Georgia Attorney General Sam Olens said he has “significant concerns” about a proposal to reduce loan balances for some homeowners as part of a settlement of a nationwide foreclosure probe, joining at least seven other states that have criticized such a plan.
A deal with the top mortgage servicers in the U.S. that includes writedowns could encourage homeowners who are current on their loans to stop making payments, Olens, a Republican, said today in a telephone interview.
“You’re declaring in advance who the winners and losers are,” Olens said. “I’m a little concerned that this process disengages the normal market forces.”
Judging by last week’s performance, it sure looks as though the country’s top bank regulator is back to its old tricks.
Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.
It may take at least two months to reach a final agreement, said the person, who declined to be identified because the talks are private. An accord remains out of reach because states want principal reductions for borrowers, which is more than banks agreed to in deals reached with U.S. regulators last week, said Allison Schoenthal, a lawyer at Hogan Lovells in New York.
“Principal reductions I don’t think are going to be agreed to by banks, and I don’t think the banks see a need for a penalty when, in their view, they haven’t done anything wrong,” said Schoenthal, who represents lenders and servicers and isn’t involved in the talks.
Take this home for example. It was originally sold for $289,000.
Prior to Final Judgment, property had two (2) assignments of mortgage for two entities same robo-signer for both via MERS.
At auction it was sold for a MAJOR discount at approx. 75% off. to Indymac via LPS Minnesota address in 2010. We know Indymac has been shut down way before this time.
Why couldn’t they work a deal like this when this person whom I personally know tried over and over to get a modification AT THE TIME?
They had a good job then and still have a good job today.
So why do they not want to work with the borrowers and reduce the principal to reflect today’s REAL and TRUE appraisal of the property?
Make sure you follow the transactions to understand what happened and why it makes no sense where this goes.
Now Here comes more funny business:
Still following?
Property was Quit Claimed/Transferred To Freddie Mac for $100.00 (prepared by David Stern) but consideration shows only $10.00.
Property then sold for $3900.00 more 13 days later $78,000
SAME day flipped for $150,000
Previous records are all gone [compare both images]
Dylan Ratigan with special guest New York Times’ Louise Story, discussing the 600+ page report uncovering Goldman Sachs scheme to defraud investors. According to Bloomberg, The U.S. Justice Department and regulators will have to determine whether employees and executives of Goldman Sachs Group Inc. violated any laws when they traded securities tied to the housing market and testified to Congress about the transactions, Senator Carl Levin said.
While the attorneys general proposed many similar terms last month, banking regulators didn’t include any requirements for lowering mortgage debt. That may hinder Iowa Attorney General Thomas J. Miller as he leads a group of state officials working with the administration to require lenders to evaluate loan cuts for some borrowers whose homes are worth less than their mortgages.
“I have always been pretty skeptical about the ability of principal reductions to get you much,” said Mark A. Calabria, director of financial-regulation studies at the Cato Institute, a public-policy research group in Washington. “I think we will look back and say this was the death knell.”
Lenders say ‘dual tracking’ protects their investment if the homeowner is unable to qualify for new loan terms. But regulators seeking to ban the practice say it lulls some borrowers into thinking they won’t have their homes taken away.
Question: Wonder what the regulators thought of when they watched 60 Minutes broadcast of LPS, DOCX and Servicer fraud on national tv with over 12 million viewers?
Just see what the number one popular post has been on this site since the airing of it or do a simple google search like 60 Minutes Docx or 60 Minutes LPS and you’ll see SFF is the first site that comes up. We’re no fools and believe me the entire globe has tuned in, including the regulators.
The nation’s 14 largest mortgage firms must compensate wronged homeowners after federal bank regulators determined the companies broke federal and state laws by improperly foreclosing on an incalculable number of distressed borrowers. The agencies announced such penalties Wednesday, the first in what is likely to be a series of enforcement actions targeting the country’s biggest banks and costing them billions.
Lenders like Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial systematically broke rules and took shortcuts when foreclosing on homeowners last year, the regulators said. Their three-month review launched after documents and videos of so-called robo-signers — people who signed thousands of foreclosure documents a day without reading them or knowing what was in them — surfaced, leading the biggest banks to halt home seizures.
Bank examiners found the firms employed practices that “failed to conform to state legal requirements.” In other words, they broke the law.
The 14 largest U.S. mortgage servicers must pay back homeowners for losses from foreclosures or loans that were mishandled in the wake of the housing collapse, according to a consent decree released today.
The agreement between the servicers and U.S. regulators imposes more substantial penalties than early reports of the deal indicated. It could also help the U.S. Justice Department determine the size and scope of any future fines for the flawed practices, regulators said.
The banks didn’t admit or deny regulators’ findings, according to the orders.
From Fed Press Release:
The Federal Reserve will closely monitor progress at the firms in addressing these matters and will take additional enforcement actions as needed.
In addition to the actions against the banking organizations, the Federal Reserve on Wednesday announced formal enforcement actions against Lender Processing Services, Inc. (LPS), a domestic provider of default-management services and other services related to foreclosures, and against MERSCORP, Inc. (MERS), which provides services related to tracking and registering residential mortgage ownership and servicing, acts as mortgagee of record on behalf of lenders and servicers, and initiates foreclosure actions. These actions address significant compliance failures and unsafe and unsound practices at LPS and its subsidiaries, and at MERS and its subsidiary. The action requires LPS to address deficient practices related primarily to the document execution services that LPS, through its subsidiaries DocX, LLC, and LPS Default Solutions, Inc., provided to servicers in connection with foreclosures. MERS is required to address significant weaknesses in, among other things, oversight, management supervision, and corporate governance. The LPS action is being taken jointly with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, while the MERS action is being taken jointly with those agencies and the Federal Housing Finance Agency.
The Federal Reserve Board based its enforcement actions on the findings of the interagency reviews of the major mortgage servicers, LPS, and MERS. A summary of the findings from the reviews of the mortgage servicers is available in the Interagency Review of Foreclosure Policies and Practices,which is simultaneously being released by the Federal Reserve Board and the other agencies.
The rule of law is not even worth 20 basis points. That’s the ultimate message in a recent paper by Charles Calomiris, Eric Higgins, and Joseph Mason evaluating the proposed AG mortgage servicing settlement. Calomiris et al. estimate that the settlement will raise mortgage costs at least 20bps, and they think that’s too much.
Recognize what they’re really saying: that 20-45bps is too high a price to pay for the rule of law. They value the rule of law at less than 20bps. At present conversion rates, that’s about 30 shekels of silver.
The whole Calomiris et al. document is rather strange, as it’s hard to do any serious evaluation of the settlement without knowing the terms. We’ve seen a proposed servicing standards term sheet from the AGs and we’ve seen a CFPB analysis of disgorgement of wrongful profits and the costs of potential principal reductions, but it’s way premature to attempt any sort of real evaluation of a settlement. Unless, of course, the goal is not a serious evaluation of a settlement, but an attempt to forestall a settlement. Which is what this paper is.
The resolution of a 50-state probe of foreclosure practices shouldn’t block individual states from investigating the mortgage-servicing industry, according to the office of New York Attorney General Eric Schneiderman.
“Any settlement agreement should preserve the ability of attorneys general to follow the facts where they lead and not be precluded from conducting comprehensive investigations,” Lauren Passalacqua, a Schneiderman spokeswoman, said today in a statement.
Federal banking regulators have not officially imposed their new rules for the top mortgage servicers, but criticism is already being heard. A wide coalition of consumer and housing groups is denouncing the legal agreements, which are likely to be published within a few days. ?
[…]
The problem, said Alys Cohen of the National Consumer Law Center, is the agreements “do not in any way require the servicers to stop avoidable foreclosures, and that is what we need.”
It’s going to get really interesting to see how this all plays out with the AG’s role.
According to the New York Times, the the servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways. They will be required to have more layers of oversight and proper training of their foreclosure staff. The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction.
[…]
The investigators reviewed the policies and procedures, structure and staffing of the top servicers, as well as their use of law firms and other third parties. They examined 2,800 foreclosures in various stages.
The banks examined were Bank of America, Citibank, GMAC, JPMorgan Chase, Wells Fargo and nine others. The examination found critical deficiencies and shortcomings in foreclosure preparation and oversight, resulting in violations of state and local foreclosure laws, regulations and rules.
The servicers will probably be assessed fines at a later point.
Regulators including the Office of the Comptroller of the Currency, Federal Reserve and Office of Thrift Supervision could announce the agreements with the banks and thrifts as early as next week, though a date wasn’t final, according to people familiar with the matter.
The regulators are likely to act ahead of state attorneys general, who are also in talks with the banks. Those discussions are moving at a slower pace amid disputes among several state officials.
Seriously, why aren’t they all working together? Lefty doesn’t know what the right is doing.
Here’s the banks’ counterproposal for a servicing fraud settlement. I can sum it up in two words: drop dead. Or two letters: F.U. This proposals is so pathetically thin that it’s not a good faith counterproposal. This document only deals with servicing standards–nothing in it whatsoever about penalties, modification quotas, etc. But even on servicing standards it is a bunch of empty promises to have internal controls and try harder.
The first point about this counterproposal is simply to note what’s absent from it:
(1) nothing about principal reductions
(2) nothing about second liens and conflicts of interest
(3) nothing about MERS (reserved for later)
(4) nothing about in-sourced vendor fees or force-placed insurance to affiliates. This makes the fees and force-place insurance sections pretty meaningless.
Read the excerpts below carefully… You’ll be screwed if you plan to wait on any reasonable settlement, just like “HAMP” left you waiting for your mod. Don’t expect miracles!
“We have a long way to go,” Iowa Attorney General Tom Miller, who is leading the effort from the states’ side, said after the afternoon session broke up.
[…]
Lengthy negotiations work to the banks’ advantage, critics say.
“The banks’ strategy is to run the clock,” a Georgetown University law professor, Adam Levitin, said. “The chances of a settlement that meaningfully reforms mortgage servicing and makes the banks pay an appropriate price for illegal conduct are rapidly slipping away.”
“I am incensed that the FBI has not filed one criminal case,” Rep. Marcy Kaptur (D-Ohio) said, referring to the lack of prosecutions against major banking executives. “And I’m very worried that the game that’s being played here is to run out the statute of limitations.”
#
Oh and AG’s make sure the banks get barred from Deficiency Judgments in your settlement!
The document, reviewed by The Wall Street Journal, is a response to a 27-page term sheet banks received earlier this month from state attorneys general that would require the servicers to consider reducing principal for troubled borrowers. The 15-page bank proposal, dubbed the Draft Alternative Uniform Servicing Standards, includes time lines for processing modifications, a third-party review of foreclosures and a single point of contact for financially troubled borrowers. It also outlines a so-called “borrower portal” that would allow customers to check the status of their loan modifications online.
But the document doesn’t include any discussion of principal reductions. Nor does it include a potential amount banks could pay for borrower relief or penalties. Government officials have discussed a settlement sum of more than $20 billion.
(Updates with excerpt from letter in fourth paragraph.)
March 22 (Bloomberg) — Four more Republican state attorneys general are opposing a plan to resolve a nationwide probe of foreclosure and mortgage-servicing practices because the terms may foster a “moral hazard.”
In a letter today to Iowa Attorney General Tom Miller, a Democrat who has taken the lead in the investigation, the officials objected to new documentation requirements and principal reductions outlined in the proposed settlement submitted to the country’s top mortgage-servicing companies this month.
How’s this for contrasting interpretations: the AGs’ proposed mortgage servicing settlement is being termed both a “shakedown” (WSJ editorial page) and a “bailout.” (Jesse Eisinger at ProPublica–ok, he uses the word “gift”, but still).
Wow. That’s some divergence in characterization of an incomplete term sheet.
I think both of these interpretations miss the mark, as neither really gets what a settlement is. A settlement is a voluntary contract and represents compromises by both sides in order to avoid uncertain litigation outcome. The WSJ’s interpretation is just nuts–the cheerleaders for freedom of contract are complaining about the price of a contract offer. Addressing Eisinger’s bailout charge is more complex. Details below the break.
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