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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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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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STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”

STUBBS v. Bank of America, BAC, Fannie Mae | GA Nothern District Court “BAC …was not the ‘SECURED CREDITOR’ entitled to foreclose”


h/t NYE LAVALLE

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

GARY STUBBS,
Plaintiff,

v.

BANK OF AMERICA, BAC HOME
LOANS SERVICING, LP, and
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,
Defendants.

EXCERPT:

Plaintiff has alleged facts making it plausible that Fannie Mae was in fact
the secured creditor at the time of the foreclosure and has alleged that no
assignment to Fannie Mae was filed prior to the time of sale as required by
O.C.G.A. § 44-14-162(b). Therefore, based on the allegations in the amended
complaint, BAC evaded the most substantive requirements of Georgia’s
foreclosure statute in that (1) it was not the secured creditor entitled to foreclose
despite providing a notice letter affirmatively representing it was the creditor;
and (2) it failed to file the assignment of the security deed to the secured creditor
in the county deed records prior to the foreclosure. See O.C.G.A. § 162(b);
Weems v. Coker, 70 Ga. 746, 749 (Ga. 1883); Cummings v. Anderson, 173 B.R.
959, 963 (Bankr. N.D. Ga. 1994).3 The Court accordingly DENIES the motion to
dismiss Plaintiff’s claim for wrongful foreclosure based on failure to comply with
Georgia foreclosure law.

For whatever reason scribd download is not permitting this to be downloaded.

Please use this link to download Stubbs_v._Bank_of_America

[ipaper docId=85835317 access_key=key-p289vkcj1anvmg11uxn height=600 width=600 /]

 

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Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem

Servicers Behaving Badly: An Insider’s Perspective on the Root Cause of this Recurring Problem


The Subprime Shakeout-

The Principal – Agent Problem: Part I – RMBS Data Integrity

Back near the dawn of time when I was in business school, and the faculty was hard-pressed to find topics to fill up the curriculum, they introduced the Principal – Agent Problem.  As future corporate managers and agents of the stockholders, I suppose they wanted to explain to us that our economic interests were not identical to those of the owners.  This wasn’t exactly the most shocking news we had ever received, but that was all that was said about the issue, back then.

Of course, there is considerably more to this multi-faceted problem. According to Wikipedia, “The principal–agent problem arises when a principal compensates an agent for performing certain acts that are useful to the principal and costly to the agent, and where there are elements of the performance that are costly to observe,” primarily due to asymmetric information, uncertainty and risk.

Let’s look at the relationship between the RMBS bondholder

[THE SUBPRIME SHAKEOUT]

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Court sides with Nevada in BoA foreclosure case

Court sides with Nevada in BoA foreclosure case


REUTERS-

A federal appeals court on Friday granted Nevada’s request to send its lawsuit alleging mortgage modification and foreclosure abuses against Bank of America Corp back to Nevada state court.

The 9th U.S. Circuit Court of Appeals reversed a decision by a lower court, which had concluded that the lawsuit belonged in federal court.

Nevada’s complaint, filed in Clark County, Nevada, in January 2011, alleges that Bank of America misled consumers about the terms of its home mortgage modification and foreclosure processes.

Nevada also accused the bank of violating terms of a consent judgment it and several of its subsidiaries had entered into with the state in February 2009.

After Bank of America removed the lawsuit to federal court, Nevada’s request to send it back to state court was denied.

Chief Judge Robert Clive Jones of the District of Nevada ruled that the lawsuit belonged in his court because the lawsuit was a class action, which gives federal courts jurisdiction.

[REUTERS]

[ipaper docId=84003144 access_key=key-2n413anbehd46i3rju3e height=600 width=600 /]

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LETTER: MBIA tells judge of newly uncovered Countrywide fraud “FACTS” database

LETTER: MBIA tells judge of newly uncovered Countrywide fraud “FACTS” database


Alison Frankel-

I sure hope the Securities and Exchange Commission and other members of the new joint mortgage-backed securities task force are paying attention to the docket in MBIA’s New York State Supreme Court fraud and breach-of-contract suit against Countrywide. On Wednesday, MBIA’s lawyers at Quinn Emanuel Urquhart & Sullivan sent a letter to Justice Eileen Bransten requesting that she order Countrywide to produce discovery on an internal fraud-tracking database “which MBIA had not previously known to exist.” MBIA said it needs the discovery to prepare for upcoming depositions of former Countrywide employees who tried to expose its allegedly fraudulent mortgage underwriting practices, including the well-known whistleblowers Eileen Foster and Mari Eisenman.

[REUTERS LEGAL]

[ipaper docId=81876930 access_key=key-1x9iscls2av3gu2fie2u height=600 width=600 /]

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Syncora Guar. Inc. v Countrywide Home Loans, Inc. 650042/09 1.3.2012

Syncora Guar. Inc. v Countrywide Home Loans, Inc. 650042/09 1.3.2012


Supreme Court, New York County

Syncora Guarantee Inc., Plaintiff,

against

Countrywide Home Loans, Inc., COUNTRYWIDE SECURITIES CORP., COUNTRYWIDE FINANCIAL CORP., and BANK OF AMERICA CORPORATION, Defendants.

[ipaper docId=77091015 access_key=key-2o48po62z1cpi1cavlzg height=600 width=600 /]

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MBIA Insurance Corp. v. Countrywide Home Loans Inc., 602825-2008 SUMMARY JUDGMENT 1.3.2012

MBIA Insurance Corp. v. Countrywide Home Loans Inc., 602825-2008 SUMMARY JUDGMENT 1.3.2012


SUPREME COURT OF THE STATE OF NEW YORK

MBIA Insurance Corporation,

v

Countrywide Home Loans, Inc., et al., 

[ipaper docId=77090661 access_key=key-13v4rj9xjd50mjupv4b8 height=600 width=600 /]

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Helping Homeowners Harmed by Foreclosures: Ensuring Accountability and Transparency in Foreclosure Reviews Written Testimony of Alys Cohen

Helping Homeowners Harmed by Foreclosures: Ensuring Accountability and Transparency in Foreclosure Reviews Written Testimony of Alys Cohen


Helping Homeowners Harmed by Foreclosures:
Ensuring Accountability and Transparency in Foreclosure Reviews

Written Testimony
of
Alys Cohen

National Consumer Law Center
also on behalf of
Community Legal Services of Philadelphia, Connecticut Fair Housing Center, Consumer Action,
Consumers Union, Empire State Justice Center, Financial Protection Law Center, Housing and
Economic Rights Advocates, Legal Aid Center of Southern Nevada, Inc., Michigan Foreclosure
Task Force, National Association of Consumer Advocates, National Council of La Raza, National
Community Reinvestment Coalition, National Fair Housing Alliance, National People’s Action,
Neighborhood Economic Development Advocacy Project, North Carolina Justice Center

Before the United States Senate Subcommittee on
Housing, Transportation, and Community Development of the
United States Senate Committee on
Banking, Housing, & Urban Affairs

Dec. 13, 2011

[ipaper docId=76011855 access_key=key-1k6w4svmfeeqc1zxi5a7 height=600 width=600 /]

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Matt Stoller: Treat foreclosure as a crime scene

Matt Stoller: Treat foreclosure as a crime scene


“Obama may talk of the “99 percent” but his administration is engaged in an aggressive coverup of bank crimes.”

 

Politico-

Bubbling under the surface of politics is the foreclosure crisis — where the power of big finance is brushing up against the rule of law. The party leaders seem to have decided it is essentially a giant — but unavoidable — tragedy. GOP presidential candidate Mitt Romney said foreclosures have to clear for the housing market to reset. The Obama administration, meanwhile, has spent only about $2 billion of the $75 billion authorized for the Home Affordable Modification Program.

But the foreclosure crisis is not only a few million personal tragedies. It is a few million crime scenes.

[POLITICO]

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Senator Maria Cantwell: MERS “should be shut down and dissolved”

Senator Maria Cantwell: MERS “should be shut down and dissolved”


H/T Matt Stoller

December 15, 2011

The Honorable Eric Holder, Jr.

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530-0001

Dear Attorney General Holder:

I write regarding the ongoing settlement talks between state attorneys general, federal fraud regulators, the White House, and large financial institutions over alleged illegal foreclosure and mortgage servicing practices and abuses.

I am concerned that recently reported settlement proposals will effectively absolve these financial institutions of substantial civil and criminal liability in one of the largest alleged fraud schemes during the financial crisis. Specifically, I am concerned that the proposed settlement includes a release from liability that may be far too sweeping, does not adequately compensate victims, does not require enough of banks to reform the system that led to the crisis in the first place, and is being made before all the facts are known and without the backing of a full inquiry into the size and scope of the alleged fraud.

Large financial institutions helped inflate the housing bubble through tranching and securitizing mortgages at a frenetic pace while disregarding mortgage and foreclosure laws. Collecting fees from issuing mortgages then selling to investors securities backed by these mortgages allowed the largest financial institutions to pump up profits and home prices, while dumping any potential losses on homeowners, taxpayers, and investors. When the housing bubble burst taxpayers were forced to bail out the largest financial institutions. It is estimated that the federal government disbursed over $4.7 trillion to financial institutions, and guaranteed an additional $13.87 trillion, during the financial crisis.

Without a thorough investigation, it is impossible to truly estimate just how pervasive the defects in the foreclosure and securitization process are. Continued reports of wrongful foreclosures, forged documents, and an inability of servicers and banks to prove chain of title and the legal right to foreclosure, raises the very alarming possibility that these defects were endemic to the mortgage servicing industry across the country. The sheer magnitude of the potential fallout from these defects demands that we undertake a full investigation to uncover the true scope of wrongdoing before providing blanket immunity to the perpetrators.

I am also concerned that reports of a settlement in the range of $20 billion, as recently reported, may not adequately compensate the victims of the foreclosure crisis. As a result of the pump-and-dump scheme perpetrated by the nation’s largest banks that inflated – and burst – the housing bubble, an estimated 14 million Americans are underwater, owing $700 billion more on their homes than those homes are worth. A $20 billion settlement is woefully inadequate to compensate the wrongfully evicted or homeowners struggling to stay in their homes. Much more should be required of banks to provide meaningful help underwater homeowners and compensate foreclosure fraud victims.

A settlement with mortgage servicers must also require reforms to ensure such abuses do not happen again. The goal of servicing mortgages must be accuracy and adherence to the law, not expediency and corner-cutting. Confidence must be restored that proper transference of notes and mortgages was followed and clear chains of titles are available for all mortgages. Until then, the burden of proof must be on financial institutions to prove that they have the legal authority to foreclose. The Mortgage Electronic Registration System should be dissolved and shut down, and the shortcut that allowed banks to avoid hundreds of millions, if not billions, in local fees to local registrars of deeds be closed off. It is critical that large banks not be allowed to shirk their tax obligations to local governments. A settlement in this case must compensate state and local governments for taxes and fees which were owed but not collected.

The crisis in our housing and financial markets has shaken the confidence of the American people in our financial system and in government. Holding banks accountable for abusive and fraudulent practices, while compensating damaged homeowners, wrongfully evicted, local governments, and defrauded investors is vital to restoring that confidence. I urge you to ensure that any settlement with mortgage servicers over alleged foreclosure abuses does not absolve liability for crimes and wrongdoing that has yet to be fully investigated, and ensures just compensation for victims.

I appreciate your attention to this matter.

Sincerely,

U.S. Senator Maria Cantwell

###

[ipaper docId=75811029 access_key=key-3akr4fq4pq5lfwoyir3 height=600 width=600 /]

 

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Banks Press for CFPB Waivers in Foreclosure Talks

Banks Press for CFPB Waivers in Foreclosure Talks


Little by little they are working their way up to freedom.

All their eggs are almost in the basket…

WSJ-

Banks are demanding that the Consumer Financial Protection Bureau relinquish the right to sue over certain flawed mortgage originations, in exchange for their participation in a proposed multibillion-dollar settlement of alleged foreclosure abuses.

The banks say their inability to secure a sufficiently broad release from the new bureau, which was sidelined in earlier discussions as it launched, would be a deal breaker. The five biggest U.S. mortgage banks, state attorneys general and Obama administration officials are pushing to finalize a deal before the end of the year that would be worth $19 billion or more.

[WALL STREET JOURNAL]

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Borrowers may give up future claims in foreclosure reviews

Borrowers may give up future claims in foreclosure reviews


We already knew this and if you expect any real restitution, you’re in for a surprise!

HW-

A mortgage servicer will be granted a waiver from future claims depending on what sort of remediation a borrower gets from the foreclosure reviews conducted under federal consent orders.

Independent consultants, approved by the Office of the Comptroller of the Currency and the Federal Reserve, will review nearly 4.5 million foreclosure files over the next several months. They will be looking for any harm caused by improper practices uncovered last year.

[HOUSING WIRE]

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Banks, Officials Near Pact on Foreclosures

Banks, Officials Near Pact on Foreclosures


Planned…just in time for the Holidays around the corner!

Here’s hoping you forget when you get back from celebrating!

 

WSJ-

Five large lenders could be forced to make concessions worth roughly $19 billion as bank representatives and government officials push to put the finishing touches on a settlement of most state and federal investigations of alleged foreclosure improprieties.

Housing and Urban Development Secretary Shaun Donovan and state officials hope to reach a deal as soon as this week, though any agreement could be delayed by unresolved issues including the naming of a monitor to oversee the agreement.

The settlement would end months-long negotiations among federal officials, state attorneys general and the nation’s five largest mortgage servicers: Ally Financial Inc., Bank …

[WALL STREET JOURNAL]

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Ex-FDIC Chief Sheila Bair Top Pick for Bank Monitor

Ex-FDIC Chief Sheila Bair Top Pick for Bank Monitor


For some background information on Sheila Bair please read Joe Nocera’s great article: Sheila Bair’s Bank Shot

 Bloomberg-

Sheila Bair, the former Federal Deposit Insurance Corp. chairman, is a leading candidate among state officials to ensure banks comply with any settlement of a nationwide foreclosure probe, a person familiar with the matter said.

Bair, who led the agency from 2006 until stepping down this year, is supported by some state officials as a third-party monitor of any settlement with mortgage servicers, including Bank of America Corp. (BAC), the person said. At least one bank in the talks, Citigroup Inc. (C), opposes her selection, said the person, who didn’t want to be named because the talks are private.

[BLOOMBERG]

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OCC Foreclosure Review Disclosures Still Disappoint

OCC Foreclosure Review Disclosures Still Disappoint


Doing something — anything — quickly but poorly is no substitute for taking the time to do what needs to be done well.

American Banker-

Congresswoman Maxine Waters (D-CA) is fearful that the quick-and-poor may prevail with mortgage servicer reviews, based on what she sees planned in response to last April’s consent orders from federal regulators.

“The only thing worse than no accountability for the banks,” according to Waters, “is for regulators to create the illusion of accountability, while putting no enforcement power behind their efforts.”

[AMERICAN BANKER]

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Proposed changes to the MERS® System Rules of Membership

Proposed changes to the MERS® System Rules of Membership


via- MERS

Set forth on Exhibit A are proposed changes to the MERS® System Rules of Membership (“Rules”).

These proposed changes are “technical” in nature in that there are no substantive changes to any of the Rules. The changes mainly clarify the distinction between Mortgage Electronic Registration Systems, Inc., and its service provider, MERSCORP, Inc. They also properly reference the MERS® System, where appropriate.

The proposed changes to the Rules are highlighted and underlined in Exhibit A [Below].

[ipaper docId=74344261 access_key=key-2oldis7h147wp3xoxvyk height=600 width=600 /]

 

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Pillar Processing Firm That Helped Steven J. Baum P.C. To Lay Off 590 People

Pillar Processing Firm That Helped Steven J. Baum P.C. To Lay Off 590 People


Just as in Florida with Stern & DJSP, this will continue to repeat with others.

You all know who you are.

Rewind-

In 2007 Steven J. Baum sold all or most of his stake in Pillar to Tailwind Capital. Tailwind is a Hedge Fund that buys companies that are valued between $25 – and $100 Million. Sometime later, Ares Capital Corporation, a publicly traded company invested over $30 Million in Pillar. Both Baum & Pillar share an address.

Ares, Tailwind Said to Be Subpoenaed in N.Y. Foreclosure Probe.

BUFFALO NEWS-

Pillar Processing, a back-office and document-processing firm with close ties to the Steven J. Baum PC foreclosure law firm, will lay off 590 full- and part-time employees at its offices in Amherst.

The company told state and local officials that the layoffs are expected to take effect Feb. 27. Pillar is also laying off about 20 employees in Westbury, on Long Island.

[BUFFALO NEWS]

H/T JeffreyFreedman.com

“I’m not saying Baum and Pillar were not in the wrong, but according to my sources, many other firms in New York were doing the same things as Baum and Pillar,” Freedman said. “However, Baum and Pillar were the only upstate companies handling a large volume of foreclosure business, and now the work is most likely going to move to downstate firms that are still in business.”

I think we all know that they know who they all are. 🙂 Sound Off!

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FANNIE MAE: Authorization for File Transfers from the Baum Law Firm

FANNIE MAE: Authorization for File Transfers from the Baum Law Firm


Effective immediately, servicers are authorized to transfer any Fannie Mae foreclosure or bankruptcy matters in New York from Steven J. Baum, P.C., to any other Retained Attorney Network firms in the State of New York, a listing of which is posted on eFannieMae.com.

[ipaper docId=73952804 access_key=key-29xzzyberswyxcgijtio height=600 width=600 /]

 

 

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Foreclosure firm’s collapse could delay cases statewide

Foreclosure firm’s collapse could delay cases statewide


If you think these mills are the only ones? …GUESS AGAIN!

All of these firms should be barred and out of business period. You all know who you are.

REUTERS-

The sudden demise of one of New York’s largest foreclosure law firms has raised concerns of a drag on the thousands of cases it still has pending before the courts.

Steven J. Baum PC filed notice Monday informing federal labor regulators that it is planning “mass layoffs” on Feb. 20 as it prepares to close its doors. While no specific numbers were provided, the firm currently employs about 67 full and part-time employees at its main offices in western New York and 22 full and part-time employees in Long Island.

But while his firm may be on its way out, Steven Baum said in a statement Monday that he and remaining staff members will “fulfill our remaining work on behalf of our clients.”

Whether this means relying on the skeleton crew left behind to wind down the business or transferring cases to new firms will depend on the status of each case, according to attorneys who work on foreclosures in New York.

[REUTERS]

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Cummings Calls for Unredacted Copies of “Engagement Letters” Between Mortgage Servicing Companies and Private Consultants

Cummings Calls for Unredacted Copies of “Engagement Letters” Between Mortgage Servicing Companies and Private Consultants


Washington, DC (Nov. 22, 2011)—Ranking Member Elijah E. Cummings released the following statement today regarding the public release of highly redacted “engagement letters” between mortgage servicing companies and independent consultants they hired to review past foreclosure abuses:

“Although I am encouraged that some information is being made public today, our Committee should issue subpoenas to obtain full, unredacted copies of these documents so we can ensure that homeowners are being fully and appropriately compensated.  Six months is too long to wait to conduct oversight of mortgage servicing companies that illegally foreclosed against homeowners.”

Today, the Office of the Comptroller of the Currency released copies of the engagement letters with significant redactions, including the removal of sections regarding past work, actual and potential conflicts of interest, and the procedures available to homeowners to file claims and complaints due to errors, misrepresentations, or other deficiencies in a foreclosure process.

Cummings first asked for full copies of these engagement letters on May 31, 2011, following a report issued by federal regulators finding “critical weaknesses” and “widespread risk” with 14 of the nation’s largest mortgage servicing companies’ foreclosure practices.

The regulators ordered the mortgage servicing companies to hire private consultants to conduct more comprehensive reviews of their foreclosure actions, but the regulators allowed them to propose the terms of the reviews, including the methodology of the reviews, the criteria guiding the selection of cases to be reviewed, and any proposed sampling techniques.  Some have criticized this approach for providing insufficient oversight of the banks’ actions.

In their responses to Cummings, the regulators explained that, by law, they cannot produce the full engagement letters until they are legally compelled to do so.

As a result, on October 27, Cummings wrote to Committee Chairman Darrell Issa requesting that he either issue subpoenas for the engagement letters or schedule a subpoena vote for the Committee’s business meeting on November 17, 2011.  Issa declined to take either step, stating at the business meeting that he preferred to wait until Thanksgiving to determine whether the engagement letters would be released voluntarily.

 

source: http://democrats.oversight.house.gov

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

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