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Tag Archive | "insurance"

An FDA for Financial Innovation: Applying the Insurable Interest Doctrine to 21st Century Financial Markets

An FDA for Financial Innovation: Applying the Insurable Interest Doctrine to 21st Century Financial Markets


Eric A. Posner

University of Chicago – Law School

E. Glen Weyl

University of Chicago; University of Toulouse 1 – Toulouse School of Economics

February 23, 2012

.

University of Chicago Institute for Law & Economics Olin Research Paper No. 589


Abstract:     
The financial crisis of 2008 was caused in part by speculative investment in complex derivatives. In enacting the Dodd-Frank Act, Congress sought to address the problem of speculative investment, but merely transferred that authority to various agencies, which have not yet found a solution. We propose that when firms invent new financial products, they be forbidden to sell them until they receive approval from a government agency designed along the lines of the FDA, which screens pharmaceutical innovations. The agency would approve financial products if they satisfy a test for social utility that focuses on whether the product will likely be used more often for hedging than for speculation. Other factors may be addressed if the answer is ambiguous. This approach would revive and make quantitatively precise the common-law insurable interest doctrine, which helped control financial speculation before deregulation in the 1990s.

Click Image Below For PDF

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WILLIAMS v. WELLS FARGO | ORDER DENYING DEFENDANTS’ MOTION TO EXCLUDE EXPERT, AND GRANTING PLAINTIFFS’ MOTION TO CERTIFY CLASS ACTION

WILLIAMS v. WELLS FARGO | ORDER DENYING DEFENDANTS’ MOTION TO EXCLUDE EXPERT, AND GRANTING PLAINTIFFS’ MOTION TO CERTIFY CLASS ACTION


UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No. 11-21233-Civ-SCOLA

RAY WILLIAMS, et al.,
Plaintiffs,

vs.

WELLS FARGO BANK, N.A., et al.,
Defendants.

[ipaper docId=82831936 access_key=key-s27qmuaqm9f02yvq20e height=600 width=600 /]

 

 

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Nichols Kaster PLLP Files Class Action Against GMAC Mortgage and Balboa Insurance Services for Illegally Backdating Insurance Policies and Charging for Worthless Coverage

Nichols Kaster PLLP Files Class Action Against GMAC Mortgage and Balboa Insurance Services for Illegally Backdating Insurance Policies and Charging for Worthless Coverage


Fort Lauderdale, FL (PRWEB) November 14, 2011

On November 14, 2011, Plaintiff Christine Ulbrich filed a nationwide class action lawsuit against GMAC Mortgage, LLC and Balboa Insurance Services, Inc. in the United States District Court for the Southern District of Florida. The lawsuit alleges that GMAC and Balboa illegally backdated force-placed insurance policies and charged borrowers for insurance coverage that was, in some cases, expired on the day it was purchased. The suit also alleges that GMAC and Balboa charged borrowers inflated premiums that were as much as 14 times the market rate. According to Plaintiff’s attorney, Kai Richter, “The whole point of insurance is to protect against future risks. Forcing borrowers to buy expired insurance at inflated premiums is inexcusable.”

The Complaint alleges that GMAC force-placed a windstorm policy on Ulbrich’s property in March 2011, which was backdated for the period from October 1, 2009 to October 1, 2010, and charged Ulbrich almost $10,000 for this already-expired coverage. The lawsuit further alleges GMAC sent Ulbrich a renewal notice on the very same date, stating that “the windstorm insurance coverage we placed on your account has expired,” and then force-placed a second windstorm policy on her property in April 2011, which was backdated by more than six months and cost more than $9,600. According to the Complaint, Ulbrich’s mortgage payments skyrocketed from $1,227.52 per month to $2,695.59 per month after GMAC purchased this backdated coverage, due to an alleged “shortage” in her escrow account. GMAC is now threatening to foreclose on her home because she cannot afford the increased payments, even though she previously was current on her mortgage.

“It is outrageous to drive homeowners into foreclosure by force-placing backdated insurance coverage on their property and charging them inflated premiums for expired coverage,” said Richter. “GMAC received billions of dollars in bailout money from taxpayers, and this is no way to say ‘thank you,’” continued Richter.

In her class action Complaint, Ulbrich seeks relief on behalf of herself and other similarly-situated GMAC borrowers across the country. Ulbrich asserts claims against GMAC for breach of contract, breach of the duty of good faith and fair dealing, breach of fiduciary duty, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act. In addition, Ulbrich also asserts an unjust enrichment claim against Balboa, which allegedly accepted premiums for backdated policies and allegedly paid a kickback to GMAC in return.

The case is entitled Ulbrich v.GMAC Mortgage, LLC and Balboa Insurance Services, Inc., No. 0:11-cv-62424 (S.D. Fla.). Plaintiff is represented by Kai Richter, Michelle Drake, and Timothy Selander from Nichols Kaster, PLLP. Nichols Kaster has offices in Minneapolis, Minnesota and San Francisco, California, and is currently pursuing several other cases against major banks for wrongfully force-placing insurance on borrowers, including JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., and RBS Citizens, N.A. (also known as Citizens Bank), and U.S. Bank, N.A.. Additional information is located at http://www.nka.com or may be obtained by calling Nichols Kaster, PLLP toll free at (877) 448-0492.

###

Read the full story at http://www.prweb.com/releases/2011/11/prweb8964133.htm

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Brad Gana’s Texas Home, Destroyed By Hurricane Ike, Faces Foreclosure [WATCH]

Brad Gana’s Texas Home, Destroyed By Hurricane Ike, Faces Foreclosure [WATCH]


Even those that continue to make payments on a house that no longer exists aren’t immune to foreclosure.

Brad Gana, of Seabrook, Texas is being threatened with foreclosure over a home that hasn’t existed since it was destroyed by Hurricane Ike in 2008, local Houston 2 News reports. Furthermore, after the hurricane, which cost the Texas shoreline an estimated $11 billion in damages, reduced the property to an empty slab of concrete, Gana alleges he continued to make payments.

In the meantime, Bank of America, the mortgage lender, took out a forced homeowner’s policy on the property and raised monthly payments. Gana, however, says he was never notified of the change since his mailbox was destroyed by what’s come to be known as the third-most destructive hurricane ever to hit the United States.

[HUFFINGTONPOST]

 

 

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Banks could face new source of mortgage losses

Banks could face new source of mortgage losses


Lies, bogus claims catching up…a bit too late

(Reuters) –

A federal housing insurance program may be forced to deny bank claims for money lost in home loan foreclosures, costing them another $13.5 billion in mortgage-related losses, according to a report on Monday from bank analyst Paul Miller of FBR Capital Markets.

Bank of America Corp, JPMorgan Chase & Co and Wells Fargo, three of the four largest U.S. banks, are at risk for the biggest losses, the analyst estimated.

The Federal Housing Authority, which insures …

[REUTERS]

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Indiana Supreme Court Limits Use of Strict Foreclosure to Clear Title

Indiana Supreme Court Limits Use of Strict Foreclosure to Clear Title


NAILTA-

In 2005, Countrywide Home Loans, Inc. obtained a first mortgage against real estate owned by Rita and Kenneth Cloud. Sometime thereafter, the Clouds went into default and the mortgage was foreclosed. On August 28, 2006, Countrywide filed a foreclosure action against the Clouds. At a Sheriff’s Sale on February 22, 2007, Countrywide bid its judgment and took title to the real estate by Sheriff’s Deed. The Deed was recorded on March 15, 2007.

However, prior to the first mortgage and subsequent foreclosure judgment, the Clouds executed an unsecured promissory note to Citizens Bank of New Castle in January of 2003. The Clouds went into default on that note, as well. A complaint was filed against the Clouds to obtain a judgment on the unsecured note. On June 9, 2006, the Steuben County Court entered a default judgment against the Clouds in favor of Citizens Bank.

At the time Countrywide filed its foreclosure action in August of 2006, the Citizens Bank judgment lien was of record, but missed and Citizens Bank was not named as a defendant in the Countrywide foreclosure action.

On April 19, 2007, Countrywide conveyed title to the subject property to Fannie Mae by limited warranty deed.

[NAILTA]

[ipaper docId=65193185 access_key=key-250vg2towm9adue4ls60 height=600 width=600 /]

 

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Banks Took $6B in Reinsurance Kickbacks, Investigators Say

Banks Took $6B in Reinsurance Kickbacks, Investigators Say


This is a must read. There is no end to this mess. ENJOY!

American Banker-

Many of the country’s largest banks received $6 billion in kickbacks from mortgage insurers over the course of a decade, according to a previously undisclosed investigation by the Inspector General of the Department of Housing and Urban Development.

The allegations, since referred to the Department of Justice, stem from lenders’ demand that insurers cut them in on the lucrative business of insuring the mortgages they produced during the housing boom.

In exchange for the their business, companies such as Citigroup Inc, Wells Fargo & Co, SunTrust Banks Inc. and Countrywide allegedly required reinsurance partnerships on generous terms that violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices.

[AMERICAN BANKER]

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‘Who’s Holding the Bag’ – Presentation at the Ira Sohn May 2007 Conference

‘Who’s Holding the Bag’ – Presentation at the Ira Sohn May 2007 Conference


‘Who’s Holding the Bag’

Presentation at the Ira Sohn May 2007 Conference

by Bill Ackman, Founder, Pershing Square Capital Management


[ipaper docId=63547253 access_key=key-1kmka9olyljx4fp5emby height=600 width=600 /]

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Stern insurer wants out of policy, says it doesn’t cover claims involving “fraud”

Stern insurer wants out of policy, says it doesn’t cover claims involving “fraud”


Oh it’s getting hard to escape this word connected to Mr. Stern. Just last month GMAC dropped a bombshell of it’s own in case you missed it.

Kim Miller-

An insurer for former foreclosure giant David J. Stern wants out of its policy, saying in a lawsuit that the company doesn’t cover “claims based upon, arising out of, directly or indirectly resulting from or in consequence of, or in any way involving a dishonest, fraudulent, criminal, or malicious act or omission.”

Admiral Insurance Company filed a lawsuit Thursday in the United States District Court, Southern District of Florida, saying it shouldn’t be responsible for defense expenses in two class-action claims filed against Stern in Palm Beach County. Stern had a $3 million policy with Admiral that expired last year.

[PALM BEACH POST]

[ipaper docId=62351330 access_key=key-25ryyro2lukh48q51slx height=600 width=600 /]

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NYSC Denies MTD “Fraud, Breach of Contract, Securitization” | MBIA v. MORGAN STANLEY, SAXON MORTGAGE

NYSC Denies MTD “Fraud, Breach of Contract, Securitization” | MBIA v. MORGAN STANLEY, SAXON MORTGAGE


MBIA INSURANCE CORPORATION

against

MORGAN STANLEY, MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS, SAXON MORTGAGE SERVICES INC.

[ipaper docId=56545204 access_key=key-20p0si7ej7oidnaif5xb height=600 width=600 /]

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Senate Hearing “The State of the Securitization Markets”

Senate Hearing “The State of the Securitization Markets”


Securities, Insurance, and Investment

Watch this hearing live!

Wednesday, May 18, 2011
09:30 AM – 12:00 PM
538 Dirksen Senate Office Building

The witnesses will be: Professor Steven L. Schwarcz, Stanley A. Star Professor of Law and Business, Duke University School of Law; Mr. Tom Deutsch, Executive Director, American Securitization Forum; Mr. Martin S. Hughes, President and Chief Executive Officer, Redwood Trust; Ms. Lisa Pendergast, President, Commercial Real Estate Finance Council; Ms. Ann Elaine Rutledge, Founding Principal, R&R Consulting; and Mr. Chris J. Katopis, Executive Director, Association of Mortgage Investors.

All hearings are webcasted live and Individuals with disabilities who require an auxiliary aid or service, including closed captioning service for webcast hearings, should contact the committee clerk at 202-224-7391 at least three business days in advance of the hearing date.

Witnesses

Panel 1

  • Professor Steven L. Schwarcz
    Stanley A. Star Professor of Law and Business
    Duke University School of Law
  • Mr. Tom Deutsch
    Executive Director
    American Securitization Forum
  • Mr. Martin S. Hughes
    President and Chief Executive Officer
    Redwood Trust
  • Ms. Lisa Pendergast
    President
    Commercial Real Estate Finance Council
  • Ms. Ann Elaine Rutledge
    Founding Principal
    R&R Consulting
  • Mr. Chris J. Katopis
    Executive Director
    Association of Mortgage Investors
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Keller Rohrback L.L.P. Announces Investigation of Bank of America Corp. and JPMorgan Chase & Co. Regarding Force-Placed Insurance

Keller Rohrback L.L.P. Announces Investigation of Bank of America Corp. and JPMorgan Chase & Co. Regarding Force-Placed Insurance


Keller Rohrback’s investigation focuses on alleged abuses by Bank of America and JPMorgan Chase, among others, such as: failing to pay for hazard insurance out of the borrower’s escrow funds, charging homeowners for unnecessary insurance, backdating policies providing coverage retroactively, utilizing their own subsidiaries to provide the hazard insurance, and purchasing policies from companies who share fees or profits with the servicers—often without disclosing this information to the borrower. Keller Rohrback is also investigating the force-placed insurance practices of the following mortgage loan servicers:

Aurora Loan Services IndyMac Mortgage Services
Downey Savings & Loan Litton Loan Servicing LP
EMC Mortgage Corp. Nationstar Mortgage LLC
Financial Freedom PennyMac
GMAC Mortgage, Inc. Saxon
HSBC SunTrust Mortgage, Inc.

Source: Keller Rohrback L.L.P.

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‘COLLATERAL DAMAGE’ | Is Hacker Group Anonymous About To Expose Bank Of America FRAUD?

‘COLLATERAL DAMAGE’ | Is Hacker Group Anonymous About To Expose Bank Of America FRAUD?


via GAWKER‘s  Adrian Chen:

A member of the activist collective Anonymous is claiming to be have emails and documents which prove “fraud” was committed by Bank of America employees, and the group says it’ll release them on Monday. The member, who goes by the Twitter handle OperationLeakS, has already posted an internal email from the formerly Bank of America-owned Balboa Insurance Company.

For full details go to Gawker.com

Email is between Balboa Insurance vice president Peggy Johnson and other Balboa employees

[Image OperationLeakS via Twitter]

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OrlandoSentinel | Seniors find dark side to reverse mortgages

OrlandoSentinel | Seniors find dark side to reverse mortgages


Growing reverse-mortgage defaults put homeowners at risk of foreclosure

Thousands of older homeowners in Florida who tapped the equity in their paid-off homes to boost their income now face the possibility of foreclosure as the number of defaults on such “reverse mortgages” skyrockets.

More than 30,000 U.S. homeowners are in “technical default” on their reverse mortgages and could lose their homes because they have failed to pay their property taxes or property-insurance premiums, according to a new research report based on the latest government data.

Florida leads the country in terms of the number of defaults, with nearly 5,300, or about 18 percent of the U.S. total, according to the CredAbility Group, a nonprofit consumer-credit counseling service based in Atlanta.

Florida’s reverse-mortgage-default rate stands at about 8 percent, compared with a nationwide rate of 5 percent.

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ADAM LEVITIN | Clash of the Titans: RMBS Edition

ADAM LEVITIN | Clash of the Titans: RMBS Edition


posted by Adam Levitin
.

And so it begins. We’re about to witness the main event in financial institution internecine warefare: investment funds (MBS buyers) vs. banks (MBS sellers).

There have already been some opening skirmishes. The monoline bond insurers (MBIA, Syncora, FGIC, Ambac (and here), CIFG (and here), and–I haven’t found any litigation with them on this, but there’s gotta be some–ACA) have been litigating against some of the banks whose securitizations they insured for various fraud, negligent misrepresentation, and breach of warranty claims. Many of the Federal Home Loan Banks (Chicago, Indianapolis, Pittsburgh, San Francisco, Seattle, maybe others that I don’t recall of the top of my head), which slurped up RMBS during the bubble, only to find them toxic, have brought (separate) suits mainly on securities fraud charges, but also on common law fraud and negligent misrepresentation claims. (See here for a totally dated, August 2010 estimation of the liabilities in these suits.)

Then last fall the financial world was shaken by the New York Fed, BlackRock, and PIMCO’s demand letter to Bank of New York Mellon and Countrywide. That showed that A-list financial institutions were taking the range of problems with RMBS, from representation and warranty breaches to servicer malfeasance, seriously. (You can see the NY Fed, acting for the Maiden Lane LLCs, as really another representing AIG, essentially the mother of all monolines for these purposes.) But that wasn’t litigation proper, just an angry growl, with a threat of litigation if things weren’t resolved. (When you see the letterhead for the response, you’ll see that BoA/CW is taking this mighty seriously. Despite the typo in that snippy letter, it didn’t come cheap. These guys are lawyering up.)

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VIDEO| History will repeat itself on tax payer dime! ‘COOP’

VIDEO| History will repeat itself on tax payer dime! ‘COOP’


Watch carefully at the latest “Master Plan” the banks have up their sleeves!

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Posted in concealment, conspiracy, CONTROL FRAUD, corruption, fannie mae, foreclosure, foreclosures, Freddie Mac, insurance, mbs, mortgage, note, securitization, STOP FORECLOSURE FRAUD, trade secretsComments (1)

MERS comments on the Commission’s Proposed Rule for Asset-Backed w/ Referrals

MERS comments on the Commission’s Proposed Rule for Asset-Backed w/ Referrals


Excerpts:

MERS was created in 1995 under the auspices of the Mortgage Bankers Association (MBA), as the mortgage industry’s utility, to streamline the mortgage process by using electronic commerce to eliminate paper. Our Board of Directors and shareholders are comprised of representatives from the MBA, Fannie Mae, Freddie Mac, large and small mortgage companies, the American Land Title Association (ALTA), the CRE Finance Council, title underwriters, and mortgage insurance companies.

Our initial focus was to eliminate the need to prepare and record assignments when trading mortgage loans. Our members make MERS the mortgagee and their nominee on the security instruments they record in the county land records. Then they register their loans on the MERS® System so they can electronically track changes in ownership over the life of the loans. This process eliminates the need to record assignments every time the loans are traded. Over 3000 MERS members have registered more than 65 million loans on the MERS® System, saving the mortgage industry hundreds of millions of dollars in the process. The Federal Housing Administration (FHA) and Veterans Administration (VA) approved MERS for government loans because they recognized the value to consumers. On table-funded loans, MERS eliminates the cost to the consumer of the mortgage assignment ($30 – $150). In addition, the MERS process ensures that lien releases are not delayed by eliminating potential breaks in the chain of title. Similar to the residential product, we also addressed the assignment problem in the commercial market with MERS® Commercial, on which is registered over $110 billion in Commercial Mortgage-Backed Securities (CMBS) loans.

More than 60 percent of existing mortgages have an assigned MIN, making a total of 65,000,000 loans registered since the inception of the system in 1997. The corresponding data for these mortgages is tracked on the MERS® System from origination through sale and until payoff. MERS therefore offers a substantial base of historical data about existing loans that can be harnessed to bring transparency to existing MBS products. Attached are letters from the MBA, FHA, Fannie Mae and Freddie Mac on this point.

[ipaper docId=35515524 access_key=key-vw36i36b7uiubwj5x8u height=600 width=600 /]

Related:

MERS May NOT Foreclose for Fannie Mae effective 5/1/2010

_________________________________________

Fannie Mae’s Announcing Miscellaneous Servicing Policy Changes

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Posted in bank of america, chain in title, fannie mae, foreclosure, foreclosures, Freddie Mac, mbs, MERS, MERSCORP, Mortgage Bankers Association, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC., Notary, R.K. Arnold, Real Estate, robo signers, S.E.C., securitization, STOP FORECLOSURE FRAUD, title company, Wall StreetComments (2)

Should You Be Told if Your Bad Credit Affects Your Car Insurance Rates?

Should You Be Told if Your Bad Credit Affects Your Car Insurance Rates?


By DinSFLA

What does Car Insurance and Credit Scores have in common? DISCRIMINATION!

If the government does not step up with a plan to make sure this does not continue, other crisis will begin to brew.

AMERICA will take the roads uninsured because they cannot afford the rates and they still need to get to work and shop for food!

Once our survival instincts kick in nothing else matters but food, clothes and shelter. Get my point?

So this being said and with the high rate of foreclosures out there. Who is going to have stellar credit for car insurance?

The same goes with Employers and Home Insurance!

Enough is Enough…We are suppose to be the Land of The Free not The Controlled and Abused!

THIS NEEDS TO BE EVALUATED IMMEDIATELY! THIS AFFECTS EVERYONE!

Arkansas and Oregon Lead the Way

The attorneys general of Arkansas and Oregon have both filed suits against a leading car insurance company for failing to disclose “adverse actions” taken against customers based on their credit. Five other states have joined them in seeking national clarification on the matter. But this begs the question, “Why would car insurance companies not tell you that your credit was impacting your rates?”

The answer is simple: Every car insurance company treats its customers’ credit differently. A study by Consumer Reports showed a nearly forty percent difference between how two car insurance companies viewed the same bad-credit customer. And that’s two car insurance companies that actually use credit reports – some don’t. In that case, you could save up to forty-seven percent on your car insurance rates!

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Posted in concealment, conspiracy, credit score, fair isaac corporation, fico, foreclosure, foreclosures, insurance, STOP FORECLOSURE FRAUDComments (0)

Borrower Bailout?: Goldman Sachs Conveyor Belt

Borrower Bailout?: Goldman Sachs Conveyor Belt


 Via: Livinglies

Borrower Bailout?: Goldman Sachs Conveyor Belt

  • If you have a GSAMP securitized loan you might want to pay particular attention here. In fact, if you ever had a securitized loan of any kind you should be very interested.
  • Hudson Mezzanine: The use of the word “mezzanine” is like the use of the word “Trust.” There is no mezzanine and there is no trust in the legal sense. It is merely meant to convey the fact that a conduit was being used to front multiple transactions — any one of which could be later moved around because the reference to the conduit entity does not specifically incorporate the exhibits to the conduit.
  • The real legal issue here is who owns the profit from these deals? The profit is derived from insurance. The cost of insurance was funded from the securitized chain starting with the sale of securities to investors for money that was pooled.
  • That pool was used in part to fund mortgages and insurance bets that those mortgages would fail. 93% of the sub-prime mortgages rated Triple AAA got marked down to junk level even if they did not fail, and insurance paid off because of the markdown. That means money was paid based upon loans executed by borrowers, whether they were or are default or not.
  • If enough of the pool consisted of sub-prime mortgages, the the entire pool was marked down and insurance paid off. So whether you have a sub-prime mortgage or a conventional mortgage, whether you are up to date or in default, there is HIGH PROBABILITY that a payment has been made from insurance which should be allocated to your loan, whether foreclosed or not.
  • The rest of the proceeds of investments by investors went as fees and profits to middlemen. If you accept the notion that the entire securitization chain was a single transaction in which fraud was the principal ingredient on both ends (homeowners and ivnestors), then BOTH the homeowner borrowers and the investors have a claim to that money.
  • Homeowners have a claim for undisclosed compensation under the Truth in Lending Act and Investors have a claim under the Securities laws.  (That is where these investor lawsuits and settlements come from).
  • What nobody has done YET is file a claim for borrowers. The probable reason for this is that the securities transactions giving rise to these profits seem remote from the loan transaction. But if they arose BECAUSE of the execution of the loan documents by the borrower, then lending laws apply, along with REG Z from the Federal reserve. The payoff to borrowers is huge, potentially involving treble damages, interest, court costs and attorney fees.
  • Under common law fraud and just plain common sense, there is no legal basis for allowing the perpetrator of a fraud to keep the benefits arising out of the the fraud. So who gets the money?
April 26, 2010

Mortgage Deals Under Scrutiny as Goldman Faces Senators

By LOUISE STORY

WASHINGTON — The legal storm buffeting Goldman Sachs continued to rage Tuesday just ahead of what is expected to be a contentious Senate hearing at which bank executives plan to defend their actions during the housing crisis.

Senate investigators on Monday claimed that Goldman Sachs had devised not one but a series of complex deals to profit from the collapse of the home mortgage market. The claims suggested for the first time that the inquiries into Goldman were stretching beyond the sole mortgage deal singled out by the Securities and Exchange Commission. The S.E.C. has accused Goldman of defrauding investors in that single transaction, Abacus 2007-AC1, have thrust the bank into a legal whirlwind.

The stage for Tuesday’s hearing was set with a flurry of new documents from the panel, the Permanent Senate Subcommittee on Investigations. That was preceded by a press briefing in Washington, where the accusations against Goldman have transformed the politics of financial reform.

In the midst of this storm, Lloyd C. Blankfein, Goldman’s chairman and chief executive, plans to sound a conciliatory note on Tuesday.

In a statement prepared for the hearing and released on Monday, Mr. Blankfein said the news 10 days ago that the S.E.C. had filed a civil fraud suit against Goldman had shaken the bank’s employees.

“It was one of the worst days of my professional life, as I know it was for every person at our firm,” Mr. Blankfein said. “We have been a client-centered firm for 140 years, and if our clients believe that we don’t deserve their trust we cannot survive.”

Mr. Blankfein will also testify that Goldman did not have a substantial, consistent short position in the mortgage market.

But at the press briefing in Washington, Carl Levin, the Democrat of Michigan who heads the Senate committee, insisted that Goldman had bet against its clients repeatedly. He held up a binder the size of two breadboxes that he said contained copies of e-mail messages and other documents that showed Goldman had put its own interests first.

“The evidence shows that Goldman repeatedly put its own interests and profits ahead of the interests of its clients,” Mr. Levin said.

Mr. Levin’s investigative staff released a summary of those documents, which are to be released in full on Tuesday. The summary included information on Abacus as well as new details about other complex mortgage deals.

On a page titled “The Goldman Sachs Conveyor Belt,” the subcommittee described five other transactions beyond the Abacus investment.

One, called Hudson Mezzanine, was put together in the fall of 2006 expressly as a way to create more short positions for Goldman, the subcommittee claims. The $2 billion deal was one of the first for which Goldman sales staff began to face dubious clients, according to former Goldman employees.

“Here we are selling this, but we think the market is going the other way,” a former Goldman salesman told The New York Times in December.

Hudson, like Goldman’s 25 Abacus deals, was a synthetic collateralized debt obligation, which is a bundle of insurance contracts on mortgage bonds. Like other banks, Goldman turned to synthetic C.D.O.’s to allow it to complete deals faster than the sort of mortgage securities that required actual mortgage bonds. These deals also created a new avenue for Goldman and some of its hedge fund clients to make negative bets on housing.

Goldman also had an unusual and powerful role in the Hudson deal that the Senate committee did not highlight: According to Hudson marketing documents, which were reviewed on Monday by The Times, Goldman was also the liquidation agent in the deal, which is the party that took it apart when it hit trouble.

The Senate subcommittee also studied two deals from early 2007 called Anderson Mezzanine 2007-1 and Timberwolf I. In total, these two deals were worth $1.3 billion, and Goldman held about $380 million of the negative bets associated with the two deals.

The subcommittee pointed to these deals as examples of how Goldman put its own interests ahead of clients. Mr. Levin read from several Goldman documents on Monday to underscore the point, including one in October 2007 that said, “Real bad feeling across European sales about some of the trades we did with clients. The damage this has done to our franchise is very significant.”

As the mortgage market collapsed, Goldman turned its back on clients who came knocking with older Goldman-issued bonds they had bought. One example was a series of mortgage bonds known as Gsamp.

“I said ‘no’ to clients who demanded that GS should ‘support the Gsamp’ program as clients tried to gain leverage over us,” a mortgage trader, Michael Swenson, wrote in his self-evaluation at the end of 2007. “Those were unpopular decisions but they saved the firm hundreds of millions of dollars.”

The Gsamp program was also involved in a dispute in the summer of 2007 that Goldman had with a client, Peleton Partners, a hedge fund founded by former Goldman workers that has since collapsed because of mortgage losses.

According to court documents reviewed by The Times on Monday, in June 2007, Goldman refused to accept a Gsamp bond from Peleton in a dispute over the securities that backed up a mortgage security called Broadwick. A Peleton partner was pointed in his response after Goldman refused the Gsamp bond.

“We do appreciate the unintended irony,” wrote Peter Howard, a partner at Peleton, in an e-mail message about the Gsamp bond.

Bank of America ended up suing Goldman over the Broadwick deal. The parties are awaiting a written ruling in that suit. Broadwick was one of a dozen or so so-called hybrid C.D.O.’s that Goldman created in 2006 and 2007. Such investments were made up of both mortgage bonds and insurance contracts on mortgage bonds.

While such hybrids have received little attention, one mortgage researcher, Gary Kopff of Everest Management, has pointed to a dozen other Goldman C.D.O.’s, including Broadwick, that were mixes of mortgage bonds and insurance policies. Those deals — with names like Fortius I and Altius I — may have been another method for Goldman to obtain negative bets on housing.

“It was like an insurance policy that Goldman stuck in the middle of the sandwich with all the other subprime bonds,” Mr. Kopff said. “And it was an insurance policy designed to protect them.”

An earlier version of this article misidentified Senator Levin’s home state.

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Posted in cdo, concealment, conspiracy, corruption, foreclosure fraud, goldman sachs, hank paulson, john paulson, livinglies, matt taibbi, neil garfield, S.E.C., securitizationComments (1)


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