Morgan Stanley - FORECLOSURE FRAUD

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Morgan Stanley to be fined in electronic mortgage system (MERS) and foreclosure scandal

Morgan Stanley to be fined in electronic mortgage system (MERS) and foreclosure scandal


Wonder when they will get to LPS…

Computer World UK-

The US Federal Reserve has issued a punishing court order to Morgan Stanley, as it prepares to fine the bank over the use of automated ‘robo signing’ of documents relating to foreclosures for struggling US mortgage payers. It ordered the bank to make significant process, data and systems improvements.

The issue relates to a troubled electronic mortgage registry created by a range of the largest banks, which is allegedly plagued with errors. Those that have brought claims against the banks have said access to the database was deliberately restricted by the banks, and that mortgage foreclosures were often based on incorrect data entered by the banks as they rushed to offload the loans.

The court order issued this week concerns the Saxon business, which Morgan Stanley has sold to mortgage servicing group Ocwen Financial. The Fed said Morgan Stanley retained responsibility for the impact of Saxon’s actions. Saxon had issued over 225,000 residential mortgage loans.

Robo-signing typically involves employees of mortgage servicing companies automatically signing off foreclosure papers without checking them, in the interests of fast processing the papers.

The practice was allegedly supported by the Mortgage Electronic Registration Systems (MERS), which

[COMPUTER WORLD UK]

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Secrets of the Bailout, Now Revealed – Gretchen Morgenson

Secrets of the Bailout, Now Revealed – Gretchen Morgenson


I’ve always said if walls could talk in these secretive rooms, look no further than Gretchen to shut it down with a story.

NYT-

A FRESH account emerged last week about the magnitude of financial aid that the Federal Reserve bestowed on big banks during the 2008-09 credit crisis. The report came from Bloomberg News, which had to mount a lengthy legal fight to wrest documents from the Fed that detailed its rescue efforts.

It is dispiriting, of course, that we are still learning about the billions provided to various financial firms during the crisis. Another sad element to this mess is that getting the truth requires the legal firepower of an organization as rich as Bloomberg.

[NEW YORK TIMES]

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SEC Bans Document Destruction After Whistleblower Cries Foul

SEC Bans Document Destruction After Whistleblower Cries Foul


Massive Collateral Damage has been done and in the age of having files held in electronic data, this is very disturbing.

Executive Gov-

The Securities and Exchange Commission has forbidden its employees from destroying investigative documents, as fallout spreads from a whistleblower’s recent claim that the agency has illegally destroyed thousands of preliminary investigation documents.

An SEC attorney alerted Sen. Chuck Grassley (R-Iowa) of the possible crimes in August. The whistleblower said the documents in question were “matters under inquiry,” including reviews of AIG, Morgan Stanley, Lehman Brothers and Bernie Madoff.

[EXECUTIVE GOV]

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Vexed by Securitization Suit, Banks Pull Out of Mortgage Fraud Settlement Meeting

Vexed by Securitization Suit, Banks Pull Out of Mortgage Fraud Settlement Meeting


Banks blow up mortgage settlement talks, despite Iowa AG Tom Miller’s begging and whimpering!!

TIME-

The five biggest mortgage servicers have cancelled a planned negotiating session with representatives of the 50 State Attorneys General in apparent protest over a federal regulator filing suit against them, a source familiar with the matter tells TIME.

The banks canceled the meeting on Tuesday afternoon in protest over the announcement last Friday that the Federal Housing Finance Agency would bring a broad case against 17 firms, including those in talks with the State AGs. The FHFA, which oversees mortgage giants Fannie Mae and Freddie Mac, alleges the firms violated securities law by misrepresenting the value of bundles of high-risk mortgages they sold. FHFA did not say how much the case might be worth, but outside analysts have said it could potentially produce billions of dollars in compensatory damages from the firms.

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In Disputed Fannie and Freddie Mortgage Deals Evidence of ‘Robo-Signing’

In Disputed Fannie and Freddie Mortgage Deals Evidence of ‘Robo-Signing’


TIME-

Long before the banks started evicting delinquent homeowners, Wall Street, it appears, used robo-signers to ink mortgage deals that would eventually cost investors tens of billions of dollars and in part led to the financial crisis.

According to lawsuits filed last week by the U.S.’s Federal Housing Financing Agency, one individual was used by three different banks to sign off on 36 different mortgage bond deals in 2006 alone. Many of the deals contained as many as 4,000 home loans. Yet, according to the lawsuits, the individual Evelyn Echevarria signed documents attesting to the fact that all the loans – well over 100,o00 in 2006 alone


Read more:
[Curious Capitalist.blogs.time.com]

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It’s hard to Believe the Gnomes at Freddie and Fannie didn’t know what they were buying

It’s hard to Believe the Gnomes at Freddie and Fannie didn’t know what they were buying


This is a great article written by Kevin Villani who was senior vice president and chief economist at Freddie Mac from 1982 to 1985.

American Banker-

In the 1980s Freddie Mac had a marketing campaign “The Gnomes Know,” touting their expertise in mortgage markets. Now the Federal Housing Finance Agency has filed a $200 billion lawsuit against 17 of the nation’s largest mortgage lenders arguing that during the subprime lending debacle of the last decade the gnomes didn’t know!


[AMERICAN BANKER]

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Prove Fannie and Freddie Innocent Before Suing the Banks–And Here Is How

Prove Fannie and Freddie Innocent Before Suing the Banks–And Here Is How


Business Insider-

Last Friday the U.S. regulator, the Federal Housing Finance Agency (FHFA), which has the oversight responsibility of Fannie Mae and Freddie Mac, sued 17 large banks and financial institutions relating to losses on approximately $200 billion of Fannie Mae and Freddie Mac subprime bonds.

Now, let me be clear right from the start.  I am no apologist for the banks.  And historically my tendency has been to support better financial regulation and even the Democratic Party through my voting preference.

However, enough is enough.  At this point in time the Government and the FHFA have no right to sue the banking industry on behalf of Fannie Mae and Freddie Mac.  That is a joke.



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[BUSINESS INSIDER]

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Janet Tavakoli: “Fraud As a Business Model”

Janet Tavakoli: “Fraud As a Business Model”


If William K. Black and Janet would only team up to write a book?

HuffPO-

There were many factors that contributed to our recent financial bubble: deregulation, cheap money from the Fed, failure to enforce remaining regulations, crony capitalism, hubris, speculation, leverage, and fraud among other problems. While fraud wasn’t the only issue, it was and is a significant contributor to the credit bubble. Restraining fraud is a necessary but not sufficient condition for a sound financial system. Congressional investigations in recent years have put ample evidence of fraud in the public domain.

To illustrate just one type of malicious mischief, Senator Carl Levin (D. Mich.), Chairman of a senate investigative panel, issued a memo stating that Goldman ” magnified the impact of toxic mortgages.” The Wall Street Journal reviewed data showing that a $38 million subprime-mortgage bond created in June 2006 was referenced in more than 30 debt pool causing around$280 million in losses to investors by 2008. In other words, Goldman kept repackaging, reselling or protecting (buying credit default protection on) losers. It took the wrong kind of nerve for Goldman’s CEO to say he was doing “God’s work.”

[HUFFINGTON POST]

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FHFA puts out statement clarifying lawsuits

FHFA puts out statement clarifying lawsuits


For Immediate Release Contact:

Corinne Russell (202) 414-6921
Stefanie Johnson (202) 414-6376

September 6, 2011

Federal Housing Finance Agency Statement on Recent Lawsuits Filed Upon

[ipaper docId=64098989 access_key=key-2ooexah5egqokqopzcs0 height=600 width=600 /]

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U.S. banks offered deal over lawsuits – FT

U.S. banks offered deal over lawsuits – FT


REUTERS-

Big U.S. banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that is proposed to limit part of their legal liability, the Financial Times reported on Tuesday.

The FT said state prosecutors have proposed a deal to limit part of the banks’ liability in return for a multibillion-dollar payment.

The talks aim to settle allegations that banks including Bank of America (BAC.N), JPMorgan Chase (JPM.N), Wells Fargo (WFC.N), Citigroup (C.N) and Ally Financial (GKM.N). seized the homes of delinquent borrowers and broke state laws by employing so-called “robosigners”, workers who signed off on foreclosure documents en masse without reviewing the paperwork.

[REUTERS]

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FHFA Complaints: Can Control Frauds Recover for Being Defrauded by other Control Frauds?

FHFA Complaints: Can Control Frauds Recover for Being Defrauded by other Control Frauds?


William K. Black-

Reading the FHFA complaints against many of the world’s largest banks is a fascinating and troubling process for anyone that understands “accounting control fraud.” The FHFA, a federal regulatory agency, sued in its capacity as conservator for Fannie and Freddie. Its complaints are primarily based on fraud. The FHFA alleges that the fraud came from the top, i.e., it alleges that many of the world’s largest banks were control frauds and that they committed hundreds of thousands of fraudulent acts. The FHFA complaints emphasize that other governmental investigations have repeatedly confirmed that the defendant banks were engaged in endemic fraud. The failure of the Department of Justice to convict any senior official of a major bank, and the almost total failure to indict any senior official of a major bank has moved from scandal to farce.

The FHFA complaints are distressing, however, in their failure to explain why the frauds occurred and how an accounting control fraud works. The FHFA complaint against Countrywide is particularly disappointing because …

[BENZINGA]

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Fannie-Freddie’s Hypocritical Suit Against Banks Making Loans that GSEs Helped Create

Fannie-Freddie’s Hypocritical Suit Against Banks Making Loans that GSEs Helped Create


Lets NOT forget both Fannie and Freddie, like most of the named banks they are suing, each are shareholders of MERS.

Again, who gave the green light to eliminate the need for assignments and to realize the greatest savings, lenders should close loans using standard security instruments containing “MOM” language back in April 26, 1999?

This was approved by Fannie Mae and Freddie Mac which named MERS as Original Mortgagee (MOM)!

Open Market-

“U.S. is set to sue dozen big banks over mortgages,” reads the front-page headline in today’s New York Times. The “deck” below the headline explains that that the Federal Housing Finance Agency, which oversees the government-sponsored enterprises Fannie Mae and Freddie Mac, is “seen as arguing that lenders lacked due diligence” in the loans they made.

A more apt description would probably be that Fannie and Freddie are suing the banks for selling them the very loans the GSEs helped designed and that government mandates encourage — and are still encouraging them to make. These conflicted actions are just one more of the government’s contributions to the uncertainty that is helping to keep unemployment at 9 percent.

Strangely the author of the Times piece, Nelson Schwartz, ignores the findings of a recent blockbuster

[OPEN MARKET]

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FULL COMPLAINTS | FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac

FULL COMPLAINTS | FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac


UPDATE :

FHFA suit stops short of going nuclear, ignores the biggest flaw in securitization/REMICs – failure to properly convey the notes….instead, FHFA sez loans were xferred properly to trust, to prevent 100% taxation 4 failure 2 comply w/ IRC’s REMIC requirements. Cute…I worry that this is an attempt to fix / limit total bank exposure by getting uncontested ruling that REMIC provisions were followed…

via @Thad Bartholow

What? Why is “WELLS FARGO” not listed? Let me know when they get to “W”.

FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac

Washington, DC — The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), today filed lawsuits against 17 financial institutions, certain of their officers and various unaffiliated lead underwriters. The suits allege violations of federal securities laws and common law in the sale of residential private-label mortgage-backed securities (PLS) to the Enterprises.

Complaints have been filed against the following lead defendants, in alphabetical order:

LITIGATION

 

Federal Housing Finance Agency

?FHFA Filings in PLS Cases, September 2, 2011
Ally Financial Inc. f/k/a GMAC, LLC Complaint [PDF]
Bank of America Corporation Complaint [PDF]
Barclays Bank PLC Complaint [PDF]
Citigroup, Inc. Complaint [PDF]
Suisse Holdings (USA), Inc. Complaint [PDF]
Credit Suisse Holdings (USA), Inc. Complaint [PDF]
Deutsche Bank AG Complaint [PDF]
First Horizon National Corporation Complaint [PDF]
General Electric Company Complaint [PDF]
Goldman Sachs & Co. Complaint [PDF]
HSBC North America Holdings, Inc. Complaint [PDF]
JPMorgan Chase & Co. Complaint [PDF]
Merrill Lynch & Co. / First Franklin Financial Corp. Complaint [PDF]
Morgan Stanley Complaint [PDF]
Nomura Holding America Inc. Complaint [PDF]
The Royal Bank of Scotland Group PLC Complaint [PDF]
Société Générale ?Complaint [PDF]

 

FANNIE MAE

FREDDIE MAC

The cases are Federal Housing Finance Agency v. Bank of America Corp. (BAC), 11-CV-6195; FHFA v. Barclays Bank Plc., 11-CV- 6190; FHFA v. Citigroup, 11-CV-6196; FHFA v. Credit Suisse Holdings (USA) Inc., 11-CV-6200; FHFA v. Deutsche Bank AG, 11- CV-6192; FHFA v. First Horizon National Corp., 11-CV-6193; FHFA v. Goldman, Sachs & Co., 11-CV-6198; FHFA v. HSBC North America Holdings Inc., 11-CV-6189; FHFA v. JPMorgan Chase & Co., 11-CV- 6188; FHFA v. Merrill Lynch & Co., 11-CV-6202; FHFA v. Nomura Holding America Inc., 11-CV-6201; FHFA v. SG Americas Inc., 11- CV-6203, U.S. District Court, Southern District of New York

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One More Reason to Shut the SEC and Start Over: William D. Cohan

One More Reason to Shut the SEC and Start Over: William D. Cohan


Bloomberg-

Thanks to Darcy Flynn, a longtime attorney at the Securities and Exchange Commission, we now have all the ammunition we need to do what should have been done years ago: terminate the SEC, with extreme prejudice, and in its place construct a new regulatory watchdog for Wall Street free of obvious conflicts of interest.

Flynn’s courage has almost been lost in all the recent apocalyptic talk of earthquakes and hurricanes, but a few weeks back he did something remarkable. After raising concerns internally at the SEC last year — and getting nowhere — Flynn went public and alleged in a formal whistleblower complaint that for at least 17 years the SEC “followed a policy of systematically destroying documents” related to what are known as Matters Under Investigation, or MUIs, most of which were focused on possibly illicit or illegal behavior at Wall Street firms. MUIs are the first step in investigating a case that may lead to a formal SEC inquiry.

[BLOOMBERG]

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Document Shredding: Why SEC’s Defense Won’t Fly

Document Shredding: Why SEC’s Defense Won’t Fly


MATT TAIBBI-

Just a quick note about the “Shredded Justice” story, as I’ve had a couple of questions about some of the SEC’s responses to the story.

Several readers pointed to this story in which SEC spokesman John Nester said this:

“We do keep records of our MUI’s and they’re available to our investigators to learn about previous work on matters that have been reviewed.”

[ROLLINGSTONE]

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MATT TAIBBI: Is the SEC Covering Up Wall Street Crimes?

MATT TAIBBI: Is the SEC Covering Up Wall Street Crimes?


A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation’s worst financial criminals.

Rollingstone-

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

[ROLLINGSTONE]

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LETTER | SEC Destroys Over 9,000 Fraud Documents Involving Goldman Sachs, Madoff, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Lehman, Morgan Stanley, Wells Fargo

LETTER | SEC Destroys Over 9,000 Fraud Documents Involving Goldman Sachs, Madoff, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Lehman, Morgan Stanley, Wells Fargo


Market Watch-

WASHINGTON (MarketWatch) — The Securities and Exchange Commission may have destroyed documents and compromised enforcement cases involving activity at large banks and hedge funds during the height of the financial crisis in 2008, according to allegations made by a lawmaker on Wednesday.

[MARKET WATCH]

[ipaper docId=62540112 access_key=key-wotv5tiw8imq9xbpkk9 height=600 width=600 /]

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A Template for MBS Settlements and How Safety-and-Soundness Regulation Is Incompatible with Law Enforcement

A Template for MBS Settlements and How Safety-and-Soundness Regulation Is Incompatible with Law Enforcement


All of this goes to a simple point: safety-and-soundness regulation is fundamentally incompatible with law enforcement. Prudential regulators aren’t interested in law enforcement.  They’re interested in preserving quiet and stability and that sometimes means papering over problems and looking the other way.

Prof. Adam Levitin

Over the past couple of years, the Massachusetts Attorney General’s office has reached settlements with a number of major banks regarding mortgage securitization. These settlements has received very little notice in the press, but I think they provide a real template for future AG settlements and are worth examining.

Continue reading [CREDIT SLIPS]

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New York State Attorney General Eric Schneiderman Probing Lender Processing Services, Nationwide Title Clearing

New York State Attorney General Eric Schneiderman Probing Lender Processing Services, Nationwide Title Clearing


Just last week Chicago AG Lisa Madigan announced she was probing them as well. Note: some mistakenly say “National” instead of “Nationwide” below…

NY POST-


Indeed, New York State Attorney General Eric Schneiderman recently said that his office is probing mortgage processing firm Lender Processing Services and National Title Clearing.

Schneiderman also launched a probe into the mortgage securitization practices of major investment banks Goldman Sachs, Morgan Stanley, Deutsche Bank and UBS.


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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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Will the Banks Finally Have to Answer?

Will the Banks Finally Have to Answer?


This involves other players, not only the banks… and this will go down in History.

NYTimes-

At long last, there may be a serious investigation into the mortgage mess — the kind that results in clarity as well as big fines and maybe even accountability.

Gretchen Morgenson reported in The Times on Tuesday that Eric Schneiderman, the New York attorney general, wants to discuss mortgage operations during the housing bubble with executives of Bank of America, Goldman Sachs and Morgan Stanley. He has also requested documents and information from the banks, examined material given to his predecessor, Andrew Cuomo, and studied issues raised in lawsuits against the banks.



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New York AG Probes Banks Over Mortgage Securities

New York AG Probes Banks Over Mortgage Securities


Wall Street Journal-

New York Attorney Attorney General Eric Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry.

Mr. Schneiderman will hold meetings with executives of several major banks, including Bank of America Corp., Morgan Stanley and Goldman Sachs, according to people familiar with the investigation. He intends to discuss securitization of mortgage loans and other mortgage practices and has requested related documents from the firms, these people said. The meetings over securitization are expected to happen in the coming week.

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