Over One Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations

FOR IMMEDIATE RELEASE
2012-233

Washington, D.C., Nov. 16, 2012 — In coordination with the federal-state Residential Mortgage-Backed Securities Working Group, the Securities and Exchange Commission today charged J.P. Morgan Securities LLC and Credit Suisse Securities (USA) with misleading investors in offerings of residential mortgage-backed securities (RMBS). The firms agreed to settlements in which they will pay more than $400 million combined, and the SEC plans to distribute the money to harmed investors.

The SEC alleges that J.P. Morgan misstated information about the delinquency status of mortgage loans that provided collateral for an RMBS offering in which it was the underwriter. J.P. Morgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans. J.P. Morgan also is charged for Bear Stearns’ failure to disclose its practice of obtaining and keeping cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold into RMBS trusts. The proceeds from this bulk settlement practice were at least $137.8 million.

J.P. Morgan has agreed to pay $296.9 million to settle the SEC’s charges.

According to the SEC’s order against Credit Suisse, the firm similarly failed to accurately disclose its practice of retaining cash for itself from the settlement of claims against mortgage loan originators for problems with loans that Credit Suisse had sold into RMBS trusts and no longer owned. Credit Suisse also made misstatements in SEC filings about when it would repurchase mortgage loans from trusts if borrowers missed the first payment due. The firm made $55.7 million in profits and losses avoided from its bulk settlement practice, and its investors lost more than $10 million due to Credit Suisse’s practices concerning first payment defaults.

Credit Suisse has agreed to pay $120 million to settle the SEC’s charges.

“In many ways, mortgage products such as RMBS were ground zero in the financial crisis,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Misrepresentations in connection with the creation and sale of mortgage securities contributed greatly to the tremendous losses suffered by investors once the U.S. housing market collapsed. Today’s actions involving RMBS securities are a continuation of the SEC’s strong efforts to pursue wrongdoing committed in connection with the financial crisis.”

Mr. Khuzami is a co-chair of the RMBS Working Group, which brings together federal and state agencies to investigate those responsible for misconduct that contributed to the financial crisis through the pooling and sale of RMBS.

RMBS Working Group Co-Chair and U.S. Attorney for the District of Colorado John Walsh said, “Today’s filings represent significant steps towards the accomplishment of the Working Group’s mission – to investigate and confront the abuses in the residential mortgage-backed securities market that significantly contributed to the Financial Crisis. The Working Group model allows the Department of Justice to lend a hand to other enforcement partners around the country who, in turn, have their own unique resources, talents, and legal tools to contribute to the effort. And the Justice Department’s efforts in this area have benefited from SEC’s work on its own cases.”

RMBS Working Group Co-Chair and New York State Attorney General Andrew Schneiderman said, “Today’s actions are another step forward in the process of bringing accountability for the misconduct that led to the collapse of the housing market. We will continue to work together on behalf of consumers and investors to ensure that it never happens again.”

According to the SEC’s complaint against J.P. Morgan filed in federal court in Washington D.C., federal regulations under the securities laws require the disclosure of delinquency information related to assets that provide collateral for an asset-backed securities offering. Information about the delinquency status of mortgage loans in an RMBS transaction is important to investors because those loans are the primary source of funds by which investors can earn interest and obtain repayment of their principal.

The SEC alleges that in the prospectus supplement for the $1.8 billion RMBS offering that occurred in December 2006, J.P. Morgan made materially false and misleading statements about the loans that provided collateral for the transaction. The firm represented that only four loans (.04 percent of the total loans collateralizing the transaction) were delinquent by 30 to 59 days, and that those four were the only loans that had had an instance of delinquency of 30 or more days in the 12 months prior to the “cut-off date” for the transaction. However, at the time J.P. Morgan made these representations, the firm actually had information showing that more than 620 loans (above 7 percent of the total loans collateralizing the transaction) were, and had been, 30 to 59 days delinquent, and the four loans represented as being 30 to 59 days delinquent were in fact 60 to 89 days delinquent.

The SEC’s complaint also alleges that Bear Stearns’ bulk settlements covered loans collateralizing 156 different RMBS transactions issued from 2005 to 2007. Loan originators were usually required by contract to buy back loans that suffered early payment defaults or had other defects. However, Bear Stearns frequently negotiated discounted cash settlements with these loan originators in lieu of a buy-back on loans that were owned by the RMBS trusts. The firm – both before and after the merger with J.P. Morgan – then kept most of the bulk settlement proceeds. The firm failed to disclose the practice to investors who owned the loans. Bear Stearns repurchased only about 13 percent of these defective bulk settlement loans from the trusts, compared to a nearly 100 percent repurchase rate when loan originators agreed to buy back the defective loans. For most loans covered by bulk settlements, the firm collected money from originators without paying anything to the trusts.

J.P. Morgan settled the SEC’s charges by consenting to pay $50.5 million in disgorgement and prejudgment interest and a $24 million penalty for the delinquency misstatements, which the SEC will seek to distribute to harmed investors in the transaction through a Fair Fund. J.P. Morgan agreed to pay $162,065,536 in disgorgement and prejudgment interest and a $60.35 million penalty for the bulk settlement practice misconduct, and the SEC will seek to distribute these funds to harmed investors through a separate Fair Fund. J.P. Morgan consented, without admitting or denying the allegations, to the entry of a final judgment permanently enjoining them from violating Section 17(a)(2) and (3) of the Securities Act of 1933. The settlement is subject to court approval.

According to the SEC’s order instituting a settled administrative proceeding against Credit Suisse, the firm and its affiliated entities misled investors in 75 different RMBS transactions through the bulk settlement practice. From 2005 to 2010, Credit Suisse frequently negotiated bulk settlements with loan originators in lieu of a buy-back of loans that were owned by the RMBS trusts. Credit Suisse kept the bulk settlement proceeds for itself and failed to disclose the practice to investors who owned the loans. In nine of the 75 RMBS trusts, Credit Suisse failed to comply with offering document provisions that required it to repurchase certain early defaulting loans. Credit Suisse also applied different quality review procedures for loans that it sought to put back to originators, instituted a practice of not repurchasing such loans from trusts unless the originators had agreed to repurchase them, and failed to disclose the bulk settlement practice when answering investor questions about early payment defaults.

The SEC’s order also found that Credit Suisse made misleading statements about a key investor protection known as the First Payment Default (FPD) provision in two RMBS offerings. The FPD provision required the mortgage loan originator to repurchase or substitute loans that missed payments shortly before or after they were securitized. Credit Suisse misled investors by falsely claiming that “all First Payment Default Risk” was removed from its RMBS, and at the same time limiting the number of FPD loans that were put back to the originator.

Credit Suisse settled the SEC’s charges by consenting to pay $68,747,769 in disgorgement and prejudgment interest and a $33 million penalty, which the SEC will seek to distribute through a Fair Fund to harmed investors in the 75 RMBS transactions affected by the bulk settlement practice. Credit Suisse agreed to pay $12,256,651 in disgorgement and prejudgment interest and a $6 million penalty, which the SEC will seek to distribute through a separate Fair Fund to harmed investors in the two transactions affected by the FPD misstatements. Credit Suisse agreed to an order, without admitting or denying the allegations, requiring them to cease and desist from violations of Section 17(a)(2) and (3) of the Securities Act and Section 15(d) of the Securities Exchange Act of 1934.

These investigations were conducted by members of the SEC Enforcement Division’s Structured and New Products Unit in both the Denver and Washington, D.C. offices, including Zachary Carlyle, Mark Cave, Sarra Cho, Allison Herren Lee, Laura Metcalfe, Colin Rand, Thomas Silverstein, John Smith, Andrew Sporkin, Amy Sumner, and Jeffrey Weiss. The trial unit members assigned to this matter were Dugan Bliss, Kyle DeYoung, Jan Folena, and Christian Schultz. The Enforcement Division was assisted by Eugene Canjels and Vance Anthony in the Division of Risk, Strategy and Financial Innovation. The SEC thanks the other agencies who are members of the RMBS Working Group for their assistance and cooperation regarding these enforcement actions.

“These actions demonstrate that we intend to hold accountable those who misled investors through poor disclosures in the sale of RMBS and other financial products commonly marketed and sold during the financial crisis. Our efforts in that regard continue,” said Kenneth Lench, Chief of the SEC Enforcement Division’s Structured and New Products Unit.

* * *

Today’s announcement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s Residential Mortgage-Backed Securities (RMBS) Working Group, a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice together with 10 U.S. Attorneys’ Offices and the FBI, the Securities and Exchange Commission, the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the Federal Housing Finance Agency’s Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The Working Group is led by five co-chairs: Director of Enforcement for the SEC Robert Khuzami, New York State Attorney General Eric Schneiderman, Assistant Attorney General for the Justice Department’s Criminal Division Lanny Breuer, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division Stuart Delery and U.S. Attorney for the District of Colorado John Walsh. The RMBS Working Group Coordinator is Matthew Stegman. For more information about the RMBS working group and the Financial Fraud Enforcement Task Force, which is chaired by Attorney General Eric Holder, visit: www.stopfraud.gov

# # #

http://www.sec.gov/news/press/2012/2012-233.htm

Yes, this is the same firm US Attorney General Eric Holder & Lanny Breuer, head of the Justice Department criminal division were partners of.

Reuters-

A state judge in Minneapolis ruled Thursday that Covington & Burling cannot represent the state of Minnesota in an environmental lawsuit against the law firm’s onetime client 3M Co.

Hennepin County District Court Judge Robert Blaeser disqualified Covington from the case due to the firm’s prior work for 3M on regulatory matters involving fluorochemical products. The Minnesota lawsuit had likewise involved fluorochemicals, creating a conflict, the judge said.

“Covington has exhibited a conscious disregard for its duties of confidentiality, candor, full disclosure, and loyalty to 3M by failing to raise its conflicts arising from the fact that it previously advised and represented 3M on (fluorochemical) matters,” Blaeser wrote.

The ruling followed five months of legal bickering between Covington, the prestigious Washington law firm, and 3M, the Fortune 500 company behind Scotch Tape and Post-it products.

A separate lawsuit by 3M against Covington arising out of the Minnesota case is pending in Minnesota state court.

[REUTERS]

image: ethics.tamu.edu

New Economic Perspectives-

Beurre blanc is the classic white butter sauce of France.  Americans who hate the French claim that they became adept at saucing to cover up the rot in their meat in earlier times.  A beurre blanc does not remove the rot.  It masks the bad taste and the bad color of bad meat.  Indeed, the sauce makes the dish even less healthy.  If the rotten meat doesn’t get you, the sauce’s cholesterol will.

“Breuer blanc” is the classic white butter sauce served by the increasingly oxymoronic Justice Department to cover up the rot in elite American banksters.  Lanny Breuer runs the Criminal Division during the continuing cover up of the greatest and most destructive epidemic of elite white-collar crime in our history.  The ingredients of “Breuer blanc” consist of a generous portion of inaction and a large dollop of hypocrisy all emulsified with esters of excuse.

The last three administrations have found the bouquet of the financial industry’s political contributions so delectable that they have allowed elite financial firms and their senior officers to commit fraud with near impunity.  Prosecutions, even serious investigations employing grand juries, of the elite bankers who became wealthy by causing the ongoing crisis have become so rare that Breuer is firing “blancs” at the most elite frauds.  The results of Breuer blanc have been catastrophic.   The Clinton, Bush, and Obama administrations (and Congress) catered to elite bankers so unctuously that they created the most criminogenic environment for financial fraud in history.  The fin de siècle feast that the Clinton and Bush administration served up to produce the crisis exemplified the elite degeneracy that the French have always ascribed to the end of an era.  The element of hope, however, that the French also ascribe to the new era was quickly betrayed by the Obama administration.  The audacity of hope soon curdled into a spoiled and broken Breuer blanc slathered over the rot of the elite banksters to cover up their frauds.

[NEW ECONOMIC PERSPECTIVE]

The crony connections just keep on coming over at Eric Holder’s Department of Justice.

BreitBart-

Last week, the Justice Department announced that it will not prosecute Goldman Sachs or any of its employees in a financial probe. 

Could that be because the attorney for Goldman Sachs CEO Lloyd Blankfein was none other than Attorney General Eric Holder’s “best friend” and former personal attorney, Reid Weingarten?

 Or because in 2008, Goldman Sachs employees donated  $1,013,091 to Barack Obama?

 Or because Goldman Sachs is the former client of Eric Holder’s and Assistant Attorney General Lanny Breuer’s law firm, Covington & Burling?

[BREITBART]

But also take a good look at the MERS trademark documents below, especially the very top of page 3 where it names Covington & Burling the sender of what appears to be a fax allegedly in 1998 for “MERSCORP Inc.”. The documents were signed in 2003, 3-4 years after MERS’ 1999?s date via Fmr. V.P. W. Hultman’s secretary Kathy McKnight [PDF link to depo pages 29-39].

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WE NEED TO LOOK AT THOSE OVER AT THE JUSTICE DEPARTMENT AND WHERE THEY WORKED BEFORE THEY GOT THERE BECAUSE I THINK ONE OF THE REASONS PROSECUTION ISN’T THE LEVEL THAT IT SHOULD THERE IS SOME PARALYSIS IN SOME PLACES BECAUSE OF THOSE WHO ARE ABLE TO BLOCK A PLAY.

-Congresswoman Marcy Kaptur

Now for the story below and make sure you click to read of ALL the companies Covington & Burling represent!

Bloomberg-

There’s an old saying in journalism that there are no new stories, only new reporters. The revelation that U.S. Attorney General Eric Holder’s old law firm used to represent the bankrupt brokerage firm MF Global Holdings is a great example.

Here’s the lead paragraph from an article yesterday on the right-leaning news website Breitbart.com, which was following up on an op-ed in the Washington Times:

“Those wondering why the Department of Justice has refused to go after Jon Corzine for the vaporization of $1.6 billion in MF Global client funds need look no further than the documents uncovered by the Government Accountability Institute that reveal that the now-defunct MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s former law firm, Covington & Burling.”

[BLOOMBERG]

BreitBart-

Those wondering why the Department of Justice has refused to go after Jon Corzine for the vaporization of $1.6 billion in MF Global client funds need look no further than the documents uncovered by the Government Accountability Institute that reveal that the now-defunct MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s former law firm, Covington & Burling.

There’s more.

Records also reveal that MF Global’s trustee for the Chapter 11 bankruptcy retained as its general bankruptcy counsel Morrison & Foerester–the very law firm from which Associate Attorney General Tony West came to DOJ.

And more….

[BREITBART]

Abigail C. Field-

Below I give the details, but here’s the takeaway: the Obama Justice Department, led by star white collar criminal defense attorneys Eric Holder and Lanny Breuer–and the Obama SEC, led by former securities industry’s self-regulator Mary Shapiro and Deutsche Bank CDO lawyer Robert Khuzami, ignored the business records of a Wall Street madam that document a few thousand Wall Streeters’ use of her brothel’s services. They’ve also ignored traders‘ and executives’ widely acknowledged cocaine and prescription drug abuse.

That information is useful in coercing insiders into cooperating with the government. That’s key to successfully prosecuting the top dogs. For so long as President Obama’s law “enforcers” refuse to use such information, they are simply not serious about prosecuting any of the individuals who looted our financial system, wrecking our housing market and economy.

Wall Street’s use of prostitutes and coke has been in and out of the news for years, and I hadn’t really connected the dots. The accountability failure aspect…

[REALITY CHECK]

image: guardian.co.uk

via: Live To Try

To Attorney General Eric Schneiderman:

Today, a group of citizens is staging a sit-in at your office at 120 Broadway. Whereas most sit-ins aim to disrupt, ours will be different: our goal is to propel you forward.

President Obama has tasked you with co-chairing the Residential Mortgage-Backed Securities Fraud Task Force, and the last thing we want to do is get in your way. However, since the creation of this unit, over four hundred thousand homes have been foreclosed on–that’s over four thousand a day—and not a single bank or corporate criminal has been brought to justice.

Your job title is “The People’s Lawyer.” We are the People. We want to help
you with the People’s Investigation of mortgage-backed securities fraud and
other crimes of the recidivist banking industry. We know that the only path to
lasting structural reform involves holding accountable those institutions that
committed fraud.

We’ve read reports that you have not been given the staff or the resources
you were promised. That is unacceptable, so we are stepping up. You said
recently, “I need everyone out there to help us make this investigation as
strong and thorough as it needs to be.” (The American Prospect, 4/23/12)

We are here to answer your call.

We’re tired of transactional politics. We are pushing for transformational
change. We want justice that is sweeping, swift, and blind to the influence
and power of those who are guilty. We know you want the same. But we
also know that you face considerable political resistance–which is why
we’re here today to help.

Sincerely,

The May Fourth Committee for Equal Justice Under the Law
Concerned Constituents of the Economy

CC: Assistant Attorney General Lanny Breuer, Assistant Attorney General
Tony West, Director of SEC Enforcement Robert Khuzami, and U.S.
Attorney John Walsh

[ipaper docId=92645069 access_key=key-21m60uc6g15sdyu49ccs height=600 width=600 /]

THE WHITE HOUSE

Office of the Press Secretary

FACT SHEET: President Obama’s Plan to Help Responsible Homeowners and Heal the Housing Market

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference, including allowing these homeowners to save thousands of dollars by refinancing at today’s low interest rates. That’s why the President is putting forward a plan that uses the broad range of tools to help homeowners, supporting middle-class families and the economy.

Key Aspects of the President’s Plan

• Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will: 

•  Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
• Streamline the refinancing process for all GSE borrowers who are current on their loans.
• Give borrowers the chance to rebuild equity through refinancing.

Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:

• Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
• Full disclosure of fees and penalties.
• Guidelines to prevent conflicts of interest that end up hurting homeowners.
• Support to keep responsible families in their homes and out of foreclosure.
• Protection for families against inappropriate foreclosure, including right of appeal.

First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.

Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.

• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.

Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.

1.      Broad Based Refinancing Plan

Millions of homeowners who are current on their mortgages and could benefit from today’s low interest rates face substantial barriers to refinancing through no fault of their own. Sometimes homeowners with good credit and clean payment histories are rejected because their mortgages are underwater. In other cases, they are rejected because the banks are worried that they will be left taking losses, even where Fannie Mae or Freddie Mac insure these new mortgages.  In the end, these responsible homeowners are stuck paying higher interest rates, costing them thousands of dollars a year.

To address this challenge, the President worked with housing regulators this fall to take action without Congress to make millions of Americans eligible for lower interest rates. However, there are still millions of responsible Americans who continue to face steep barriers to low-cost, streamlined refinancing. So the President is now calling on Congress to open up opportunities to refinancing for responsible borrowers who are current on their payments.

Under the proposal, borrowers with loans insured by Fannie Mae or Freddie Mac (i.e. GSE-insured loans) will have access to streamlined refinancing through the GSEs. Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA. For responsible borrowers, there will be no more barriers and no more excuses.

Key components of the President’s plan include:

• Providing Non-GSE Borrowers Access to Simple, Low-Cost Refinancing: President Obama is calling on Congress to pass legislation to establish a streamlined refinancing program. The refinancing program will be open to all non-GSE borrowers with standard (non-jumbo) loans who have been keeping up with their mortgage payments. The program will be operated through the FHA.

Simple and straightforward eligibility criteria: Any borrower with a loan that is not currently guaranteed by the GSEs can qualify if they meet the following criteria:

• They are current on their mortgage: Borrowers will need to have been current on their loan for the past 6 months and have missed no more than one payment in the 6 months prior.
• They meet a minimum credit score. Borrowers must have a current FICO score of 580 to be eligible. Approximately 9 in 10 borrowers have a credit score adequate to meet that requirement. 
• They have a loan that is no larger than the current FHA conforming loan limits in their area: Currently, FHA limits vary geographically with the median area home price – set at $271,050 in lowest cost areas and as high as $729,750 in the highest cost areas
• The loan they are refinancing is for a single family, owner-occupied principal residence.  This will ensure that the program is focused on responsible homeowners trying to stay in their homes.

Streamlined application process: Borrowers will apply through a streamlined process designed to make it simpler and less expensive for borrowers and lenders to refinance. Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed. (Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, a lender will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.)

Program parameters to reduce program cost: The President’s plan includes additional steps to reduce program costs, including:

• Establishing loan-to-value limits for these loans. The Administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify. This would reduce the risk associated with the program and relieve the strain of negative equity on the borrower.
• Creating a separate fund for new streamlined refinancing program. This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing Mutual Mortgage Insurance (MMI) fund.

EXAMPLE: How Refinancing Can Benefit a Borrower With a Non-GSE Loan

•  A borrower has a non-GSE mortgage originated in 2005 with a 6 percent rate and an initial balance of $300,000 – resulting in monthly payments of about $1,800.

• The outstanding balance is now about $272,000 and the borrower’s home is now worth $225,000, leaving the borrower underwater (with a loan-to-value ratio of about 120%).

• Though the borrower has been paying his mortgage on time, he cannot refinance at today’s historically low rates.

• Under the President’s legislative plan, the borrower would be eligible to refinance into a 4.25% percent 30-year loan, which would reduce monthly payments by about $460 a month.

Refinancing Plan Will Be Fully Paid For By a Portion of Fee on Largest Financial Institutions: The Administration estimates the cost of its refinancing plan will be in the range of $5 to $10 billion, depending on exact parameters and take-up. This cost will be fully offset by using a portion of the President’s proposed Financial Crisis Responsibility Fee, which imposes a fee on the largest financial institutions based on their size and the riskiness of their activities – ensuring that the program does not add a dime to the deficit.

Fully Streamlining Refinancing for All GSE Borrowers: The Administration has worked with the FHFA to streamline the GSEs’ refinancing program for all responsible, current GSE borrowers. The FHFA has made important progress to-date, including eliminating the restriction on allowing deeply underwater borrowers to access refinancing, lowering fees associated with refinancing, and making it easier to access refinancing with lower closing costs.

To build on this progress, the Administration is calling on Congress to enact additional changes that will benefit homeowners and save taxpayers money by reducing the number of defaults on GSE loans. We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress to do what is in the taxpayer’s interest, by:

 a.     Eliminating appraisal costs for all borrowers: Borrowers who happen to live in communities without a significant number of recent home sales often have to get a manual appraisal to determine whether they are eligible for refinancing into a GSE guaranteed loan, even under the HARP program. Under the Administration’s proposal, the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.

 b.     Increasing competition so borrowers get the best possible deal: Today, lenders looking to compete with the current servicer of a borrower’s loan for that borrower’s refinancing business continue to face barriers to participating in HARP. This lack of competition means higher prices and less favorable terms for the borrower. The President’s legislative plan would direct the GSEs to require the same streamlined underwriting for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers’ business.

 c.      Extending streamlined refinancing for all GSE borrowers: The President’s plan would extend these steps to streamline refinancing for homeowners to all GSE borrowers. Those who have significant equity in their home – and thus present less credit risk – should benefit fully from all streamlining, including lower fees and fewer barriers. This will allow more borrowers to take advantage of a program that provides streamlined, low-cost access to today’s low interest rates – and make it easier and more automatic for servicers to market and promote this program for all GSE borrowers.

Giving Borrowers the Chance to Rebuild Equity in their Homes Through Refinancing: All underwater borrowers who decide to participate in either HARP or the refinancing program through the FHA outlined above will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes. The latter course, when combined with a shorter loan term of 20 years, will give the majority of underwater borrowers the chance to get back above water within five years, or less.

To encourage borrowers to make the decision to rebuild equity in their homes, we are proposing that the legislation provide for the GSEs and FHA to cover the closing costs of borrowers who chose this option – a benefit averaging about $3,000 per homeowner. To be eligible, a participant in either program must agree to refinance into a loan with a no more than 20 year term with monthly payments roughly equal to those they make under their current loan. For those who agree to these terms, the lender will receive payment for all closing costs directly from the GSEs or the FHA, depending on the entity involved.  

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower

• A borrower has a 6.5 percent $214,000 30-year mortgage originated in 2006. It now has an outstanding balance of $200,000, but the house is worth $160,000 (a loan-to-value ratio of 125). The monthly payment on this mortgage is $1,350.

• While this borrower is responsibly paying her monthly mortgage, she is locked out of refinancing.

• By refinancing into a 4.25 percent 30-year mortgage loan, this borrower will reduce her monthly payment by $370. However, after five years her mortgage balance will remain at $182,000.

• Under the rebuilding equity program, the borrower would refinance into a 20-year mortgage at 3.75 percent and commit her monthly savings to paying down principal. After five years, her mortgage balance would decline to $152,000, bringing the borrower above water.

• If the borrower took this option, the GSEs or FHA would also cover her closing costs – potentially saving her about $3,000.

Streamlined Refinancing for Rural America: The Agriculture Department, which supports mortgage financing for thousands of rural families a year, is taking steps to further streamline its USDA-to-USDA refinancing program. This program is designed to provide those who currently have loans insured by the Department of Agriculture with a low-cost, streamlined process for refinancing into today’s low rates. The Administration is announcing that the Agriculture Department will further streamline this program by eliminating the requirement for a new appraisal, a new credit report and other documentation normally required in a refinancing. To be eligible, a borrower need only demonstrate that he or she has been current on their loan.

Streamlined Refinancing for FHA Borrowers:  Like the Agriculture Department, the Federal Housing Authority is taking steps to make it easier for borrowers with loans insured by their agency to obtain access to low-cost, streamlined refinancing.  The current FHA-to-FHA streamlined refinance program allows FHA borrowers who are current on their mortgage to refinance into a new FHA-insured loan at today’s lower interest rates without requiring a full re-underwrite of the loan, thereby providing a simple way for borrowers to reduce their mortgage payments. 

However, some borrowers who would be eligible for low-cost refinancing through this program are being denied by lenders reticent to make loans that may compromise their status as FHA-approved lenders. To resolve this issue, the FHA is removing these loans from their “Compare Ratio”, the process by which the performance of these lenders is reviewed. This will open the program up to many more families with FHA-insured loans.

2.      Homeowner Bill of Rights

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower:

The Administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards   As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors. The Administration believes that there should be one set of rules that borrowers and lenders alike can follow. A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.

The Administration will therefore work closely with regulators, Congress and stakeholders to create a more robust and comprehensive set of rules that better serves borrowers, investors, and the overall housing market. These rules will be driven by the following set of core principles: 

• Simple, Easy to Understand Mortgage Forms: Every prospective homeowner should have access to clear, straightforward forms that help inform rather than confuse them when making what is for most families their most consequential financial purchase. To help fulfill this objective, the Consumer Financial Protection Bureau (CFPB) is in the process of developing a simple mortgage disclosure form to be used in all home loans, replacing overlapping and complex forms that include hidden clauses and opaque terms that families cannot understand. 

• No Hidden Fees and Penalties: Servicers must disclose to homeowners all known fees and penalties in a timely manner and in understandable language, with any changes disclosed before they go into effect.

• No Conflicts of Interest: Servicers and investors must implement standards that minimize conflicts of interest and facilitate coordination and communication, including those between multiple investors and junior lien holders, such that loss mitigation efforts are not hindered for borrowers.

• Assistance For At-Risk Homeowners:

• Early Intervention: Servicers must make reasonable efforts to contact every homeowner who has either demonstrated hardship or fallen delinquent and provide them with a comprehensive set of options to help them avoid foreclosure. Every such homeowner must be given a reasonable time to apply for a modification.

• Continuity of Contact: Servicers must provide all homeowners who have requested assistance or fallen delinquent on their mortgage with access to a customer service employee with 1) a complete record of previous communications with that homeowner; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.

• Time and Options to Avoid Foreclosure: Servicers must not initiate a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure. Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless and until the homeowner fails to complete an application for a modification within a reasonable period, their application for a modification has been denied or the homeowner fails to comply with the terms of the modification received.

• Safeguards Against Inappropriate Foreclosure
  • Right of Appeal: Servicers must explain to all homeowners any decision to take action based on a failure by the homeowner to meet their payment obligations and provide a reasonable opportunity to appeal that decision in a formal review process.
  • Certification of Proper Process: Prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.

The agencies of the executive branch with oversight or other authority over servicing practices –the FHA, the USDA, the VA, and Treasury, through the HAMP program – will each take the steps needed in the coming months to implement rules for their programs that are consistent with these standards.

3.      Announcement of Initial Pilot Sale in Initiative to Transition Real Estate Owned (REO) Property to Rental Housing to Stabilize Neighborhoods and Improve Housing Prices

When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.

Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.

4.      Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work

Last summer, the Administration announced that it was extending the minimum forbearance period that unemployed borrowers in FHA and HAMP would receive on their mortgages to a full year, up from four months in FHA and three months in HAMP. This forbearance period allows borrowers to stay in their homes while they look for jobs, which gives these families a better chance of avoiding default and helps the housing market by reducing the number of foreclosures. Extending this period makes good economic sense as the time it takes the average unemployed American to find work has grown through the course of the housing crisis: nearly 60 percent of unemployed Americans are now out of work for more than four months.

These extensions went into effect for HAMP and the FHA in October. Today the Administration is announcing that the market has followed our lead, finally giving millions of families the time needed to find work before going into default.

• 12-Month Forbearance for Mortgages Owned by the GSEs: Fannie Mae and Freddie Mac have both announced that lenders servicing their loans can provide up to a year of forbearance for unemployed borrowers, up from 3 months. Between them, Fannie and Freddie cover nearly half of the market, so this alone will extend the relief available for a considerable portion of the nation’s unemployed homeowners.

• Move by Major Servicers to Use 12-Month Forbearance as Default Approach: Key servicers have also followed the Administration’s lead in extending forbearance for the unemployed to a year. Wells Fargo and Bank of America, two of the nation’s largest lenders, have begun to offer this longer period to customers whose loans they hold on their own books, recognizing that it is not just helpful for these struggling families, but it makes good economic sense for their lenders as well.

• A New Industry Norm: With these steps, the industry is gradually moving to a norm of providing 12 months of forbearance for those looking for work. This is a significant shift worthy of note, as only a few months ago unemployed borrowers simply were not being given a fighting chance to find work before being faced with the added burden of a monthly mortgage payment.

 5.      Joint Investigation into Mortgage Origination and Servicing Abuses

The Department of Justice, the Department of Housing and Urban Development, the Securities and Exchange Commission and state Attorneys General have formed a Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force that will be responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The Department of Justice has announced that this working group will consist of at least 55 DOJ attorneys, analysts, agents and investigators from around the country, joining existing state and federal resources investigating similar misconduct under those authorities.

The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level.  Other state Attorneys General have been and will be joining this effort.

 6.      Putting People Back to Work Rehabilitating Homes, Businesses and Communities Through Project Rebuild

Consistent with a proposal he first put forward in the American Jobs Act, the President will propose in his Budget to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures – including those piloted through the Neighborhood Stabilization Program – Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks. 

In addition, the Budget will provide $1 billion in mandatory funding in 2013 for the Housing Trust Fund to finance the development, rehabilitation and preservation of affordable housing for extremely low income families. These approaches will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.

7.      Expanding HAMP Eligibility to Reduce Additional Foreclosures and Help Stabilize Neighborhoods

To date, the Home Affordable Mortgage Program (HAMP) has helped more than 900,000 families permanently modify their loans, providing them with savings of about $500 a month on average. Combined with measures taken by the FHA and private sector modifications, public and private efforts have helped more than 4.6 million Americans get mortgage aid to prevent avoidable foreclosures. Along with extending the HAMP program by one year to December 31, 2013, the Administration is expanding the eligibility for the program so that it reaches a broader pool of distressed borrowers. Additional borrowers will now have an opportunity to receive modification assistance that provides the same homeowner protections and clear rules for servicers established by HAMP. This includes:

• Ensuring that Borrowers Struggling to Make Ends Meet Because of Debt Beyond Their Mortgage Can Participate in the Program: To date, if a borrower’s first-lien mortgage debt-to-income ratio is below 31% they are ineligible for a HAMP modification. Yet many homeowners who have an affordable first mortgage payment – below that 31% threshold – still struggle beneath the weight of other debt such as second liens and medical bills. Therefore, we are expanding the program to those who struggle with this secondary debt by offering an alternative evaluation opportunity with more flexible debt-to-income criteria.

• Preventing Additional Foreclosures to Support Renters and Stabilize Communities: We will also expand eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single-family homes are an important source of affordable rental housing, and foreclosure of non-owner occupied homes has disproportionate negative effects on low-and moderate-income renters.

8.      Increasing Incentives for Modifications that Help Borrowers Rebuild Equity

Currently, HAMP includes an option for servicers to provide homeowners with a modification that includes a write-down of the borrower’s principal balance when a borrower owes significantly more on their mortgage than their home is worth. These principal reduction modifications help both reduce a borrower’s monthly payment and rebuild equity in their homes. While not appropriate in all circumstances, principal reduction modifications are an important tool in the overall effort to help homeowners achieve affordable and sustainable mortgages. To further encourage investors to consider or expand use of principal reduction modifications, the Administration will:

• Triple the Incentives Provided to Encourage the Reduction of Principal for Underwater Borrowers: To date, the owner of a loan that qualifies for HAMP receives between 6 and 21 cents on the dollar to write down principal on that loan, depending on the degree of change in the loan-to-value ratio. To increase the amount of principal that is written down, Treasury will triple those incentives, paying from 18 to 63 cents on the dollar.

• Offer Principal Reduction Incentives for Loans Insured or Owned by the GSEs: HAMP borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE’s regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.

###

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PROSECUTING MORTGAGE DOCUMENT FRAUD

In the State of the Union address on January 24, 2012, President Barack Obama announced the creation of a special unit within the Financial Fraud Enforcement Taskforce to deal with mortgage origination and securitization abuses:

And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.

This new unit will hold accountable those who broke the law,
speed assistance to homeowners, and help turn the page on an
era of recklessness that hurt so many Americans.

The members of the new Mortgage Securitization Abuses Unit were
identified as New York Attorney General Eric Schneiderman; Assistant
U.S. Attorney General Lanny Breuer, who currently heads the Criminal
Division at the Department of Justice; Robert Khuzami, Director of
Enforcement at the SEC; John Walsh, U.S. Attorney, District of
Colorado; and Tony West, Assistant Attorney General, Civil Division,
Department of Justice.

Later in the evening, New York Attorney General Eric Schneiderman
released the following statement:

I would like to thank President Obama for his leadership in the
creation of a coordinated investigation that marshals state and
federal resources to bring justice for the victims of the
misconduct that caused the mortgage crisis.

In coordination with our federal partners, our office will
continue its steadfast commitment to holding those responsible
for the economic crisis accountable, providing meaningful relief
for homeowners commensurate with the scale of the
misconduct, and getting our economy moving again.

The American people deserve a robust and comprehensive
investigation into the global financial meltdown to ensure
nothing like it ever happens again, and today’s announcement
is a major step in the right direction.

New York Attorney General Schneiderman and Delaware Attorney
General Beau Biden have been among the most outspoken of those in
law enforcement regarding the prosecution of crimes relating to
mortgage securitization. In May, 2011, Attorney General
Schneiderman’s office announced probes of two Florida firms, Lender
Processing Services and Nationwide Title Clearing. This office also
announced probes into the mortgage securitization practices of major
investment banks Goldman Sachs, Morgan Stanley, Deutsche Bank
and UBS.

Attorneys General Schneiderman and Biden have repeatedly
announced their opposition to any grant of immunity from criminal
prosecution to those involved in illegal acts involving mortgage
securitization.

Fabrication of mortgage documents is one of the major
unaddressed crimes involving mortgage securitization. False
documents were created to convince homeowners that mortgagebacked
trusts owned their homes and had the legal right to foreclose.
Based on these documents, hundreds of thousands of homeowners
forfeited their homes. Every day, tens of thousands of homeowners
lose their battle to get local foreclosure judges to recognize that the
documents presented by the banks and mortgage companies are
fraudulent.

Those few County Recorders who have conducted in-depth
examinations of the documents have found widespread abuses that
occurred over at least seven years. County Recorders John O’Brien of
Massachusetts and Jeff Thigpen of North Carolina have declared their
offices as “crime scenes.”

These documents were created in large part because the mortgage
securitizers never obtained the mortgage documents they promised to
obtain. Investors and the SEC believed that the securitizers had
obtained properly endorsed mortgage notes and mortgage
assignments and had recorded every change of ownership on the
MERS system as promised.

“Providing meaningful relief for homeowners commensurate with
the scale of the misconduct” is a tremendous, but achievable goal.
Congratulations to Attorney General Schneiderman for setting this goal.

[ipaper docId=79356900 access_key=key-12letnx8gj93rmf8pfvc height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

You all should have seen twitter light up with all sorts of confusion, but Abigail sums it all up in this one single piece.

Abigail C. Field-

President Obama,

you’re right, critics of yours from the left–people like me–love the idea of NY Attorney General Eric Schneiderman chairing a “special unit to investigate misconduct and illegalities that contributed to both the financial collapse and the mortgage crisis” that would be “part of a new Unit on Mortgage Origination and Securitization Abuses.” But that’s not what you’re announcing.

Schneiderman isn’t chairing anything. He’s Co-Chairing. That’s a huge difference. If he’s Chair he’s in charge. If he’s Co-Chair he needs consensus. And who is he Co-Chairing with? Lanny Breuer. That’s unacceptable.

[REALITY CHECK]

As first reported on this site with some teeth: Eric Holder, Covington & Burling and MERSCORP

Now you understand why absolutely nothing is getting done. Turn who in?? Since the banksters were their clients…¿Capich?

It’s not that your the best, but who’s best connected…

REUTERS-

U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

The firm, Covington & Burling, is one of Washington’s biggest white shoe law firms. Law professors and other federal ethics experts said that federal conflict of interest rules required Holder and Breuer to recuse themselves from any Justice Department decisions relating to law firm clients they personally had done work for.

[REUTERS]

HuffPO- Richard (RJ) Eskow

No financial executives have gone to jail, despite an overwhelming body of evidence indicating that a group of organized “banker gangs” conducted a widespread Wall Street crime wave that made them rich and while throwing millions into poverty. The Justice Department’s failure to act against these bankers is matched only by its declining credibility — a problem it only makes worse whenever it tries to defend itself.

An interview with an outgoing Justice official in today’s Wall Street Journal is merely the latest in a sad parade of weak excuses and implausible arguments, and it comes on the heels of Justice Department official Lanny Breuer’s poor 60 Minutes showing this week on the same topic.

Stop. Just stop. If nobody at Justice can get the job done, it’s time for the Administration to bring in a whole new team and start again. Did everybody in the banking business break the law? No. Very few did. But some of the ones that did appear to be very well-placed, and if they’re not punished they’ll do it again and again.

…

[HUFFINGTONPOST]

WASHINGTON, D.C. – House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) today announced the issuance of a subpoena to Attorney General Eric Holder, Jr. for Justice Department documents related to the “Operation Fast and Furious” gun walking scandal.

 “Top Justice Department officials, including Attorney General Holder, know more about Operation Fast and Furious than they have publicly acknowledged,” said Chairman Issa. “The documents this subpoena demands will provide answers to questions that Justice officials have tried to avoid since this investigation began eight months ago. It’s time we know the whole truth.”

 The subpoena seeks the following:

 In accordance with the attached schedule instructions, you, Eric H. Holder Jr., are required to produce all records in unredacted form described below:

1. All communications referring or relating to Operation Fast and Furious, the Jacob Chambers case, or any Organized Crime Drug Enforcement Task Force (OCDETF) firearms trafficking case based in Phoenix, Arizona, to or from the following individuals:

 a. Eric Holder Jr., Attorney General;

 b. David Ogden, Former Deputy Attorney General;

 c. Gary Grindler, Office of the Attorney General and former Acting Deputy Attorney General;

 d. James Cole, Deputy Attorney General;

 e. Lanny Breuer, Assistant Attorney General;

 f. Ronald Weich, Assistant Attorney General;

 g. Kenneth Blanco, Deputy Assistant Attorney General;

 h. Jason Weinstein, Deputy Assistant Attorney General;

 i. John Keeney, Deputy Assistant Attorney General;

 j. Bruce Swartz, Deputy Assistant Attorney General;

 k. Matt Axelrod, Associate Deputy Attorney General;

 l. Ed Siskel, former Associate Deputy Attorney General;

 m. Brad Smith, Office of the Deputy Attorney General;

 n. Kevin Carwile, Section Chief, Capital Case Unit, Criminal Division;

 o. Joseph Cooley, Criminal Fraud Section, Criminal Division; and,

 p. James Trusty, Acting Chief, Organized Crime and Gang Section.

 2. All communications between and among Department of Justice (DOJ) employees and Executive Office of the President employees, including but not limited to Associate Communications Director Eric Schultz, referring or relating to Operation Fast and Furious or any other firearms trafficking cases.

 3. All communications between DOJ employees and Executive Office of the President employees referring or relating to the President’s March 22, 2011 interview with Jorge Ramos of Univision.

 4. All documents and communications referring or relating to any instances prior to February 4, 2011 where the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) failed to interdict weapons that had been illegally purchased or transferred.

 5. All documents and communications referring or relating to any instances prior to February 4, 2011 where ATF broke off surveillance of weapons and subsequently became aware that those weapons entered Mexico.

 6. All documents and communications referring or relating to the murder of Immigrations and Customs Enforcement Agent Jaime Zapata, including but not limited to documents and communications regarding Zapata’s mission when he was murdered, Form for Reporting Information That May Become Testimony (FD-302), photographs of the crime scene, and investigative reports prepared by the FBI.

 7. All communications to or from William Newell, former Special Agent-in-Charge for ATF’s Phoenix Field Division, between:

 a. December 14, 2010 to January 25, 2011; and,

 b. March 16, 2009 to March 19, 2009.

 8. All Reports of Investigation (ROIs) related to Operation Fast and Furious or ATF Case Number 785115-10-0004.

 9. All communications between and among Matt Axelrod, Kenneth Melson, and William Hoover referring or relating to ROIs identified pursuant to Paragraph 7.

 10. All documents and communications between and among former U.S. Attorney Dennis Burke, Attorney General Eric Holder Jr., former Acting Deputy Attorney General Gary Grindler, Deputy Attorney General James Cole, Assistant Attorney General Lanny Breuer, and Deputy Assistant Attorney General Jason Weinstein referring or relating to Operation Fast and Furious or any OCDETF case originating in Arizona.

 11. All communications sent or received between:

 a. December 16, 2009 and December 18, 2009, and;

 b. March 9, 2011 and March 14, 2011, to or from the following individuals:

• Emory Hurley, Assistant U.S. Attorney, Office of the U.S. Attorney for the District of Arizona;
• Michael Morrissey, Assistant U.S. Attorney, Office of the U.S. Attorney for the District of Arizona;
• Patrick Cunningham, Chief, Criminal Division, Office of the U.S. Attorney for the District of Arizona;
• David Voth, Group Supervisor, ATF; and,
• Hope MacAllister, Special Agent, ATF.

 12. All communications sent or received between December 15, 2010 and December 17, 2010 to or from the following individuals in the U.S. Attorney’s Office for the District of Arizona:

 a. Dennis Burke, former United States Attorney;

 b. Emory Hurley, Assistant United States Attorney;

 c. Michael Morrissey, Assistant United States Attorney; and,

 d. Patrick Cunningham, Chief of the Criminal Division.

 13. All communications sent or received between August 7, 2009 and March 19, 2011 between and among former Ambassador to Mexico Carlos Pascual; Assistant Attorney General Lanny Breuer; and, Deputy Assistant Attorney General Bruce Swartz.

 14. All communications sent or received between August 7, 2009 and March 19, 2011 between and among former Ambassador to Mexico Carlos Pascual and any Department of Justice employee based in Mexico City referring or relating to firearms trafficking initiatives, Operation Fast and Furious or any firearms trafficking case based in Arizona, or any visits by Assistant Attorney General Lanny Breuer to Mexico.

 15. Any FD-302 relating to targets, suspects, defendants, or their associates, bosses, or financiers in the Fast and Furious investigation, including but not limited to any FD-302s ATF Special Agent Hope MacAllister provided to ATF leadership during the calendar year 2011.

 16. Any investigative reports prepared by the FBI or Drug Enforcement Administration (DEA) referring or relating to targets, suspects, or defendants in the Fast and Furious case.

 17. Any investigative reports prepared by the FBI or DEA relating to the individuals described to Committee staff at the October 5, 2011 briefing at Justice Department headquarters as Target Number 1 and Target Number 2.

 18. All documents and communications in the possession, custody or control of the DEA referring or relating to Manuel Fabian Celis-Acosta.

 19. All documents and communications between and among FBI employees in Arizona and the FBI Laboratory, including but not limited to employees in the Firearms/Toolmark Unit, referring or relating to the firearms recovered during the course of the investigation of Brian Terry’s death.

 20. All agendas, meeting notes, meeting minutes, and follow-up reports for the Attorney General’s Advisory Committee of U.S. Attorneys between March 1, 2009 and July 31, 2011, referring or relating to Operation Fast and Furious.

 21. All weekly reports and memoranda for the Attorney General, either directly or through the Deputy Attorney General, from any employee in the Criminal Division, ATF, DEA, FBI, or the National Drug Intelligence Center created between November 1, 2009 and September 30, 2011.

 22. All surveillance tapes recorded by pole cameras inside the Lone Wolf Trading Co. store between 12:00 a.m. on October 3, 2010 and 12:00 a.m. on October 7, 2010.

 ###

source: oversight.gov

Huffington Post Investigative Fund |  David Heath First Posted: 05- 3-10 09:24 PM   |   Updated: 05- 3-10 09:44 PM

Republished from the Huffington Post Investigative Fund.

The financial crisis has spawned hundreds of criminal prosecutions for alleged fraud. Yet so far, defendants have been mostly minor players such as real-estate agents, mortgage brokers, borrowers and a few low-level bank employees. No senior executives at large financial institutions face criminal charges.

Thats in stark contrast to prosecutions during the savings and loan scandal two decades ago, when the government’s strategy targeted and snagged some of banking’s most powerful players. The approach back then succeeded in sending scores of S&L executives to prison, as well as junk-bond king Michael Milken and business tycoon Charles Keating Jr.

One explanation for the difference may be that key bank regulators — who did the detective work during the S&L crisis and sent more than 1,000 criminal referrals to prosecutors — have this time left reporting fraud up to the banks themselves.

Spokesmen for two chief regulators, the Comptroller of the Currency and the Office of Thrift Supervision, say that they have not sent prosecutors a single case for criminal prosecution.

An OTS spokesman said the agency, much like the banks themselves, does not see much evidence of criminal fraud inside the financial institutions. The spokesman, Bill Ruberry, citing the agency’s enforcement director, said, “There may be some isolated cases, but certainly there’s no widespread patterns.”

That surprises William K. Black, a former OTS official who helped coordinate criminal investigations during the S&L crisis.

“Dear God,” Black said when told bank regulators haven’t made any criminal referrals. “Not a single one?”

Black sees many signs the the government is less aggressive than during the S&L era — and could result in more bad behavior.

“This crisis was not bad luck,” he said. “It was done to us. When you bring those convictions, you hope that at least for a while to deter.”

Banks have reported massive amounts of fraud to the Treasury Department but have not held themselves — or their top executives — responsible, instead pinning blame on borrowers, independent mortgage brokers, and others.

That may account for the dearth of prosections against big fry. For instance, in California, among states where the mortgage meltdown hit hardest, the Huffington Post Investigative Fund identified 170 mortgage fraud prosecutions in federal courts. Only two are against employees of a regulated lender.

An Investigative Fund analysis shows that two-thirds of the 170 prosecutions are against mortgage brokers, real-estate professionals or borrowers — the same groups blamed by the banks when they report suspicious activities to regulators.

Besides the absence of criminal referrals, other plausible factors for the lack of major prosecutions may include a skittishness among prosecutors about filing cases they could have trouble winning, and a severe decline in investigative resources. The FBI dramatically shifted resources away from white-collar crime after the 2001 terrorist attacks.

To be sure, there are also notable differences between the S&L and current financial crisis, in the behavior of lenders during both periods, and between civil allegations of fraud and proving that someone committed a crime — all of which could account for the lack of big prosecutions.

But interviews with several law enforcement authorities suggest another explanation: A lack of active assistance to prosecutors by bank regulators who played key roles during the S&L crackdown. Those regulators sent detailed reports to prosecutors of known and suspicious criminal activity.

“Only the regulators can make a lot of these cases,” Black said. “The FBI can make a few, but the regulators are the ones that understand the industry.”

[youtube=http://www.youtube.com/watch?v=PR-8uVu4lPI]

Under intense political pressure in the late 1980s, the Justice Department and thrift regulators developed a strategy to thoroughly investigate failed S&Ls for evidence of fraud and to focus their resources on the highest ranking executives.

In the early years, between 1987 and 1989, there were more than 300 prosecutions. Some bank executives were already behind bars. In 1989, Woody Lemons, chairman of Vernon Savings and Loan in Texas, was sentenced to 30 years.

In June 1990, then-OTS director Timothy Ryan told Congress that his agency had established criminal-referral units in each of 12 district offices. In addition, more than 30 OTS employees were assigned as full-time agents of grand juries or assistant US attorneys to help prosecutions. And the agency prioritized prosecutions to a Top 100 list, targeting senior S&L executives and directors.

While data on criminal referrals during the S&L crisis is spotty, the Government Accountability Office reported that in the first ten months of 1992 alone — a random snapshot — financial regulators sent the Justice Department more than 1,000 cases for criminal prosecution.

One study showed that 35 percent of criminal referrals in Texas — ground zero for the S&L problems — were against officers and directors.

This time, prosecutors are relying more heavily on banks to report suspicious activity to the Treasury Department. Banks are required to report known or suspected criminal violations, including fraud, on Suspicious Activity Reports designed for the purpose. In effect, the reports, which can be many pages in length, provide substantive leads for criminal investigations.

Black scoffs at the strategy of leaving it to banks to ferret out all the fraud. “Institutions will not make criminal referrals against the people who control the institutions,” said Black.

A white-collar criminologist and law professor at the University of Missouri-Kansas City, he argues that there’s ample evidence of fraud. Insiders working for lenders openly referred to loans they made without proof of income as “liar loans.” Many banks actively sought inflated appraisals in their rush to make as many loans as possible. As previously reported by the Investigative Fund, such lending practices contributed to the demise of Washington Mutual.

Not everyone agrees that such a case can be successful. Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. An investor in loans who documents fraud can force a bank to buy the loan back. But convincing a jury that executives intended to make fraudulent loans, and thus should be held criminally responsible, may be too difficult of a hurdle for prosecutors.

“It doesn’t make any sense to me that they would be deliberately defrauding themselves,” Wagner said.

So far, only sporadic news reports suggest that the Justice Department has ongoing criminal investigations against major banks such as Washington Mutual and Countrywide, as well as investment bank Goldman Sachs.

Fewer Cops on the Beat

The Justice Department, in response to written questions from the Investigative Fund, acknowledged the absence of criminal referrals from financial regulators. Months into the financial crisis, a new Financial Fraud Enforcement Task Force, formed by President Obama last fall, was trying to work out communication problems between Justice and the regulatory agencies, according to the head of the task force, Robb Adkins. Adkins has said that criminal referrals from regulators have been “too often the exception to the rule.”

At a Congressional hearing in December, Assistant Attorney General Lanny Breuer was asked why there have been no criminal cases brought yet against CEOs. “Don’t for a moment think [these cases] aren’t being investigated,” Breuer replied. “They are complicated cases. It took a long time in hatching them and developing them. But they will be brought.”

The system that tracks Suspicious Activity Reports, or SARs, detected a dramatic increase in mortgage fraud starting in 2003, when reports of mortgage fraud nearly doubled within a year from 5,400 to 9,500. By 2007, the number had exploded to 53,000. During those same years, many mortgage lenders dramatically lowered their lending standards. Banks often required no proof of income. Borrowers could even get loans without be able to repay them.

Yet in their reports, banks overwhelmingly have blamed others for fraud. Whenever a borrower’s income was wrong on a loan application, the banks fingered borrowers 87 percent of the time and independent mortgage brokers 64 percent of the time, according to a 2006 Treasury analysis of the SARs. But the bank’s own employees were almost never blamed — only about four times in every 1,000 reports.

That might explain why so few prosecutions have targeted bank insiders.

Another reason for fewer prosecutions against bank employees is that the Federal Bureau of Investigation has far fewer agents working on the current crisis. Deputy Director John Pistole testified before Congress last year that the bureau had 1,000 people working on the S&L crisis at its height. That compares to about 240 agents working on mortgage fraud cases last year.

The FBI dramatically shifted its resources away from white-collar crime and to terrorism after the Sept. 11 attacks.

“We just didn’t have the cops on the beat” during the recent crisis, said Sen. Ted Kaufman, the Delaware Democrat who conducted a hearing on the lack of criminal prosecutions. “I was around during the savings and loan crisis [as a Congressional aide] and we had a lot more folks working it when it went down.”

Even with additional funding from Congress, which Kaufman helped push through, the FBI is budgeted to have 377 people working mortgage fraud cases this year, about a third as many as during the S&L investigations.

Charges Harder to Prove?

Charges in the recent banking crisis may be harder to prove, said Robert H. Tillman, who teaches at St. John’s University and who analyzed data about S&L prosecutions. Savings and loan executives who were convicted often personally approved large commercial loans for projects doomed to fail. Some would use federally insured deposits to pay themselves excessive salaries or to lend money to their own real estate projects. A few even took kickbacks.

This time, lending executives may have encouraged the making of bad loans, but they generally did not personally approve the loans, Tillman said. They didn’t send emails telling the troops to make fraudulent loans but paid big commissions to loan offers who made risky loans. Then the executives were able to reap huge bonuses for making the company look so profitable.

So far, the biggest cases have been civil lawsuits brought by the Securities and Exchange Commission, including most recently a highly publicized securities fraud case against Goldman Sachs and one of its vice presidents, Fabrice P. Tourre. News reports suggest that a referral from the SEC’s enforcement division to the Justice Department has led to a criminal inquiry.

Typically, federal authorities deal with massive financial scandals by picking a few cases they are confident they can win, said Henry Pontell, an expert on fraud at the University of California — Irvine.

This time, the administration may have been more focused on saving failing banks — and an entire financial system — than in prosecuting bank executives, Pontell said. Giving billions in bailout dollars to executives who encouraged fraudulent practices not only could complicate a case, it could prove embarrasing, he added.