Sorry about the quality…had to go with what I had at the time.
NOTE: Mr Arnold said there is 20,000 who sign 7 documents but not in this clip.
Ms. Diane E. Thompson Counsel National Consumer Law Center
Mr. R. K. Arnold President and CEO Mortgage Electronic Registration Systems, Inc
I wish I could have recorded this on HD so everyone can witness some of the lies the Bank Reps were telling. They are really out of touch with reality.
At one point when JPMorgan’s David Lowman began to speak some attendees stood up and yelled, then escorted out the room after a brief pause.
__
__
<SNIP>
SHELBY: I CAN SEE WHO OWNS THE MORTGAGE?
ARNOLD: There is no assignment if MERS is the Mortgagee
One group is out with a “white paper” defending the mortgage securitization process, with Tom Deutsch, American Securitization Forum, and CNBC’s Diana Olick.
By Jody Shenn and Prashant Gopal – Nov 16, 2010 11:14 AM ET
A trade group for companies that help package loans and leases into securities rejected claims that mortgage-bond trusts can’t prove ownership of debt they hold as Congress began hearings on the foreclosure crisis.
The standard practices of the industry result “if followed, in a valid and enforceable transfer of mortgage notes and the underlying mortgages,” Tom Deutsch, executive director of the New York-based American Securitization Forum, said in a study released today. Lawmakers in Washington ordered hearings on mortgage practices after loan servicers including Ally Financial Inc. and JPMorgan Chase & Co. halted foreclosure proceedings following revelations of so-called robo-signing.
The trade group focused on whether industry practices resulted in securitization trusts taking ownership of loans, though not whether all the paperwork needed for foreclosures is in order. Without taking ownership of mortgages within a set period after their creation, often 90 days, the trusts may be unable to later assemble the documents needed for foreclosures because of contractual requirements or tax rules.
“The law is somewhat unsettled on what actually must be done via a securitization to complete the transfers correctly,” visiting Harvard Law professor Katherine Porter told a Congressional Oversight Panel Oct. 27. Porter has said “there is disagreement on whether the transfer of the notes needed to have occurred individually,” or potentially with a specific endorsement to the new holder or a physical transfer.
Problems in Mortgage Servicing From Modification to Foreclosure
Tuesday, November 16, 2010
02:30 PM – 05:00 PM
538 Dirksen Senate Office Building
The witnesses will be: The Honorable Tom Miller, Attorney General,State of Iowa; Ms. Barbara J. Desoer, President, Bank of America HomeLoans; Mr. David Lowman, CEO, Chase Home Lending; Mr. Adam J. Levitin,Associate Professor of Law, Georgetown University Law Center; and Ms.Diane Thompson, Counsel, National Consumer Law Center. Additional witnesses may be announced at a later date.
November 16, 2010 Examining the Consequences of Mortgage
Irregularities for Financial Stability and Foreclosure
Mitigation
*Submitted under Section 125(b)(1) of Title 1 of the Emergency Economic
Stabilization Act of 2008, Pub. L. No. 110-343
Excerpts beginning pg 19:
Various commentators have begun to ask whether the poor recordkeeping and error-filled
work exhibited in foreclosure proceedings, described above, is likely to have marked earlier
stages of the process as well. If so, the effect could be that rights were not properly transferred
during the securitization process such that title to the mortgage and the note might rest with
another party in the process other than the trust.44
iv. MERS
In addition to the concerns with the securitization process described above, a method
adopted by the mortgage securitization industry to track transfers of mortgage servicing rights
has come under question. A mortgage does not need to be recorded to be enforceable as between
the mortgagor and the mortgagee or subsequent transferee, but unless a mortgage is recorded, it
does not provide the mortgagee or its subsequent transferee with priority over subsequent
mortgagees or lien holders.4
During the housing boom, multiple rapid transfers of mortgages to facilitate securitization
made recordation of mortgages a more time-consuming, and expensive process than in the past.46
To alleviate the burden of recording every mortgage assignment, the mortgage securitization
industry created the Mortgage Electronic Registration Systems, Inc. (MERS), a company that
serves as the mortgagee of record in the county land records and runs a database that tracks
ownership and servicing rights of mortgage loans.47 MERS created a proxy or online registry
that would serve as the mortgagee of record, eliminating the need to prepare and record
subsequent transfers of servicing interests when they were transferred from one MERS member
to another.48 In essence, it attempted to create a paperless mortgage recording process overlying
the traditional, paper-intense mortgage tracking system, in which MERS would have standing to
initiate foreclosures.49
MERS experienced rapid growth during the housing boom. Since its inception in 1995,
66 million mortgages have been registered in the MERS system and 33 million MERS-registered
loans remain outstanding.50 During the summer of 2010, one expert estimated that MERS was
involved in 60 percent of mortgage loans originated in the United States.51
Widespread questions about the efficacy of the MERS model did not arise during the
boom, when home prices were escalating and the incidence of foreclosures was minimal.52 But
as foreclosures began to increase, and documentation irregularities surfaced in some cases and
raised questions about a wide range of legal issues, including the legality of foreclosure
proceedings in general,53 some litigants raised questions about the validity of MERS.54 There islimited case law to provide direction, but some state courts have rendered verdicts on the issue.
In Florida, for example, appellate courts have determined that MERS had standing to bring a
foreclosure proceeding.55 On the other hand, in Vermont, a court determined that MERS did not
have standing.56
In the absence of more guidance from state courts, it is difficult to ascertain the impact of
the use of MERS on the foreclosure process. The uncertainty is compounded by the fact that the
issue is rooted in state law and lies in the hands of 50 states. judges and legislatures. If states
adopt the Florida model, then the issue is likely to have a limited effect. However, if more states
adopt the Vermont model, then the issue may complicate the ability of various players in the
securitization process to enforce foreclosure liens.57 If sufficiently widespread, these
complications could have a substantial effect on the mortgage market, inasmuch as it would
destabilize or delegitimize a system that has been embedded in the mortgage market and used by
multiple participants, both government and private. Although it is impossible to say at present
what the ultimate result of litigation on MERS will be, holdings adverse to MERS could have
significant consequences to the market.
If courts do adopt the Vermont view, it is possible that the impact may be mitigated if
market participants devise a viable workaround. For example, according to a report released by
Standard & Poor.s, ¡°most¡± market participants believe that it may be possible to solve any
MERS-related problems by taking the mortgage out of MERS and putting it in the mortgage owner’s name prior to initiating a foreclosure proceeding.58 According to one expert, the odds
that the status of MERS will be settled quickly are low.59
H.R. 3808:
to require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects
interstate commerce
2:15 P.M. –
ONE MINUTE SPEECHES – The House proceeded with one minute speeches.
H.R. 3808:
to require any Federal or State court to recognize any notarization
made by a notary public licensed by a State other than the State where
the court is located when such notarization occurs in or affects
interstate commerce
2:14 P.M. –
VETO MESSAGE FROM THE PRESIDENT – The Chair laid before the House the
veto message from the President on H.R. 3808. The objections of the
President were spread at large upon the Journal, and the veto message
was ordered to be printed as a House Document No. 111-152. Pursuant to
the order of the House of earlier today, further consideration of the
veto message and the bill are postponed until the legislative day of Wednesday, Nov. 17, 2010, and that on that legislative day, the House
shall proceed to the constitutional question of reconsideration and
dispose of such question without intervening motion.
2:13 P.M. –
The House received a message from the Clerk. Pursuant to the
permission granted in Clause 2(h) of Rule II of the Rules of the U.S.
House of Representatives, the Clerk transmitted H.R. 3808, the
“Interstate Recognition of Notarization Act of 2010,” and a Memorandum
of Disapproval thereon received from the White House on October 8,
2010, at 12:55 p.m.
Mr. Scott (VA) asked unanimous consent That, when the House adjourns
on Monday, November 15, 2010, it adjourn to meet at 12:30 p.m. on
Tuesday, November 16, 2010, for Morning-Hour Debate. Agreed to without
objection.
Mr. Scott (VA) asked unanimous consent That, when a veto message on
H.R. 3808 is laid before the House on the legislative day of today,
then after the message is read and the objections of the President are
spread at large upon the Journal, further consideration of the veto
message and the bill shall be postponed until the legislative day of Wednesday, Nov. 17, 2010; and that on that legislative day, the House
shall proceed to the constitutional question of reconsideration and
dispose of such question without intervening motion. Agreed to without
objection.
NEW YORK – It used to be that every time a bank sold a mortgage, the county land recording office received a fee. It wasn’t much – $30 or so – but then real estate boomed in the 1990s and banks pooled millions of mortgages into securities that investors bought and sold.
One mortgage transaction became a dozen or more, and the tab grew ever larger. So the banks came up with a way around the fees. And now they are fighting to avoid perhaps tens of billions of dollars in penalties that have added up over the years.
In 1997, when the banks’ burgeoning business in mortgage securities was clashing with the unwieldy nature of written forms, the industry created its own alternative, an electronic system that would track the ever-changing ownership of home loans.
The banks formed a private company called Mortgage Electronic Registry Systems Inc., or MERS. Its motto: “Process loans, not paperwork.” It has registered more than 65 million loans, three out of every five on the market.
MERS’ owners are all the big mortgage companies, including Bank of America, Citigroup, Wells Fargo, JPMorgan Chase and GMAC. They are all facing a foreclosure fraud investigation launched by all 50 state attorneys general.
Counties complained about the lost revenue after MERS was implemented, but they rarely tried to challenge the new way of doing business. Now, three years after the housing crash and two months after allegations that some banks submitted fraudulent documents to foreclosure courts, every aspect of the nation’s mortgage machine is under scrutiny.
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Two lawyers in Reno, Nev., have filed suit in 17 states alleging that banks cheated counties out of billions of dollars. In Virginia, a lawmaker has asked the state’s attorney general to investigate MERS over its failure to pay recording fees. And everywhere elected officials and class-action lawyers turn, the back-office procedures of MERS are being called into question.
The lawsuits challenge MERS’ authority to act on behalf of banks or other investors that own a mortgage. With so many loans registered to MERS, it’s a claim that goes to the heart of the mortgage-fraud scandal.
With MERS ostensibly keeping track of who owns what, counties still get their paperwork and fees the first time a mortgage is filed. Typically, that county fee is rolled into the closing costs homeowners pay when they buy a home.
MERS is “an admitted fee-avoidance scheme,” says Robert Hager, the Nevada lawyer who, along with his partner Treva Hearne, is filing the suits against MERS and its bank owners, including the government-backed mortgage- finance companies Fannie Mae and Freddie Mac. Fannie and Freddie provide a low- cost flow of funding to the nation’s mortgage markets by buying mortgages from lenders, packaging them into securities and then selling them to investors.
The suits were filed in California, Nevada and Tennessee and 14 undisclosed states where the cases are still under court seal. Hager and Hearne chose the states because their laws allow what are called false claims suits, in which citizens can take legal action against companies that may have cheated the government.
SFF has posted numerous court orders involving this firm and nothing has come about the fraud they are submitting and swearing to under oath. Shocking.
Lets set aside that these are FORECLOSURES for a second…T h e s e a r e o f f i c e r s o f t h e c o u r t [PERIOD END OF STORY], intentionally submitting bogus, fraudulent documents even after they were made aware of new filing requirements.
“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs–such as a family home–during this period of economic crisis,” said New York State Chief Judge Jonathan Lippman in a statement.
Judge Melvyn Tanenbaum suspends the following cases
Excerpt:
This Court has repeatedly directed plaintiffs counsel to submit proposed orders of reference
and judgments of foreclosure in proper form and counsel has continuously failed to do so. The Court
provided counsel’s office directly with copies of orders and judgments which would satisfy the
requirements and counsel has responded by submitting correspondence addressed to the Court from
non-attorney employees with improper and inadequate submissions. The Court deems plaintiffs
counsel’s actions to be an intentional failure to comply with the directions of the Court and a
dereliction of professional responsibility. Accordingly it is…
Continue to the Orders All The Way Down…
.
Another 18 reasons why an Investigation should be in order…some of us are keeping track and trust me there is many more!
We’ve described in various posts how evidence is growing that the participants in mortgage securitizations sometime early in this century appear to have ignored the requirements of a variety of laws and their own contracts. We believe the most serious and difficult to remedy problem results when the parties involved in the creation of a mortgage securitization failed to take the steps necessary to convey the loans to the legal entity, a trust, which was set up to hold them. As we wrote:
…. there is substantial evidence that in many cases, the notes were not conveyed to the trust as stipulated. As we have discussed, the pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note (the borrower IOU) to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title. The minimum conveyance chain in recent vintage transactions is A (originator) => B (sponsor) => C (depositor) => D (trust).
The proper conveyance of the note is crucial, since the mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”). The investors in the mortgage securitization relied upon certifications by the trustee for the trust at and post closing that the trust did indeed have the assets that the investors were told it possessed.
By JOSH KOSMAN
Last Updated: 4:25 AM, November 15, 2010
Posted: 10:34 PM, November 14, 2010
Bank lawyers prosecuting the 80,000 foreclosure cases in New York are all but admitting that the cases they have filed over the past number of years have been riddled with fraud.
In the three weeks-plus since New York State Chief Judge Jonathan Lippman put the foreclosure lawyers on notice that any fraud in foreclosure paperwork would be met with severe penalties — he is making lawyers sign affirmations promising they took “reasonable” steps to make sure the legal papers are true — practically no new foreclosure cases have been filed, The Post has learned.
And existing cases have ground to a halt, a source close to the state’s foreclosure practice said.
“Banks do not want to be the first to test the new rules,” the source said.
The virtual shutdown of New York’s foreclosure business comes despite chest-thumping, bravado-filled statements made by some banks in October that they had nothing to be afraid of when it came to foreclosure fraud and that the lawsuits aimed at kicking delinquent homeowners from their houses would continue shortly.
It seems lawyers pressing the foreclosure cases are not willing to bet their law licenses on such claims.
The foreclosure fiasco will be the subject of Senate hearings tomorrow and a House hearing Thursday, when execs from major lenders like Bank of America and JPMorgan Chase are expected to testify.
Stern’s DAL Enters Forbearance Agreement With Bank of America Over Credit
By Dawn McCarty – Nov 15, 2010 7:51 AM ET
A business run by David Stern, the Florida foreclosure lawyer who is under investigation by the state’s attorney general, entered a forbearance agreement with lender Bank of America NA.
The bank agreed not to take action in the period ending Nov. 26 over a default on a revolving line of credit by DAL Group LLC, a unit of Stern’s foreclosure-processing company, DJSP Enterprises Inc., according to a regulatory filing. The credit line, entered into in March, has an outstanding principal balance of about $12 million, DAL said.
EXCELLENT JOB! Now this is what I am talking about…no affidavits…it’s the “assignments”, the destroyed notes, the Break in Chain, the E-Signatures, no supervision!
By Prashant Gopal – Nov 15, 2010 12:00 AM ET
Bryan Bly is a pen-wielding “robo- signer” at Nationwide Title Clearing Inc., inking his name on an average 5,000 mortgage documents a day for companies such as Citigroup Inc. and JPMorgan Chase & Co.
Those are just the ones that cross his desk.
Nationwide Title employs a computer system that automatically inserts a copy of Bly’s signature on thousands of digital files that he never sees. The system even affixes an electronic notary seal.
“The problem with the way these documents are created isn’t because a computer is used,” said Gloria Einstein, a legal aid attorney in Green Cove Springs, Florida, who deposed Bly in a case in a which her client faces foreclosure by a unit of Deutsche Bank AG. “It’s because an enterprise has decided to use a computer to create a system where nobody is responsible for the information and the decisions.”
The rush to securitize more than $4 trillion of mortgages as U.S. home sales peaked in 2005 and 2006 inundated loan servicers and contractors like Palm Harbor, Florida-based Nationwide Title that help them handle paperwork. Lawsuits fighting some of the more than 4 million foreclosures since then have exposed sloppy recordkeeping and raised questions about the validity of documents used to seize properties.
Signatures Draw Scrutiny
Bly is just one of more than a dozen robo-signers deposed in the past two years by lawyers for borrowers seeking to block foreclosures. Spurred by descriptions in depositions of employees signing thousands of affidavits a week without checking their accuracy as legally required, the attorneys general in all 50 states last month opened an investigation into whether banks and loan servicers used faulty documents or improper practices to foreclose.
Nationwide Title, which has about 175 employees, provides document imaging, tracking, retrieval, recording and processing on bulk loan transfers for lenders, servicers and investors. It’s the largest third-party processor of mortgage assignments, handling more than 350,000 last year, Senior Vice President Jeremy Pomerantz said in a telephone interview. The company also prepares lien releases, which show that a mortgage has been paid off by the borrower.
Assignments, which are usually recorded with county land record departments, list the buyer and seller of a loan as it’s sold or packaged with other loans into a mortgage-backed security. Lawyers for homeowners are challenging the legitimacy of the documents, which are relied on by lenders to show they have the right to foreclose.
Batches of 30,000
(While closely held Nationwide Title in the past offered a package of foreclosure-specific services, it had just one client, Pomerantz said. The company doesn’t handle foreclosure affidavits — submitted by banks to assert ownership of a loan when they’ve lost the promissory note or to show that borrowers are in default — and often it doesn’t know when clients are requesting documents for defaulted loans, he said.)
Nationwide Title’s proprietary system isn’t entirely automated, said Erika Lance, senior vice president of administration. Employees receive requests from clients for lien releases and mortgage assignments, which are often sent in batches of as many as 30,000. They review the information and images of loan documents sent along with the request, and the information is keyed into the computer system.
The computer system fills in the electronic assignments in the format and wording each county requires, and places a signature and notary seal from a list of employees approved by each bank. Bly and other signers are given a title at the bank requesting the documents, such as “vice president” or “assistant secretary,” depending on what the individual counties require, Lance said.
This according to Straight Talk by Sharon Horstkamp, MERS Vice President and Corporate Counsel. Below is an excerpt of the newsletter:
The standard modification agreement
is between the Borrower and
the Lender. The agreement amends
and supplements (1) the Mortgage,
Deed of Trust or Deed to Secure
Debt (Security Instrument) and (2)
the Note bearing the same date as,
and secured by, the Security
Instrument. Prior to MERS, the
standard agreement worked
because the Lender was the mortgagee
of record and could modify
the mortgage and also had the
authority to modify the Note.
However, if MERS is the mortgagee
of record, the Lender can’t
modify the mortgage without the
“mortgagee’s” consent. Therefore,
Fannie Mae and Freddie Mac
changed the modification agreements
to reflect MERS as the mortgagee
of record.
Their change states the Agreement
amends and supplements the
Mortgage, Deed of Trust or Deed to
Secure Debt (Security Instrument)
granted or assigned to Mortgage
Electronic Registration Systems,
Inc., as nominee for the Lender.
The change also recommended a
signature line be added for MERS to
sign the agreement in its mortgagee
capacity. A MERS certifying officer
can sign the Agreement. It is important
to note that a MERS signature
doesn’t replace the Lender’s signature,
because MERS isn’t modifying
the note. Therefore, the Lender and
MERS must sign the document.
Brent and Wendy Diers of Fruita thought their foreclosure nightmare would end in April when they sent a check to pay off their mortgage.
.
But more than six months later, CitiMortgage hasn’t followed through on repeated assurances it would release the lien and give them title.
And despite a judge’s ruling that they are not in default, the lender’s law firm, Castle Meinhold & Stawiarski, continues to pursue a foreclosure sale.
“We are not in default and they do not have authorization to sell our house,” a frustrated Wendy Diers said.
Although the Diers case is extreme, it is just one of several stories of borrowers in Colorado and elsewhere who find themselves trapped in a frustrating state of limbo.
A surge in foreclosures has strained the system across the country, creating problems of lost paperwork, uncertain ownership on mortgages, and sloppy processing that has forced some lenders in recent weeks to pull back.
And those individuals who fall through the cracks like the Dierses find it hard to get out.
In a phone conversation, the Dierses recorded a CitiMortgage employee in May telling them “rest assured, we do have the check. Everything is fine.”
In July, the couple were told the title was being contested. Another CitiMortgage representative, named Jennifer, in late July tells them, “We have the title clear. The mortgage has been paid.”
SUPREME COURT OF THE STATE OF NEW YORK
IAS PART XXI – COUNTY OF SUFFOLK
PRESENT: HON. JEFFREY ARLEN SPINNER
Justice of the Supreme Court
KATHLEEN ROMANO,
plaintiff, .INDEX NO.: 2006-2233
– against –
STEELCASE INC and EDUCATIONAL &
INSTITUTIONAL COOPERATIVE SERVICES INC,
Defendants
Excerpts:
Both Facebook and MySpace are social networking sites where people can share information about
their personal lives, including posting photographs and sharing information about what they are
doing or thinking. Indeed, Facebook policy states that “it helps you share information with your
friends and people around YOU.” and that “Facebook is about sharing information with others.”’
Likewise, MySpace is a “social networking service that allows Members to create unique personal profiles online in order to find and communicate with old and news friends;” and, is self-described
as an “online community” where “you can share photos, journals and interests with your growing
network of mutual friends,”’ and, as a “global lifestyle portal that reaches millions of people around
the world.”3 Both sites allow the user to set privacy levels to control with whom they share their
information.
The information sought by Defendant regarding Plaintiff’s Facebook and MySpace accounts is both
material and necessary to the defense of this action and or could lead to admissible evidence.
<SNIP>
Further, Defendant‘s need for access to the information outweighs any privacy concerns that may
be voiced by Plaintiff. Defendant has attempted to obtain the sought Lifter information via other
means e.g., via deposition and notice for discovery, however, these have proven to be inadequate
since counsel has thwarted Defendant’s attempt to question Plaintiff in this regard or to obtain
authorizations from Plaintiff for the release of this information. The materials including photographs
contained on these sites may be relevant to the issue of damages and may disprove Plaintiff’s claims.
Without access to these sites, Defendant will be at a distinct disadvantage in defending this action.
ORDERED, that Defendant STEELCASE’s motion for an Order granting said Defendant access
to Plaintiff’s current and historical Facebook and MySpace pages and accounts, including all deleted
pages and related information, is hereby granted in all respects; and it is further
ORDERED, that, within 30 days from the date of service of a copy of this Order, as directed herein
below, Plaintiff shall deliver to Counsel for Defendant STEELCASE a properly executed consent
and authorization as may be required by the operators of Facebook and MySpace, permitting said
Defendant to gain access to Plaintiff’s Facebook and MySpace records, including any records
previously deleted or archived by said operators; and it is further.
ORDERED, that Counselor the moving party herein is hereby directed to serve a copy of this
order, with Notice of Entry, upon Counsel for all the remaining parties and Non-Party FACEBOOK,
within twenty (20) days of the date this order IS entered by the Suffolk County Clerk.
—By the American Bankers Association, Corporate Trust Committee
Executive Summary
In this position paper, the Corporate Trust Committee is responding to current assertions that the obligations of trustees in asset-backed securities1 (?ABS?) are greater than the duties contractually undertaken by those trustees.
These assertions, which have been made by participants in the ABS market by investors, investment advisors, rating agencies and others2, fail to recognize the legal limitations on the duties of ABS trustees and have been made in response to both disappointing ABS investment performance and market issues arising from the current economic crisis. Although ABS investment performance has been disappointing, particularly with respect to certain residential mortgage-backed securities, and there were numerous market issues which gave rise to the current crisis, it is the position of the Committee that the contractual role of the trustee was not a contributing factor to either the investment performance or the market issues which may have caused or affected it.3 Moreover, in many instances, ambiguities or errors in the transaction documents governing impaired asset-backed securities have been construed in ways that were not contemplated or bargained for by the original transaction parties and that seek to alter the role and potential liability of trustees to a degree not warranted either by the contractual language or applicable statutory and common law. As a basic principle, the Committee acknowledges the need for more clarity in transaction documents generally going forward. However, the Committee’s position is that any issues that were neither contemplated by nor addressed in the documents governing current ABS transactions must be resolved in accordance with the legal contracts governing those transactions and generally accepted rules of contractual interpretation. Reliance on clear hindsight, even with the goal of protecting particular constituencies or investors generally, to impose duties retroactively on trustees that are clearly outside the range of duties undertaken in their contracts effectively abrogates those contracts and violates basic tenets of U.S. contract law.
How to report? One of the things we strongly recommend is that you look at the MISMO standards, the Mortgage Industry Standards Maintenance Organization, for definitions, for format, and I think this might address issues, for example, with HUD reported credit score. That if you like at the MISMO, we don’t simply look at one field for credit score. There’s a field for a number. There’s also then a field of whether it’s a vantage score, whether it comes from FICO, what vendor reported the score. So that there are a number of variables then that are really behind it, and if you simply then pick up all of these variables associated with the credit score the way we do, you can then use the information internal to then generate whatever percentile or whatever calculation you would like to do, but that that would not be put back on the lender to reenter data, to rekey it, but instead use what’s already out there in the industry. Also it would provide for easier changes later on, if any additions are needed.
What about a universal mortgage identifier? That has been brought up. We would strongly recommend that you look at the mortgage identification number that’s been put out by the Mortgage Electronic Registration System, MERS. It allows us to track mortgages throughout the system from application all the way to sale of servicing, sales of the secondary market and I think for these purposes it would allow us to really sort of track some of the under coverage that we do see in the HMDA data. We did some analysis and found that by throwing out all the correspondent loans, we are eliminating a number of loans that had no counterpart in the retail broker data.
What to make public? Well, we really think that’s your decision. In a sense that there are a number of data elements here that we would very much not want to make public as companies because of the limitations we face, but that certainly that’s an issue that the bureau and the Fed will have to face going forward is the tradeoff between risks of identity theft associated with some of these elements and that, but that’s really your decision to make rather than the industry, and to some degree, we would benefit, I think, in terms of what would explain what’s going on in the industry with a greater data release.
Finally on multifamily, we did an analysis and we think that HMDA already covers about 95 percent of the multifamily loans that are made. In contrast, though, it covers only about 60 percent or so of the dollar amount of the loans. So that if you look then at the average loan amount that’s in HMDA, it’s about $1.7 million for a multifamily loan. If you look at the average loan size of what’s missing, it’s about $19 million. So we don’t know how much effort really should be put into trying to capture this remaining 5 percent of really high dollar loans that are done for just an entirely different set of investors out there. So I think you really ought to look at what do you really want to do with the multifamily data? Do you really want to expand it or is there a questionable usefulness of what’s already there? Thank you.
When the Obama administration launched its flagship foreclosure prevention program in early 2009, it pledged to spend up to $50 billion helping struggling homeowners. But the government has so far only spent a tiny fraction of that.
A recent Treasury Department report summarizing TARP spending put the total at $600 million through October.
Although the Treasury Department posts the maximum amount that could go to each mortgage servicer on its website, it doesn’t report the details of the spending. So we filed a Freedom of Information request for the data, and can now show for the first time exactly how much money has gone to each servicer. (A Treasury Department spokeswoman said they’re considering regularly releasing the information going forward.)
The program, which uses TARP money, tries to prevent foreclosures by paying mortgages servicers incentives to make loan modifications. The largest payout, $79 million, has gone to JPMorgan Chase. Next on the list is Bank of America with $45.1 million. That’s a drop in the bucket for BofA, which reported net servicing income of $780 million in the third quarter. (You can use our bailout tracker to see how much money has gone to each mortgage servicer. The figures, which come from our FOIA request, only go through August.)
With the government’s program showing signs of slowing down, the small payout so far shows that Treasury won’t come close to using the full $50 billion, said Guy Cecala, publisher of Inside Mortgage Finance. “It’s a joke, because everyone’s asking ‘is [the program] really worth the $50 billion we’ve committed?’” he said. “We’ll never spend anywhere near that.”
Second, incentives are paid out over time. For instance, homeowners in the program receive a $1,000 reduction to their mortgage each year for five years if they stay current on the modified loan. The program is less than two years old, and few modifications were given during the first year.
Incentives are paid to three different groups: homeowners, investors, and banks and other companies who service the loans (The four biggest servicers of mortgages are also the U.S.’s largest banks: Bank of America, Wells Fargo, JPMorgan Chase and Citigroup.) So far, the servicers have kept most of the money paid out: $231.5 million all told. Investors (lenders and mortgage-backed securities investors) and homeowners have received $129.2 million and $34.7 million, respectively. Our database breaks those amounts down for each servicer.
It’s hard to estimate just how much Treasury will ultimately use of the $50 billion. One reason is that a portion of the modifications will default, so all the incentives for each modification will not be paid out. Of modifications completed a year ago, about 21 percent have already defaulted, according to Treasury data.
If a homeowner keeps up payments on a modified mortgage for the full five years, it could cost the government in the range of $20,000 over five years, according to a ballpark estimate provided by the Treasury spokeswoman. But many homeowners in the program are expected to default on their mortgages well before that.
The government has set aside billions of dollars from the TARP for other, related programs – but it also remains to be seen how much of that money will be spent. The government pays incentives for other ways of avoiding foreclosure, like short sales, but those programs started relatively recently. It’s also allocated $7.6 billion to 18 different states (plus Washington, D.C.) for local plans to avert foreclosure. Another $8.1 billion has been reserved for a plan to refinance homeowners in underwater mortgages into Federal Housing Agency loans.
Separate from the TARP, Fannie Mae and Freddie Mac, both under government control, also participate in the loan modification program. Administration officials have said Fannie and Freddie could pay up to $25 billion in incentives to their servicers and homeowners, but it’s also doubtful that whole amount will be spent. As the TARP inspector general recently noted, they’ve only paid out $451 million through September.
Janet Tavakoli, Tavakoli Structured Finance, and I discuss bank and foreclosure fraud via Goldman Sachs, JP Morgan, Countrywide, Bank of America, Citigroup etc. in the video commentary below.
Janet Tavakoli, Tavakoli Structured Finance, and I discuss bank and foreclosure fraud via Goldman Sachs, JP Morgan, Countrywide, Bank of America, Citigroup etc. in the video commentary above.
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