John O’Brien is a national folk hero to anti-foreclosure activists. The Southern Essex Register of Deeds has garnered national attention by accusing big banks of acting like a “criminal enterprise.” After an audit revealed widespread flaws in banks’ handling of mortgage paperwork, O’Brien likened his Salem registry to a crime scene.
So when a New York law firm began soliciting local registries to join a class action lawsuit against an embattled mortgage clearinghouse, O’Brien should’ve been the first to sign on. He wasn’t. O’Brien was told he didn’t have the authority to join the effort. Deed registries in Norfolk, Bristol, and Plymouth counties are now pushing ahead with the case, while O’Brien is left standing on the sidelines.
O’Brien’s inability to sue over mortgage paperwork filed in his own registry highlights a quirk in Massachusetts state government. The state eliminated most of its county governments more than a decade ago, even as it retained some of the trappings of county government. District attorneys and sheriffs are still elected at the county level, for example, but they’re funded by the state. The consolidation of county governments also left the state’s 21 registries of deeds intact.
Lets not confuse the word “Flaw” with “Fraud”…There is a major difference!
HW-
John Walsh, acting Comptroller of the Currency, said the recent $25 billion mortgage servicing settlement reached between the big banks and state attorneys general does not conflict or double-up on requirements servicers have to follow in consent agreements banks signed with the OCC and other regulators last year.
In 2010, regulators, including the OCC, examined 14 large federally regulated mortgage servicers and thrifts.
Last year, the agencies issued enforcement orders against all 14 institutions forcing them to take steps to review their foreclosure review processes and to offer aid to borrowers who suffered from flawed foreclosure practices.
Honestly, the transfer of wealth that has been created, that has been taken from the saver — and from the taxpayer, do not forget — to “mend the financial system” or to keep it from falling off the cliff, is extraordinary.
When you talked about savers, these are the people as you point out that really had nothing to do with the crisis. They were in fact, doing the right thing, not buying more house than they could afford, putting away money for college education, etc. They are the ones who are really paying the price now.
I think that has led to a very angry populace but also a sense that there are two sets of rules in the country. That one set applies to big and powerful institutions that when they go awry are rescued quickly. Then there is another set of rules for the rest of us who do what we are asked to do, do what we are supposed to do, and really then become victims of the situation. It is very unfortunate and I think it is, as you say, corrosive.
On The Lack Of Accountability
The idea that forging signatures, that notarizing very important legal documents really improperly in thousands of cases — maybe millions — the idea that that is somehow is going to be allowed to go on with just sort of a penalty of some kind or a fine and not prosecuted in the criminal courts, I think it is amazing. It is really counter to what we have all been led to believe was the course of action in such a case.
You have many small people, small fry mortgage fraudsters who are in jail. I mean we are talking about the people who were straw buyers for homes who defrauded banks. They are in jail for a reason: because they perpetrated a fraud. These banks whose employees were forging signatures should also have been prosecuted with vigor and they were not. They were simply allowed to negotiate their way out of trouble and negotiate their way with shareholders money. They are not paying it out of their own executives’ pockets; they are paying it out of the shareholders’ pockets. There really is no accountability here whatsoever.
There were 1,100 criminal referrals in the S&L crisis and there were 839 convictions. That is a sizable number and far, far, far more than we have seen. I mean I think I can name one senior level person at a mortgage company who is in jail at the moment
If the top five mortgage servicers begin to abuse bond investors under the foreclosure settlement write-downs, the attorneys general would consider some protections, according to Iowa AG Tom Miller.
Miller faced down banking executives and analysts during a panel at the REthink Symposium Thursday. The $25 billion settlement signed in March forces servicers to meet roughly $10 billion in principal reductions, which could swell higher because in some instances the full dollar written down will not be credited.
Servicers will get full credit for reducing principal on loans they hold on their own portfolio but receive 45 cents for every dollar written down on mortgages held in private securities.
“To try principal reduction in a targeted way and find out if it works is good for the housing market,” Miller said. “We know what (the banks’) plans are. Two have said they wouldn’t do write-downs on private securities. But we could have some discussions about something to reassure investors.”
It’s almost been 15 years since Max Gardner and Nye Lavalle met at a conference sponsored by National Consumer Law Center that was held in Colorado, and quickly found themselves viewed as, well… heretics might be the right word. The two became fast friends based on their shared views related to the mortgage servicing industry… and I think both knew that one plus one was about to equal eleven.
Nye was a successful sports marketer and entrepreneur, credited with correctly predicting that Nascar and figure skating would draw huge crowds back in the 1990s, but after being forced to contend with his own mortgage mess, he focused on learning everything about the mortgage industry. As Gretchen Morgenson said in her article about Nye that appeared recently in the New York Times… “In hindsight, the problems he found look like a blueprint of today’s foreclosure crisis.”
It’s hard to imagine two people more tenacious that Nye and Max. Nye became a shareholder in Fannie and stayed on Fannie’s case for two years until finally the GSE hired a DC law firm to investigate his claims. The 147-page report that resulted from that investigation verified that Nye’s suspicions were correct.
Having Nye Lavalle and Max Gardner together is a rare event. Together, they would have to be considered the founding fathers of today’s foreclosure defense movement, so this is an opportunity to learn how it all began and where two of the country’s leading experts see things going from here. Turn up your speakers because it’s time for a very special 2-part Mandelman Matters Podcast… Nye Lavalle & Max Gardner Together in Concert.
Update: Pillar Processing is also part of this settlement.
Buffalo Business First-
The case of embattled foreclosure attorney Steven Baum has taken another turn as the Amherst attorney reached a settlement with the New York State Attorney General over charges his firm mishandled foreclosure filings statewide over many years.
Under terms of the agreement, Baum has agreed not to handle mortgages for two years and will pay a penalty of $4 million.
The deal with Attorney General Eric Schneiderman’s office comes five month after the firm settled with the United States Attorney for the Southern District and paid $2 million while agreeing to drastically overhaul its business practices.
Plymouth County has filed a class-action lawsuit against a national electronic mortgage registry company it says has enabled banks to avoid paying Iowa mortgage recording fees.
Plymouth County Attorney Darin Raymond filed the suit on behalf of all 99 Iowa counties against MERSCORP Holdings Inc. and Mortgage Electronic Registration Systems Inc., known as MERS, which tracks mortgages sold and traded among banks that subscribe to the company’s service. The suit also names several of the nation’s largest banks and mortgage companies.
In the lawsuit, Raymond said MERS has allowed banks to skirt Iowa’s public information and recording laws by trading mortgages through an electronic registry that lists MERS as the mortgage holder, even though the banks are buying and selling the mortgages.
Georgia Senate Unanimously Approves Bill Criminalizing Foreclosure Fraud
Today, the Senate unanimously approved HB 237, legislation that will make foreclosure fraud a crime in Georgia. Currently, Georgia law criminalizes fraud during the mortgage process, but specifically does not penalize similar fraud on the back end of the loan – at the foreclosure process.
Attorney General Sam Olens thanked the Senate for their overwhelming bipartisan support of this crucial measure. “Georgia’s current mortgage fraud statute is insufficient and must be revised to criminalize fraud throughout the entire lending process, including foreclosure,” said Olens. “Just last month, 49 state attorneys general reached a $25 billion agreement with the Nation’s five largest mortgage servicers to settle rampant fraud which occurred nationwide during the foreclosure process.”
“I applaud the members of the Senate for recognizing that Georgia urgently needs a law protecting borrowers during every stage of the lending process. I am grateful for the leadership of Senators Bill Hamrick and Jesse Stone for shepherding the bill through the Senate. I look forward to continuing to work with the bill’s sponsor, Representative Rich Golick, on gaining final approval for HB 237 in the House of Representatives, where it already passed last year 168-1.”
L1,
We will do all possible to make this a reality for you.
Palm Beach Post-
– Clerk of Courts Sharon Bock has drawn a Democratic primary challenge from foreclosure-fighting activist Lisa Epstein, who has attracted a national following for exposing suspicious foreclosure paperwork from lending institutions.
Epstein wants the clerk’s office to help crack down on fraud, starting with an audit of real estate documents filed in Palm Beach County. In a bid to address Epstein’s concerns – and avoid a Democratic primary – county Democratic Chariman Mark Alan Siegel arranged a lunch meeting between Bock and Epstein on Friday in Boca Raton.
“If there are things that can be solved, we don’t need an election to do it,” Siegel said. He called Epstein “a spirited person. She wants to raise issues. Let’s see what happens. In our view, Sharon’s doing a great job.”
Lan Pham, an economist fired by the Congressional Budget Office two years ago, is still asking whether the watchdog agency appeared to “diminish or deny” the problem of foreclosure fraud while providing analysis to Congress.
“Why is one of the most powerful government agencies that can determine the direction of the nation’s policies appearing to diminish or deny that the issue of mortgage securitization is a problem?” she said. “If it is a problem, we have a $7 trillion in mortgage-backed securities that has brought chaos to homeowners, whether or not they are in foreclosure.”
Senator Chuck Grassley Ranking Member United States Senate Judiciary Committee 135 Hart Senate Offrce Building Washington, DC 20510
Re: Inquiry into Reprisal Action by the Congressional Budget Office
Dear Ranking Member Grassley:
At the suggestion of Mr. Gary Aguirre, I describe below the circumstances of my discharge by the Congressional Budget Office and request your assistance to the extent you believe there is something appropriate you could do on my behalf.
As the Congress grapples with the economic and budgetary challenges facing the nation, the Congress relies on the Congressional Budget Office (CBO) to provide “objective” and “nonpartisan” analyses to inform its policy decisions.l This mandate gives the CBO a unique status and confers upon the agency an impression of credibility and authority, as its analyses can alter the course of national policies. The CBO cultivates this image internally and externally, and enjoys the protection ofthe press.
Yet, my brief time as a senior staffer financial economist at the CBO suggests that there is room for doubt about this perception of an objective and non-partisan CBO. Alternative view points are suppressed or questioned as “pessimistic” by CBO Director Doug Elmendorf. Economic facts inconvenient to the CBO’s forecasts of economic growth, recovery and other estimates are omitted or suppressed so the desired message may be delivered. For providing truthful and correct analyses of the issues, I was abruptly fired after 2.5 months at the CBO.
Suppression of Alternative Views
In October 2010,I wrote about the conditions and developments in the banking sector and mortgage markets. The events surrounding the collapse of the housing market triggered what many consider to be the worst economic and financial crisis in 80 years since the Great Depression. The effects from this market with $10 trillion in residential mortgage debt outstanding exposed systemic risks and put into question the solvency of financial institutions worldwide. In addition to the global response, the U.S. government and Federal Reserve have responded with trillions of dollars in extraordinary fiscal and monetary stimulus, the bulk of which was aimed at shoring up the banks and financial institutions.
I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas, in charge of the Financial Analysis Division to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households. Assistant Director Deborah Lucas explicitly sought assurances from the Assistant Director in charge of the Macroeconomic Analysis Division that the issues I raised would not lower the CBO’s forecasts of economic growth. More broadly, what emerges is a pattern of suppression by the CBO to prevent public writings about the damage brought on by the banking and financial sector and housing collapse. While disregardingfactual and empirical evidence, the CBO leadership insisted:
o Statements could not be made attributing the decline in property tax revenues to foreclosures and the decline in home prices, which runs counter to common sense and the findings by the U.S. Senate Joint Economic Committee of the U.S. Congress.
o Foreclosures had no impact on home prices (negative extemalities, spillover effects). This runs counter to common sense, and a prominent national home price index by Corelogic in the CBO’s key database subscription showing clearly the distressed homes component of the index worsens home price declines.
o The decline in home prices had no impact on household wealth, which runs counter to common sense and the fact that the home is a significant asset or source of ‘wealth’ for most households. According to the Federal Reserve, about $7 trillion in home equity evaporated in the housing collapse.
o The emerging foreclosure fraud problems in September 2010 were due to media “sensationalism”, “the kind of event of the moment where we should be adding skepticism, not just repeating the hype in the press” and discussingit “laclcs judgment about what is important’.
Let’s take a closer look at the implications of the unknown risks and liabilities of the foreclosure fraud problems unfolding through the legal process, which led the nation’s largest banks to suspend foreclosures nationwide. Issues at the heart of the foreclosure problems pertain to securitization (pooling of mortgages that collateralize mortgage-backed securities “MBS”) and the Mortgage Electronic Registration System (MERS), which purports to have legal standing on electronic records of ownership on about 65 million or half of all mortgages in the country.
MERS, with Fannie Mae and Bank of America as founding members, facilitated Wall Street’s ability to expedite the pooling of subprime mortgages into MBSs by bypassing standard ownership transfer procedures as the housing bubble escalated, the collapse of which devastated the economy and households. The CBO leadership suppressed and minimized concerns about these issues, viewing these concerns in October 2010 as media “sensationalism” and “hype.” Such statements if made public would raise serious questions about the credibility and objectivity of the CBO, and the kinds of analyses that would be provided to Congress and allowed to be made known to the public. This “hype” has entered the nation’s courtrooms:
o On January 7,2011, the Supreme Court of Massachusetts agreed with a lower court decision that invalidated the foreclosures actions of two of the largest banks on mortgages that were in MBSs; the legal right to foreclose was not proven.
o Courts in Florida have also followed suit.
On February 14,2011, U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York rendered the MERS system invalid. ln rendering his decision, Judge Grossman acknowledged that his decision would have “significant impact.”
o On February 16,2011, MERS released a statement, an exce{pt which reads: “The proposed amendment will require Members to not foreclose in MERS’ name…During this period we request that Members do not commence foreclosures in MERS’name.”
The implications have profound financial and economic consequences that would be of compelling interest to Congress and the public, but the CBO sought to silence a discussion of such risks, that in reality, have been mateiralizing. These risks put into question the ability of investors or bondholders to make claims on the collateral (the homes) that underlies trillions of dollars in MBSs, the bulk of which are now guaranteed by the govemment-sponsored enterprises (“GSEs” Fannie Mae and Freddie Mac). This affects $10 trillion in residential mortgage debt outstanding, of which $7 trillion in mortgage-backed securities (MBSs) are backed by about 65 million homes, and roughly $3 trillion is in the form of mortgage loans on bank balance sheets.
The $7 Trillion MBS Problem -Foreclosure Problems and Buy Backs
Banks, Private Label MBSs. About $1.5 trillion MBSs are bank-issued, private label MBSs that were collateralized by primarily subprime mortgages, $330 billion of which is delinquent. Banks have publicly acknowledged these risks by recently increasing reserves against repurchase of bad mortgages from investors and litigation costs. As of third quarter 2010, the nation’s largest four banks – Bank of America, JP Morgan Chase, Citigroup, and Wells Fargo – have reserved about $10 billion for potential mortgage buy back demands,l a “miniscule” amount given the $330 billion in delinquent mortgages. The combined net worth of the largest four banks is about $700 billion.
The foreclosure problems may put even greater pressure on banks as some state courts and legislation have made dents into the legal foundation of MERS. The implication is that investors may be holding trillions in MBSs that are unsecured, which places even gteater pressure on banks for mortgage buy-backs. Banks may also face greater losses in not having the legal authority under MERS to foreclose and liquidate the collateral. These issues (among others) are concentrated among a handful of the largest banks that hold about three quarters of the nation’s banking assets, a concentration that has been deemed a systemic risk to the nation’s economic and financial system. The CBO dismissing such issues prevents an analysis of the risks, so that the public may be forced again to shoulder the consequences for which they have not been a given a voice or a choice.
GSEs, Agency MBSs. The other $5.5 trillion MBSs are issued or guaranteed by Fannie Mae and Freddie Mac, whose fate is currently being debated by policy makers. During the first nine months of 2010, Fannie Mae repurchased about $195 billion in delinquent loans from its MBSs;2 Freddie Mac faced $5.6 billion in buy back demands.3 The amount of these repurchases in less than one year alone would wipe out Bank of America, the largest bank in the country.
The GSEs hold $266 billion in bank-issued private label MBSs, which have experienced the highest rates of default. Recently, Bank of America paid $2.8 billion to the GSEs to settle $7 billion in mortgage buy-back requests, a private transfer of loss to the public that remains unbeknownst to the public.
A discussion of these and other issues were not acceptable to the CBO leadership, but unrealistic assumptions are encouraged and significant facts inconsistent with their predetermined views are overlooked in providing economic analyses and estimates to Congress. For instance, the CBO leadership appeared panic-stricken when I suggested that interest rates were likely to rise in early November 2010 despite the Federal Reserye’s quantitative easing programs, and what that may mean for example, to an already weakened housing market. Indeed, interest rates have risen sharply since then from 4.3Yoto 5.}Yo onthe 30 year fixed-rate mortgage “FRM” (as of 2117111). Providing a correct assessment did not seem to matter.
For presenting a truthful and correct assessment of where things stood, I was fired. I know other economists who have been pressured to fall in line with the leadership, but are afraid to voice their concerns for fear that it could endanger their careers. I am prepared to identify them, but only with your assurance that their identities will be remain confidential at this time.
I deeply appreciate your taking the time to consider the information I have placed before you.
Sincergly,
Lan T. Pham, Ph.D.
Attachments
New York Times Article Time Line Mortgage Forecast Memo Banking Forecast Memo Banking Forecast Memo: Revision of Key Points
Let’s be clear why there’s a mortgage deal: the banks broke the law. Several laws in fact, in ways that appear criminal as well as civil. Limiting their liability is the only reason the banks did a deal.
In this post I’m going to look at what the banks could be held liable for; how much liability “their” money persuaded law enforcers to ignore will be the next post. But one important kind of peace has not been bought: criminal. So as I detail the wrong doing exposed by the deal, I highlight the crimes our law enforcers seem to allege the bankers committed. After all, a liability release isn’t simply what it says, it’s what law enforcers do with their remaining freedom to act. If crimes were committed, and indictments don’t follow, the release is much broader than its text.
A close read of the complaint and the related language that precedes the releases (see Exhibits F and G) reveals:
The consent agreements the bailed-out bankers (B.O.B.s), the feds and the states are largely as had been promised. One big surprise, however, is that the B.O.B.s would now be allowed to systematically overcharge borrowers and steal their homes. Seriously. Who cares about $1 million or $5 million penalties if horrible damage can be inflicted without punishment?
To see what I’m talking about, you need to look at Exhibit E-1. (It’s in all the consent agreements; here’s Chase‘s.) Exhibit E-1 is a 14 page table titled “Servicing Standards Quarterly Compliance Metrics.” That is, it’s a table that details what, precisely, law enforcers will check to make sure that the B.O.B.s are meeting the very pretty servicing standards in the deal. (See Exhibit A)
(Note: You may want to print out table E-1 while reading this, or at least keep it open in another browser window; what I have to say may be hard to believe and you’ll want to be able to double check that I’m telling you the truth.)
Now, the table doesn’t come right out and say, ‘we, the federal and state governments of the United States of America do hereby bless the institutionalization of servicer abuse,’ but it should. To understand why, you need to keep your eye on how the table’s columns are defined. For most issues, the critical columns are C “Loan Level Tolerance for Error” and D “Threshold Error Rate.” Later I’ll talk about the problems in Column F, the “Test Questions.”
The last four years have not been easy for Lynn Szymoniak. Since early 2008, she has waged a seemingly endless series of legal battles against some of the nation’s biggest banks in an effort to save her Palm Beach County, Fla., home from foreclosure. But Szymoniak is about to get some help — a check for $18 million for her role in uncovering evidence of massive bank fraud.
It’s a significant win for the foreclosure fraud activist, but in an interview with HuffPost, she emphasized that the settlement now does not undo the damage done to homeowners who were improperly evicted.
“It’s very satisfying to have recovered this money for the government,” Szymoniak said. “Would it have been more satisfying to have recovered it for homeowners? Possibly.”
The never ending settlement… because those in DC are doing their best to make sure their bankers are A-OK.
Reuters-
Mortgage-backed securities investors who are convinced that banks intend to shift the cost of the $25 billion national mortgage settlement onto their shoulders are “evaluating their legal options,” according to Chris Katopis, executive director of the Association of Mortgage Investors (and a former clerk on the District of Columbia Circuit Court of Appeals). The private investors, as I’ve reported, are outraged at the terms of the settlement, which sets no limit on the percentage of securitized mortgages the settling banks — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial — are permitted to modify to reach their $17 billion target for reducing the principal balance owed by struggling borrowers. Mortgage-backed noteholders believe the deal terms encourage banks to write down investor-owned first liens, rather than second lien mortgages in bank-owned portfolios. That incentive, they say, shifts the cost of the deal from the banks to mortgage-backed bondholders.
Their argument is gaining traction. The New York Times editorialized Sunday on the bank-friendly details of …
Thanks to Abigail Field for the title post and thank you to Joe over at BP Investigative Agency for this submission.
According to a Handwriting Expert… yes, documents were forged and altered.
As if Breaking and Entering weren’t enough, add forgery to the lengths JP Morgan Chase will go to take a home.
When foreclosure proceedings began on William Paatalo’s Montana property in January 2010, he, like many homeowners, felt emotionally drained and devastated. “ I couldn’t believe how I got to this place. I had perfect credit in 2008. I was making payments on three properties through Washington Mutual, but they began to misapply payments to the wrong accounts and even turned off my ‘auto-pay’ feature in an attempt to sabotage my credit and spin me into default.”
By the time Paatalo discovered the error, his credit had tanked and things started spiraling downward. “It was brutal. My business lines of credit were shut down, and I couldn’t access any of my lines of credit ; WAMU was slow to acknowledge the problem; the credit agencies ignored me; and then I got the foreclosure notices. It was a living hell. I spent a lot time being angry. “
In the end, Paatalo did what many home owners are now doing. He started pushing back. “I didn’t want to just roll over. I figured I still had some rights, so I began the painstaking process of researching my loan in hopes I could modify or delay the action. The Trustee’s sale wasn’t scheduled until June, so I figured I had a little bit of time to rectify the situation.”
But unbeknownst to Paatalo, Chase, who had acquired WAMU in 2008, took early action. In March, they broke into his home, changed all the locks, and stole property, including personal documents and a handgun. “I was out of town, and when I found out what they had done I was outraged.”
Paatalo filed a criminal complaint and took additional action. However, law enforcement sat idle as it was perceived to be a “civil matter.” Tired of being victimized, he began investigating practices in the mortgage industry and uncovered much of what is now known. In October of 2010 he filed suit against JP Morgan Chase pro se and has been litigating since then.
But his case, scheduled for trial in September, took a bizarre turn recently. “I was reading about the class action suit in California Bakenie v. JPMorgan Chase Bank and I got to wondering if my note might’ve been forged. So I got a color copy of the note, and in my office I magnified the signatures 800 fold.”
What he found was astounding. Even to the layman’s eye, the signatures appeared to have been photo-shopped. In one instance, even the signature line was colored blue. “I couldn’t believe what I was seeing. It looked like something a high school kid did.
Paatalo sent the document to Dr. Laurie Hoeltzel in southern California; a handwriting / document expert with over 20 years of experience. Her findings verified what Paatalo suspected, the documents had indeed been forged. “All along Chase has argued on record they hold the note. Clearly, they do not. It’s one thing to claim the note entitles them to foreclose, it’s another to commit a felonious act to illegally take a home they are not entitled to. It’s absolutely appalling. This is no longer a civil dispute.”
Paatalo intends to file a criminal complaint against Chase, along with formal Bar complaints against their attorneys . The expert declaration is now in the hands of Montana’s Federal Magistrate Judge Carolyn Ostby. How this new information plays out in court is yet to be determined, but Paatalo is sure of one thing. “Nothing these banks do surprises me anymore. I can only hope our judicial system has the backbone to hold these people accountable.”
Addendum: Paatalo notified Chase of his discovery last week and was attempting to have the evidence surrendered to the court and sequestered. After all, attorneys have a duty to uphold justice and refrain from assisting in fraud. He was notified today by Chase’s attorney that the documents had been removed from Butte, Montana and are now in Minneapolis, Minnesota. Paatalo has objected to the transferring of the documents, and Chase’s attempts to withhold evidence of a crime.
Read the handwriting expert’s affidavit below begin at page 5…
The surprising tale that I will attempt to pen in this blog entry has a very familiar cast of characters; the Obama Administration, the Housing Bubble, “Toxic Mortgages”, and Too Big To Fail “TBTF” Banks among others. While the headline of TBTF banks in a $25bil mortgage settlement is known to many, the underlying details of the settlement are less known and quite appalling when you pull back the covers.
The wounds on past and present homeowners are still fresh from the housing crisis. As Jonathan Laing points out in this weekend’s Barron’s cover story, “five million of the country’s 76million mortgage holders have lost their homes to foreclosure or lender ordered short sales since 2006, and an estimated 14million more own more on their homes than their properties are currently worth. In all, some $7.4 trillion in homeowners’ equity has been destroyed according to Mark Zandi…”
Cries for Accountability
While blame deserves to be cast upon numerous parties for the housing bubble, Americans have rightly called for accountability on the TBTF banks. Accountability for what? Among other faults, robo-signing became prevalent among TBTF banks as they forged mortgage documents in order to ensure proper paperwork was done to foreclose on properties.
Details of the $25bil Settlement (in the words of HUD) & Public Lauding
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION
GARY STUBBS, Plaintiff,
v.
BANK OF AMERICA, BAC HOME LOANS SERVICING, LP, and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants.
EXCERPT:
Plaintiff has alleged facts making it plausible that Fannie Mae was in fact the secured creditor at the time of the foreclosure and has alleged that no assignment to Fannie Mae was filed prior to the time of sale as required by O.C.G.A. § 44-14-162(b). Therefore, based on the allegations in the amended complaint, BAC evaded the most substantive requirements of Georgia’s foreclosure statute in that (1) it was not the secured creditor entitled to foreclose despite providing a notice letter affirmatively representing it was the creditor; and (2) it failed to file the assignment of the security deed to the secured creditor in the county deed records prior to the foreclosure. See O.C.G.A. § 162(b); Weems v. Coker, 70 Ga. 746, 749 (Ga. 1883); Cummings v. Anderson, 173 B.R. 959, 963 (Bankr. N.D. Ga. 1994).3 The Court accordingly DENIES the motion to dismiss Plaintiff’s claim for wrongful foreclosure based on failure to comply with Georgia foreclosure law.
For whatever reason scribd download is not permitting this to be downloaded.
Last week was a big one for the banks. On Monday, the foreclosure settlement between the big banks and federal and state officials was filed in federal court, and it is now awaiting a judge’s all-but-certain approval. On Tuesday, the Federal Reserve announced the much-anticipated results of the latest round of bank stress tests.
How did the banks do on both? Pretty well, thank you — and better than homeowners and American taxpayers.
That is not only unfair, given banks’ huge culpability in the mortgage bubble and financial meltdown. It also means that homeowners and the economy still need more relief, and that the banks, without more meaningful punishment, will not be deterred from the next round of misbehavior.
A: When the deal documents punt on contentious issues, merely agreeing to agree later.
Sadly, that’s what this “deal” does. This “deal” is a hybrid contract and term sheet, with all the crucial, operational aspects of compliance unresolved. A smallish to-be-dealt-with-later item is the timing for implementing the servicing standards. The biggie is the Work Plans; those have not been negotiated at all.
Yes, part of compliance has been finalized; the metrics, and the basic enforcement structure. But it’s not enough to have metrics; you also need processes for gathering the metric data and computing the results. Similarly you need more than a structure for enforcement; you need how-to details. The not-yet-existing Work Plan will cover all that. Worse, the negotiations will happen while the clock is ticking on the deal.
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