that they borrowed from the Fed’s so-called discount window. Matthew Collette, a lawyer for the government, said banks don’t do that unless they have liquidity problems.

FOIA requires federal agencies to make government documents available to the press and public. An exception to the statute protects trade secrets and privileged or confidential financial data. In her Aug. 24 ruling, U.S. District Judge Loretta Preska in New York said the exception didn’t apply because there’s no proof banks would suffer.

Tripartite Test

In its opinion today, the appeals court said that the exception applies only if the agency can satisfy a three-part test. The information must be a trade secret or commercial or financial in character; must be obtained from a person; and must be privileged or confidential, according to the opinion.

The court said that the information sought by Bloomberg was not “obtained from” the borrowing banks. It rejected an alternative argument the individual Federal Reserve Banks are “persons,” for purposes of the law because they would not suffer the kind of harm required under the “privileged and confidential” requirement of the exemption.

In a related case, U.S. District Judge Alvin Hellerstein in New York previously sided with the Fed and refused to order the agency to release Fed documents that Fox News Network sought. The appeals court today returned that case to Hellerstein and told him to order the Fed to conduct further searches for documents and determine whether the documents should be disclosed.

“We are pleased that this information is finally, and rightfully, going to be made available to the American public,” said Kevin Magee, Executive Vice President of Fox Business Network, in a statement.

Balance Sheet Debt

The Fed’s balance sheet debt doubled after lending standards were relaxed following Lehman’s failure on Sept. 15, 2008. That year, the Fed began extending credit directly to companies that weren’t banks for the first time since the 1930s. Total central bank lending exceeded $2 trillion for the first time on Nov. 6, 2008, reaching $2.14 trillion on Sept. 23, 2009.

More than a dozen other groups or companies filed friend- of-the-court briefs. Those arguing for disclosure of the records included the American Society of News Editors and individual news organizations.

“It’s gratifying that the court recognizes the considerable interest in knowing what is being done with our tax dollars,” said Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press in Arlington, Virginia.

“We’ve learned some powerful lessons in the last 18 months that citizens need to pay more attention to what’s going on in the financial world. This decision will make it easier to do that.”

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; Bob Van Voris in New York at vanvoris@bloomberg.net.

Last Updated: March 19, 2010 16:15 EDT

also see  huffington post articles on this

Posted in bloomberg, citi, concealment, conspiracy, corruption, Dick Fuld, FED FRAUD, federal reserve board, G. Edward Griffin, geithner, hank paulson, jpmorgan chase, lehman brothers, naked short selling, RON PAUL, scamComments (0)

Freedom of Information Act Requests Show OneWest Bank Misrepresentation

Freedom of Information Act Requests Show OneWest Bank Misrepresentation


When will ALL this Bull Shit come to an END? Everything is a stage and all these “Non-Bank’s” are characters!

 Freedom of Information Act Requests Show OneWest Bank Misrepresentation
Posted on March 17, 2010 by Neil Garfield

Submitted by BMcDonald

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.

I’ve been fighting OneWest Bank since August of last year here in Colorado. In Colorado they have nonjudicial foreclosures and the laws as so totally banker-biased it’s insane. All the bank has to do is go to the public trustee with a note from an attorney who “certifies” that the bank is the owner of the loan. What they don’t tell you is the bank has to go before a judge and get an order for sale in a 120 hearing. Most only find out about it at the last minute and don’t even show up because the only issue discussed is whether a default has occurred or not.

I discovered however that if you raise the question of whether the foreclosing party is a true party in interest or not, the court has to hear that as well. I raised that issue and demanded the bank produce the original documents and endorsements or assignements. The judge only ordered them to produce originals, which they did.

Long story short, I managed to hold them off for seven months after hiring an attorney. I found a bankruptcy case from CA in 2008 in which IndyMac produced original documents and ended up having to admit they didn’t own them. I had a letter from OneWest that only stated they purchased servicing rights. I had admissions from the bank’s attorney that there were no endorsements. And at the last minute I discovered the FDIC issued a press release in response to a YouTube video that went viral over the sweetheart deal OneWest did with the FDIC. The FDIC stated in their press release that OneWest only owned 7% of the loans they service. I presented all this to the judge but he ended up ignoring it all and gave OneWest an order to sell my home, which they did on the 4th.

About a week before the sale I went directly to the FDIC and filed a FOIA request for any and all records indicating ownership rights and servicing rights related to my loans and gave them my loan numbers. I managed to get the info in about 6 days. I got PROOF from the FDIC that OneWest did not own my loan. Fredie Mac did. And the info came directly from OneWest systems. And just last Friday I got a letter from IndyMac Mortgage services, obviously in compliance with the FOIA request that Freddie Mac owned the loan. So I now have a confession from OneWest themselves that they have been lying all along! I have a motion in to have the sale set aside and once that’s done I’m going to sue the hell out of them and their attorneys in Federal court.

So I found a wonderful little back door to the proof most of us need. If the FDIC is involved, you can do a FOIA request for the info. I don’t know if it applies to all banks since they are all involved in the FDIC. You all should try it to see.

Most of us are trying to get the info from the banks, which they will not do unless forced. Well, now many of us can walk right in through the back door. FOIA requests! I fought for 7 months to get the bank to cough up the info and it only took 6 days by going through the FDIC. So now I’m in the drivers seat. This damned bank has been lying from day one claiming they are the sole beneficiary of my loan. Now they have committed the fraud and done the crime by illegally selling my home. They are now in deep, deep, trouble.


  

Posted in concealment, conspiracy, corruption, fdic, FOIA, foreclosure fraud, foreclosure mills, freedom of information act, indymac, Law Offices Of David J. Stern P.A., Lender Processing Services Inc., livinglies, LPS, MERS, neil garfield, note, onewest, respa, scamComments (2)


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