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Tag Archive | "mortgage backed securities"

Alison Frankel: How BofA could lose big if it wins MBIA regulatory challenge

Alison Frankel: How BofA could lose big if it wins MBIA regulatory challenge


Alison Frankel’s On The Case-

I’ve spent a lot of time talking about what I consider Bank of America’s risky gamesmanship in its multi-pronged litigation with the bond insurer MBIA, but it may be that I’ve underestimated that risk by focusing on the downside for the bank in MBIA’s breach of contract and fraud suit. Under a not-implausible scenario, BofA faces serious risk in its regulatory challenge to MBIA’s transformation that’s going to trial on May 14. And ironically, the risk comes not from losing the case — but from winning it.

According to a sophisticated and well-advised MBIA institutional investor that has devoted serious resources to analyzing the issue — trust me, even though the investor doesn’t want to broadcast its involvement, this is a seriously savvy player — if Bank of America and two French banks succeed in overturning MBIA’s 2009 split into separate muni bond and structured finance businesses, there’s a reasonable likelihood that BofA could wind up at the back of the line of MBIA claimants, waiting years for whatever scraps are left over from payouts to municipal bond insurance policyholders.

Here’s why. For all sorts of reasons…

[REUTERS ON THE CASE]

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Abigail C. Field: Assessing Schneiderman’s Task Force Gamble

Abigail C. Field: Assessing Schneiderman’s Task Force Gamble


Abigail Field-

My latest for FireDogLake. For even more confirmation that the Feds aren’t interested in bank accountability, regardless of the State half of the task force’s intentions, see Congressman Brad Miller on why he’s not the task force Executive Director and Richard Eskow on the obviousness of the problem. 

As people increasingly realize that the mortgage settlement was an enforcement fraud, attention’s turned to the “new“ joint Federal/State task force that’s supposed to make the settlement into a “down payment,” by delivering much more. And so far people don’t like what they see, and are saying so. What’s striking about the resulting PR push back, however, is that it just highlights how banker-fraud-friendly our federal government is.

For example, Attorney General Eric Schneiderman penned a Daily News Op-Ed in which he pitches “More than 50 attorneys, investigators and analysts have already been deployed to support our investigations, with many more on the way” as somehow adequate to deliver on that “down payment” promise when the Savings and Loan crisis took over 1,000 and Enron alone took over 100. Not only hasn’t the federal government corroborated AG Schneiderman’s claim of “many more on the way”; “many more” than 50+ doesn’t sound like anywhere near the 1,000+ needed to approach the ballpark of accountability.

[REALITY CHECK]

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The Bankers’ Subversion of the Rule of Law, Notary and Land Records edition

The Bankers’ Subversion of the Rule of Law, Notary and Land Records edition


Abigail C. Filed-

Hi

For the next couple of weeks, I’m one of the David Dayen subs at FireDogLake–no one person could fill his shoes–and this post ran there earlier today. This version is slightly updated but essentially the same.

One way to see the double standard at the heart of the foreclosure fraud—one set of laws for the bailed out banks, one for the rest of us—is to focus on the role of notaries public, and then consider that role in light of what our Supreme Court said about notaries in 1984, in a case called Bernal v. Fainter, Secretary of State of Texas.

First, let’s recap the role of notaries in the foreclosure fraud crisis: Notaries are the people who verify that someone actually is who they say they are when that person signs a document. Because banks and their agents industrialized “Document Execution” as part of their foreclosure business model, notaries did not do their jobs. Notaries’ failure to verify identities has been so complete that many people will sign as one person, say, “Linda Green.” Notaries have also been told to sign documents using one name, and then notarize their own “surrogate” signature. “Well, what’s the big deal?” bank defenders say. Beyond the fact that there’s no “business convenience” exception to following the rule of law, consider Bernal.

Bernal involved Texas’s requirement that all notaries be citizens; lawful permanent resident aliens need not apply. Bernal challenged the Constitutionality for the citizenship requirement. To rule on the question, the Court had to consider what notaries did, and whether or not what notaries did was so political, so central to representative democracy, that limiting being a notary to citizens was rational. In finding that notaries were important but not political officers of the state, the Court made some observations of note.

[REALITY CHECK]

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Richard (RJ) Eskow: The White House And Mortgage Fraud: So Far It’s All Talk, No Action

Richard (RJ) Eskow: The White House And Mortgage Fraud: So Far It’s All Talk, No Action


HuffPO-

The Obama Administration worked for months on a deal that would have let America’s biggest banks off the hook for a crime wave of runaway mortgage fraud. All they had to do in return was pledge a negligible sum of money, to be paid by their shareholders and not themselves, and which they would dispense themselves. In return, crooked bankers received immunity from prosecution – and even from investigation.

After the deal came under attack from a number of its allies, the Administration settled with the banks anyway. But it promised millions of wronged homeowners – and the nation as a whole – that it would move “aggressively” to investigate criminal misdeeds and prosecute bankers and anyone else who broke the law.

That was then, this is now. Two and half months later the Administration hasn’t even started to take the inadequate steps it promised it would take. The clock is running out on the statute of limitations and there’s no sign that the Administration has lifted a finger to investigate criminal bankers.

Talk vs. Action …

[HUFFINGTON POST]

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Obama’s mortgage unit is AWOL … NY AG Eric Schneiderman should quit this fraud

Obama’s mortgage unit is AWOL … NY AG Eric Schneiderman should quit this fraud


What we have learned so far: Whenever dealing with the banks and or with the government, they are from the same mold. We cannot tell any difference.

This “mortgage task force group” thing is also NO Different than that MERS system…There are no employees!

NY Daily News-

On March 9 — 45 days after the speech and 30 days after the announcement — we met with Schneiderman in New York City and asked him for an update. He had just returned from Washington, where he had been personally looking for office space. As of that date, he had no office, no phones, no staff and no executive director. None of the 55 staff members promised by Holder had materialized. On April 2, we bumped into Schneiderman on a train leaving Washington for New York and learned that the situation was the same.

Tuesday, calls to the Justice Department’s switchboard requesting to be connected with the working group produced the answer, “I really don’t know where to send you.” After being transferred to the attorney general’s office and asking for a phone number for the working group, the answer was, “I’m not aware of one.”

The promises of the President have led to little or no concrete action.

Read more:  [NY DAILY NEWS]

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Alison Frankel: NY AG’s curious new bid to intervene in $8.5 bl BofA MBS deal

Alison Frankel: NY AG’s curious new bid to intervene in $8.5 bl BofA MBS deal


Reuters Legal-

New York Attorney General Eric Schneiderman still wants a say in whether Bank of America’s proposed $8.5 billion settlement with Countrywide mortgage-backed securities investors should be approved by a state-court judge. The AG’s new intervention motion, filed more than seven months after Schneiderman first moved to join the case, makes the exact same arguments as the old motion, which was pending before New York State Supreme Court Justice Barbara Kapnick when the settlement was removed from state court to Manhattan federal court last August. There’s just one notable exception: The AG’s office “deleted” its explosive fraud counterclaims against Countrywide MBS trustee Bank of New York Mellon. Is playing nice (or, at least, nicer) enough to win the AG a seat at the table?

Those fraud counterclaims, as you’ll surely recall, caused quite a stir when Schneiderman’s office tacked them onto its original motion to intervene. One Manhattan business development official questioned the wisdom of attacking a trustee that was at least making an effort to respond to investors’ concerns and warned that the AG was endangering the city’s standing as the preferred home of financial institutions. BNY Mellon and the institutional investors backing the proposed $8.5 billion settlement responded in kind to the AG’s intervention motion, asserting that Scheiderman didn’t have standing to intervene because he’s not a Countrywide MBS investor.

[REUTER’S ON THE CASE]

[ipaper docId=88979010 access_key=key-1qpcvmn3n6t0p8xg505g height=600 width=600 /]

 

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NY pushes objection to BofA $8.5 billion mortgage pact

NY pushes objection to BofA $8.5 billion mortgage pact


Reuters-

Bank of America Corp’s proposed $8.5 billion mortgage bond settlement received fresh opposition on Tuesday from New York’s attorney general, who said the accord appears unfair to investors who may deserve to recover more.

Eric Schneiderman, the attorney general, filed papers on Tuesday asking a New York State Supreme Court justice for permission to intervene.

He had made the same request last August before the case moved to federal court. It returned to the state court in February.

The settlement announced last June arose from Charlotte, North Carolina-based Bank of America’s 2008 purchase of Countrywide Financial Corp, once the nation’s largest mortgage lender.

[REUTERS]

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Abigail Field: Hiding the Enforcement Fraud At the Heart of the Mortgage Settlement

Abigail Field: Hiding the Enforcement Fraud At the Heart of the Mortgage Settlement


Abigail C. Field-

On Thursday, April 5th U.S. District Court Judge Rosemary M. Collyer announced she had decided to sign off on the ”$25 billion” Mortgage Settlement. By “announced”, I mean she signed the consent orders all our major law enforcers and the biggest bankers had agreed to, and entered them into the record. Judge Collyer didn’t actually say anything about the deal. She didn’t let anyone else say anything, either: she didn’t hold a public hearing on the deal.

In acting silently, Judge Collyer not only okayed the deal’s lousy terms, which institutionalize servicer theft and foreclosure fraud, she reinforced the incredibly poor public process that’s kept the enforcement fraud at the heart of the deal hidden. Deliberately hidden.

Magical Misdirection

To understand just how deceptive “our” government and “our” law enforcers have been with us

[REALITY CHECK]

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[VIDEO] Shaun Donovan on the Foreclosure Fraud Settlement & Wish Wash

[VIDEO] Shaun Donovan on the Foreclosure Fraud Settlement & Wish Wash


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BREAKING: The $25B Foreclosure Fraud settlement has been approved by U.S. District Judge Rosemary Collyer.

BREAKING: The $25B Foreclosure Fraud settlement has been approved by U.S. District Judge Rosemary Collyer.


Via

Nothing from the consent judgment entered into court in the $25B foreclosure settlement may constitute “evidence against Defendant.”

WSJ-

The settlement was announced in February and filed in court as a consent judgment last month. Judge Rosemary Collyer approved the landmark settlement on Wednesday. The signed order was filed in U.S. District Court for the District of Columbia.

The pact will offer reductions in loan principal and other assistance to qualifying homeowners. The largest portion of the aid, valued at $17 billion, goes to borrowers at risk of foreclosure. Banks will pay $5 billion in fines, including nearly $1 billion to the Federal Housing Administration.

[WALL STREET JOURNAL]

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Review Finds Possible Flaws in More Than 138,000 Bank Foreclosures

Review Finds Possible Flaws in More Than 138,000 Bank Foreclosures


Not this word again “Flaw”…it’s FULL   B L O W N   FRAUD!

Why wasn’t this review done prior to any settlement? Because they never began any investigation.

DealBook-

The nation’s biggest banks may have put the huge $25 billion settlement over bad foreclosure practices behind them, but that doesn’t mean their mortgage troubles are over.

A separate review — this time by independent consultants on behalf of the Office of the Comptroller of the Currency — flagged more than 138,000 cases for possible flaws in the foreclosure process at the nation’s largest mortgage servicers. Those include foreclosures involved with the so-called robo-signing scandal, in which bank representatives churned through hundreds of documents a day in foreclosure proceedings without reviewing them for accuracy.

[DEALBOOK]

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Bank of NY Mellon must face lawsuit on Countrywide

Bank of NY Mellon must face lawsuit on Countrywide


first to let investors in mortgage-backed securities pursue claims against a trustee under the 1939 federal Trust Indenture Act.

Reuters-

A federal judge rejected Bank of New York Mellon Corp’s bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp.

U.S. District Judge William Pauley in Manhattan said on Tuesday that bondholders who invested in 26 trusts alleged to have contained risky mortgage loans from the former Countrywide Financial Corp may pursue claims against Bank of New York Mellon. He dismissed a variety of other claims.

[REUTERS]

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Abigail C. Field: Our Government Blessed Foreclosure Fraud

Abigail C. Field: Our Government Blessed Foreclosure Fraud


Abigail C. Field-

The mortgage settlement signed by 49 states and every Federal law enforcer allows the rampant foreclosure fraud currently choking our courts to continue unabated. Yes, I realize the pretty language of Exhibit A promises the banks will completely overhaul their standard operating procedures and totally clean up their acts. Promises are empty if they’re not honored, and worthless if not enforceable.

We know Bailed-Out Bankers’ promises are empty, so what matters is if the agreement is enforceable. And when it comes to all things foreclosure fraud, the enforcement provisions are laughable. But before I detail why, let’s be clear: I’m not being hyperbolic. The bankers running and profiting most from our bailed-out banks are totally dishonest when dealing with the public, and their promises are meaningless.

To see their dishonesty in the mortgage context, read the complaint filed in the mortgage deal, or my take on it here. But the bankers don’t limit their lying, cheating and stealing to homeowners. They abuse their clients the same way. Most broadly damaging, the bankers steal from taxpayers on a federal, state and local level and practically everybody else too. Fraud is just how they do business. When dealing with bankers, you can’t do business on a handshake.

[REALITY CHECK]

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ALL IN ONE BASKET: THE BANKRUPTCY RISK OF A NATIONAL AGENT-BASED MORTGAGE RECORDING SYSTEM (MERS)

ALL IN ONE BASKET: THE BANKRUPTCY RISK OF A NATIONAL AGENT-BASED MORTGAGE RECORDING SYSTEM (MERS)


John P. Hunt

University of California – Davis School of Law (King Hall); Berkeley Center for Law, Business and the Economy

Richard Stanton

University of California, Berkeley – Finance Group

Nancy Wallace

University of California, Berkeley – Real Estate Group

February 3, 2012

UC Davis Legal Studies Research Paper No. 269

Abstract:     
Mortgage Electronic Registration Systems, Inc. (“MERS, Inc.”) owns legal title to some 30 million mortgages in the United States. The company, which was a key part of the mortgage securitization apparatus in the late 1990s and 2000s, is now under intense pressure from public and private lawsuits and investigations and faces a very real threat of insolvency. Policymakers are looking ahead to potential replacements for MERS, Inc., as a recent Fed staff proposal for a substitute system indicates. This Article examines what might happen to the mortgages that MERS, Inc. at least nominally owns in the event that the company enters bankruptcy, a question that apparently has never been explored in a publicly available analysis.

Although the legal analysis underlying the design of MERS, Inc. does not appear to be publicly available, a key assumption seems to have been that if the company ever entered bankruptcy, the mortgages in its hands would not enter the company’s bankruptcy estate and would not be available to creditors. This Article challenges that assumption, pointing to the broad authority the Bankruptcy Code confers on the bankruptcy trustee with respect to interests in real property, such as mortgages. Most courts that have considered the issue have found that the bankruptcy trustee can bring into the estate any real property interest that the debtor could have conveyed to a good-faith purchaser. There is a significant risk that MERS, Inc. can convey MERS mortgages to a purchaser acting in good faith.

Although part of that risk arises from the company’s conduct in making and acquiescing in claims in court that the company can sell the mortgages, has constitutionally protected property interests in the mortgages, is a creditor of mortgage borrowers, and owns a beneficial interest in the mortgages, part of the risk is inherent in any mortgage recording system that operates nationally and holds mortgages as an agent. Policymakers should consider that risk as they consider whether MERS should be replaced and what form the replacement should take.

[ipaper docId=86987796 access_key=key-1h1qxgl3zxlw0l1hxq94 height=600 width=600 /]

 

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John Walsh: Foreclosure settlement, consent orders do not conflict

John Walsh: Foreclosure settlement, consent orders do not conflict


Lets not confuse the word “Flaw” with “Fraud”…There is a major difference!

HW-

John Walsh, acting Comptroller of the Currency, said the recent $25 billion mortgage servicing settlement reached between the big banks and state attorneys general does not conflict or double-up on requirements servicers have to follow in consent agreements banks signed with the OCC and other regulators last year. 

In 2010, regulators, including the OCC, examined 14 large federally regulated mortgage servicers and thrifts.

Last year, the agencies issued enforcement orders against all 14 institutions forcing them to take steps to review their foreclosure review processes and to offer aid to borrowers who suffered from flawed foreclosure practices.

[HOUSING WIRE]

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SEC Files Subpoena Enforcement Action Against Wells Fargo for Failure to Produce Documents in Mortgage-Backed Securities Investigation

SEC Files Subpoena Enforcement Action Against Wells Fargo for Failure to Produce Documents in Mortgage-Backed Securities Investigation


Litigation Release No. 22305 / March 23, 2012

Securities and Exchange Commission v. Wells Fargo & Company, Civil Action No. CV-1280087 CRB Misc. (N.D. Cal. March 23, 2012)

.

.

SEC Files Subpoena Enforcement Action Against Wells Fargo for Failure to Produce Documents in Mortgage-Backed Securities Investigation

The Securities and Exchange Commission announced today that it has filed a subpoena enforcement action in the U.S. District Court for the Northern District of California against Wells Fargo & Company. According to the filing, the Commission is investigating possible fraud in connection with Wells Fargo’s sale of nearly $60 billion in residential mortgage-backed securities to investors. Pursuant to subpoenas dating back to September 2011, the bank was obligated to produce (and agreed to produce) documents to the Commission, but has failed to do so. Accordingly, the Commission filed its Application for an Order Requiring Compliance with Administrative Subpoenas.

The Commission’s action relates to its investigation into whether Wells Fargo made material misrepresentations or omitted material facts in a series of offerings between September 2006 and early 2008. The Commission’s application explains that, in connection with the securitization of the loans, a due diligence review of a sample of the loans in each offering was performed. Certain loans within that sample would be dropped from the offering for failure to comply with Wells Fargo’s loan underwriting standards. However, according to the Commission, it does not appear that Wells Fargo took any steps to address similar deficiencies in the remainder of the loans in the pool, which were securitized and sold to investors. The Commission is investigating, among other things, whether Wells Fargo misrepresented to investors that the loans being securitized complied with the bank’s loan underwriting standards.

The staff in the Commission’s San Francisco Regional Office issued several subpoenas to Wells Fargo since September 2011 seeking, among other things, materials related to due diligence and to the bank’s underwriting guidelines. According to the Commission, Wells Fargo agreed to produce the documents, and set forth a timetable for doing so, yet has failed to produce many of the materials.

Pursuant to its Application, the Commission is seeking an order from the federal district court compelling Wells Fargo to comply with the Commission’s administrative subpoenas and to produce all responsive materials to the staff. The Commission notes that it is continuing to conduct a fact-finding inquiry and has not concluded that anyone has broken the law.

 

http://www.sec.gov/litigation/litreleases/2012/lr22305.htm

alarm image: DealBreaker

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AGs to consider investor protections in foreclosure settlement

AGs to consider investor protections in foreclosure settlement


LOL…according to Tom Miller.

Good Luck!

HW-

If the top five mortgage servicers begin to abuse bond investors under the foreclosure settlement write-downs, the attorneys general would consider some protections, according to Iowa AG Tom Miller.

Miller faced down banking executives and analysts during a panel at the REthink Symposium Thursday. The $25 billion settlement signed in March forces servicers to meet roughly $10 billion in principal reductions, which could swell higher because in some instances the full dollar written down will not be credited.

Servicers will get full credit for reducing principal on loans they hold on their own portfolio but receive 45 cents for every dollar written down on mortgages held in private securities.

“To try principal reduction in a targeted way and find out if it works is good for the housing market,” Miller said. “We know what (the banks’) plans are. Two have said they wouldn’t do write-downs on private securities. But we could have some discussions about something to reassure investors.”

[HOUSING WIRE]

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COMPLAINT | Sand Canyon Corp. v. American Home Mortgage Servicing, Inc

COMPLAINT | Sand Canyon Corp. v. American Home Mortgage Servicing, Inc


SUPREME COURT OF NEW YORK

Sand Canyon Corporation,

Plaintiff

v.

American Home Mortgage Servicing, Inc.

Defendant

[ipaper docId=86295973 access_key=key-25g1cjdadqi8na4avshn height=600 width=600 /]

 

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New MBS twist: Sand Canyon sues servicer for releasing loan info

New MBS twist: Sand Canyon sues servicer for releasing loan info


Alison Frankel-

Just when you think you’ve seen it all in mortgage-backed securities litigation, along comes the likes of Sand Canyon to prove you wrong.

The onetime California mortgage lender, which stopped originating loans in late 2007 and sold its servicing business to American Home Mortgage Servicing in 2008, has filed a complaint in New York State Supreme Court in Manhattan that accuses American Home of making it too easy for MBS trustees and insurers to get hold of underlying loan files. In essence, Sand Canyon’s lawyers at Cahill Gordon & Reindel are arguing that the servicer should be helping it thwart claims that it breached representations and warranties about the mortgages it sold to MBS issuers, not smoothing the way for put-back demands.

Sand Canyon’s 26-page complaint, filed last month, asserts that American Home pledged to act as an ally when it bought the servicing business in 2008. “Sand Canyon bargained for and obtained (American Home’s) cooperation in connection with Sand Canyon’s defense,” the complaint said. Under their agreement, according to the complaint, American Home was supposed to “refrain from disclosing confidential loan information to third parties except as required by law.”

[REUTERS LEGAL]

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Where are the Indictments?

Where are the Indictments?


Abigail C. Field-

Let’s be clear why there’s a mortgage deal: the banks broke the law. Several laws in fact, in ways that appear criminal as well as civil. Limiting their liability is the only reason the banks did a deal.

In this post I’m going to look at what the banks could be held liable for; how much liability “their” money persuaded law enforcers to ignore will be the next post. But one important kind of peace has not been bought: criminal. So as I detail the wrong doing exposed by the deal, I highlight the crimes our law enforcers seem to allege the bankers committed. After all, a liability release isn’t simply what it says, it’s what law enforcers do with their remaining freedom to act. If crimes were committed, and indictments don’t follow, the release is much broader than its text.

A close read of the complaint and the related language that precedes the releases (see Exhibits F and G) reveals:

continue reading [REALITY CHECK]

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Abigail Caplovitz Field: The Mortgage Settlement Allows Banks to Steal Without Penalty

Abigail Caplovitz Field: The Mortgage Settlement Allows Banks to Steal Without Penalty


HuffPO-

The consent agreements the bailed-out bankers (B.O.B.s), the feds and the states are largely as had been promised. One big surprise, however, is that the B.O.B.s would now be allowed to systematically overcharge borrowers and steal their homes. Seriously. Who cares about $1 million or $5 million penalties if horrible damage can be inflicted without punishment?

To see what I’m talking about, you need to look at Exhibit E-1. (It’s in all the consent agreements; here’s Chase‘s.) Exhibit E-1 is a 14 page table titled “Servicing Standards Quarterly Compliance Metrics.” That is, it’s a table that details what, precisely, law enforcers will check to make sure that the B.O.B.s are meeting the very pretty servicing standards in the deal. (See Exhibit A)

(Note: You may want to print out table E-1 while reading this, or at least keep it open in another browser window; what I have to say may be hard to believe and you’ll want to be able to double check that I’m telling you the truth.)

Now, the table doesn’t come right out and say, ‘we, the federal and state governments of the United States of America do hereby bless the institutionalization of servicer abuse,’ but it should. To understand why, you need to keep your eye on how the table’s columns are defined. For most issues, the critical columns are C “Loan Level Tolerance for Error” and D “Threshold Error Rate.” Later I’ll talk about the problems in Column F, the “Test Questions.”

When Error Isn’t Error…

[HUFFINGTON POST]

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Alison Frankel: Can MBS investors block national mortgage deal via litigation?

Alison Frankel: Can MBS investors block national mortgage deal via litigation?


The never ending settlement… because those in DC are doing their best to make sure their bankers are A-OK.

Reuters-

Mortgage-backed securities investors who are convinced that banks intend to shift the cost of the $25 billion national mortgage settlement onto their shoulders are “evaluating their legal options,” according to Chris Katopis, executive director of the Association of Mortgage Investors (and a former clerk on the District of Columbia Circuit Court of Appeals). The private investors, as I’ve reported, are outraged at the terms of the settlement, which sets no limit on the percentage of securitized mortgages the settling banks — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial — are permitted to modify to reach their $17 billion target for reducing the principal balance owed by struggling borrowers. Mortgage-backed noteholders believe the deal terms encourage banks to write down investor-owned first liens, rather than second lien mortgages in bank-owned portfolios. That incentive, they say, shifts the cost of the deal from the banks to mortgage-backed bondholders.

Their argument is gaining traction. The New York Times editorialized Sunday on the bank-friendly details of …

[REUTERS LEGAL]

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Kenneth Eric Trent, www.ForeclosureDestroyer.com

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