According to court records, David J. Stern Law firm has filed a lawsuit against CitiMortgage Inc. in the Florida Southern District of Court on April 7, 2011. The cause of action is contract, case number 1:2011cv21223.
Law Offices of David J. Stern, P.A. v. CitiMortgage, Inc.
JPMorgan Chase must pay a $4 million surety bond to expedite the transfer of foreclosure cases still under the umbrella of foreclosure law firm Ben-Ezra & Katz.
The U.S. District Court for the Southern District of Florida made that ruling after JPMorgan Chase Bank sued Ben-Ezra, alleging the firm is delaying the return of foreclosure documents that represent $400 million in financial transactions. JPMorgan requested the documents after terminating an agreement with Ben-Ezra to handle its foreclosures.
MY MESSAGE TO COMPANIES LIKE NATIONWIDE TITLE CLEARING & OTHERS
When people, government officials or corporations come into the people’s cross-hairs and a decision is made that we will no longer allow, YOU ARE DONE! I will let history remind you that the proof of that statement is in the pudding. To all the powers that be:
If you are emotional and acting on emotion DON’T! Whoever is advising you to suppress freedom of speech as a means to strengthen your position has you ill advised…FIRE THEM! Do not confuse what you do to turn a profit with being morally correct and sound. This foreclosure crisis has been a direct attack against the American people on American soil for monetary gain. American’s (as you can see) are starting to stand up and say “We will no longer allow!” If you’ve learned anything from what has transpired with the Law Office of David J. Stern, it should be that when YOU get enough negative publicity in the American Press, no one will want to do business or associate themselves with YOU. For NTC, your efforts are misplaced. Attacking those who are advocates of the PEOPLE like Matt Weidner and Lisa Epstein makes you look bad. The robo-signer negative publicity has had its impact but you were better off cleaning up that mess by re-assigning people and assuring the AMERICAN PEOPLE that you will take steps and measures to ensure NO robo-signing exist. It would be better to agree with the people and show a positive support for the people rather than giving them the finger and hiring attorney’s to attack their CONSTITUTIONAL RIGHT to voice their opinion. Truth be told, the American people don’t care about NTC or Stern or any other company. They care about their family and friends and do business with those who will further their needs. Your moves will only cause greater NEGATIVE PUBLICITY toward you which in turn, will cause YOUR CLIENTS to worry about their reputations and business if they associate and do business with YOU! You don’t believe me? Watch and learn how this Litigation Consultant gave you free insight that either saved or destroyed your business.
March 28 (Bloomberg) — JPMorgan Chase & Co. sued the Florida law firm of Ben-Ezra & Katz to force it to return files of foreclosure cases in which the firm represented the bank.
JPMorgan said in a complaint filed March 25 in federal court in Miami that the files include thousands of original promissory notes, mortgages and other documents that “evidence and secure” loans worth more than $400 million. The New York- based bank seeks a court order forcing Ben-Ezra to return the files and unspecified damages.
Before StopForeclosureFraud puts up posts it tries its best to research sources and is not quick to rush to post what may not seem right for its readers. SFF had several tips of such Mass Joinder request to post but refrained from doing so for the following reasons and please make sure you read both articles below to fully understand.
Martin who runs Mandelman Matters was first to post an alert warning homeowners about Mass Joinder lawsuits in which he states
Last week I posted a “Homeowner Warning” about a mailer I’d received from a homeowner promoting participation in a lawsuit, referred to as a “Mass Joinder” lawsuit, being filed against several major banks on behalf of homeowners by the law firm of Kramer & Kaslow. Before I posted the “warning” I spoke with several attorneys I know that are well-versed in law firm marketing compliance, and I made two attempts to contact the Kramer & Kaslow attorneys at the number provided on the mailer, but received no response.
Everyone who follows Mandelman Matters knows Martin puts an enormous amount of effort into his investigative reports.
Today Reuters is reporting the same, warning homeowners
The scam is particular elaborate since a federal ban went into effect earlier this year against requiring up-front payments to those offering mortgage relief. Rules being what they are, there is an exception to it — for lawyers. While the terms are a bit more specific than that, it opened the door to people supposedly working on behalf of lawyers to still preying on those whose homes are being foreclosed.
“Those who continue to prey on and victimize vulnerable homeowners have not given up,” the warning by Wayne S. Bell, chief counsel of the California Department of Real Estate, says. “They just change their tactics and modify their sales pitches to keep taking advantage of those who are desperate to save their homes. And some of the frauds seeking to rip off desperate homeowners are trying to use the lawyer exemption above to collect advance fees for mortgage assistance relief litigation.”
Long story short do your homework so you don’t fall victim to scams.
Puget Sound Business Journal – by Kirsten Grind
Date: Friday, February 18, 2011, 2:41pm PST – Last Modified: Friday, February 18, 2011, 5:15pm PST
The Federal Deposit Insurance Corp. plans to file a civil suit against at least three former Washington Mutualexecutives, including former chief executiveKerry Killinger, seeking to collect more than $1 billion in damages, according to people familiar with the pending suit.
Killinger, former president and chief operating officer Steve Rotella and David Schneider, former president of the failed bank’s home loan division, all recently received legal notices informing them of the pending litigation, these people say.
The three executives were the highest-level officials in charge of WaMu’s mortgage operations. It’s unclear when or where the FDIC will file its suit.
http://christopher-king.blogspot.com/…
This is a crucial video with actual courtroom footage showing how mortgages and notes are lost as U.S. Citizens face foreclosure, as noted by journalists like Matt Taibbi. Fight back with KingCast courtroom video. I’ve been shooting courtroom video since I tried Civil Rights cases in the mid 1990’s.
KingCast — Reel News for Real People.
Ingress v. Wells Fargo
Hillsborough South
226-2010-CV571
WASHINGTON, DC — (MARKET WIRE) — 08/26/10 — Cuneo Gilbert & LaDuca, LLP and Liddle & Robinson, LLP today announced that a class action has been commenced in the United States District Court for the Southern District of Florida on behalf of purchasers of the common stock of DJSP Enterprises, Inc. (“DJSP” or the “Company”) (NASDAQ: DJSP) between March 16, 2010 and May 10, 2010, inclusive (the “Class” and “Class Period”), seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).
Any person seeking to serve as lead plaintiff must move the Court no later than September 20, 2010. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Matt Miller, Esq. at Cuneo, Gilbert & LaDuca at 202-789-3960, or via e-mail at mmiller@cuneolaw.com. Any member of the Class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent Class member.
The Complaint charges DJSP and certain of its officers with violations of the Exchange Act. The Complaint alleges that, throughout the Class Period, defendants made material misrepresentations and failed to disclose material adverse facts about the Company’s true financial condition, business and prospects. Specifically, the Complaint alleges that the Company made positive representations concerning its present and future business prospects, when it knew or recklessly disregarded that (1) one of its largest clients would be drastically reducing its need for the Company’s services, and (2) the federal government’s efforts to slow down real estate foreclosures would also reduce demand for the Company’s services. According to the complaint, on May 27, 2010, the Company shocked the market by lowering its guidance for adjusted net income by $15 million to $17 million, and the price of the Company’s stock has fallen dramatically.
Cuneo Gilbert & LaDuca, a firm with offices in Washington, D.C., New York, Los Angeles and Alexandria, Va., specializes in the representation of plaintiffs in consumer, antitrust, civil rights and securities class actions and is active in major litigations pending in federal and state courts throughout the United States. The Cuneo Gilbert & LaDuca website (http://www.cuneolaw.com) has more information about the firm.
Liddle & Robinson, based in New York, represents individuals and financial services firms, hedge funds and other businesses in high-stakes, cutting-edge employment, securities and commercial litigation matters. The Liddle & Robinson website (http://www.liddlerobinson.com) has more information about the firm.
Washington Mutual Inc., the ex-owner of the biggest U.S. bank to fail, will face a November trial in an investor lawsuit over ownership of $4 billion in low-ranking debt known as trust-preferred securities, a judge said.
U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, scheduled a trial for Nov. 1, the first day of a confirmation hearing on WaMu’s reorganization plan. Lawyers for WaMu and investors, including Black Horse Capital LP and Lonestar Partners LP, agree the issue must be resolved before the company can end its bankruptcy and distribute more than $6 billion to creditors.
As the confirmation hearing continues in November, other critics of WaMu’s plan may want to use any facts or arguments presented by the investors to attack the reorganization proposal, Walrath said. Shareholders claim that the holding company’s bank should never have been seized by regulators and sold to JPMorgan Chase & Co. in 2008.
“Others may want to ride your coattails,” Walrath told an attorney for Black Horse at a court hearing yesterday. “The first day of confirmation will be yours.”
In July, a group of investors sued WaMu and JPMorgan over the way the trust-preferred securities were converted from debt- like investments into equity. The investors, who bought $1 billion of the trust-preferred securities, got preferred equity in WaMu when the exchange happened just before WaMu collapsed.
Macomb, Oakland cases in federal court but may return to state
Officials at an organization representing homeowners battling their mortgage lenders say hundreds more people in the tri-county area will join additional lawsuits.
Officials at Michigan Loan Compliance Advisory Group Inc. in Troy said they plan to file lawsuits including up to another 1,000 plaintiffs against financial institutions for deceptive lending, excessive fees and other wrongdoing in granting subprime mortgages.
That’s on top of the 88 plaintiffs representing 78 mortgages in Macomb and Oakland counties who through Michigan Loan Compliance sued more than two dozen banks for awarding inflated mortgages to borrowers.
“We’re not stopping,” said May Brikho, senior consultant at Michigan Loan Compliance.
“We’re trying to convince judges there is fraud, there is a scam. The banks are not the victims. They never lost anything.
“We are getting a lot of new plaintiffs who are out of a job and they do not qualify for loan modification. People are telling other people and they are contacting us.”
The pending cases in Macomb, Oakland and a third in Wayne County were filed in state circuit court, but have since been moved to U.S. District Court in Detroit.
However, Loan Compliance attorney Ziyad Kased has asked federal Judge Arthur Tarnow to return the Oakland case to Judge Colleen O’Brien in the Oakland court in Pontiac and said he believes federal Judge Nancy Edmunds on her own may return the Macomb case back to circuit Judge John Foster in Mount Clemens.
Kased said the Oakland case should remain in state court because all of the defendants and plaintiffs do not have different state residences, which is a requirement to get the case moved.
He said that Ocwen and Saxon must gain “concurrence” of the other defendants to warrant permanent transfer and that all of the defendants must be located outside the state.
Attorney Chantelle Neumann, representing Ocwen Loan Servicing LLC, named in the Macomb case, and Saxon Mortgage Co., named in the Oakland case, gained “removal” to federal court for the time being. Neumann said the defendants did not have to gain concurrence from other defendants because the plaintiffs improperly got together.
“Plaintiffs have aggregated their grievances into one mass action in an effort to evade federal jurisdiction,” said Neumann, a Rochester Hills-based lawyer also representing Saxon, in a legal brief.
Kased says the plaintiffs have similar claims.
“There were all victims of the same predatory lending practices listed in the complaint (inflated income, understated debt, manufactured debt to income ratios etc.),” Kased says in a court document.
He contends that the case should remain since three of the defendants are “domestic Michigan corporations.”
He also said that all but three mortgages in the Oakland case are affiliated with co-defendant Mortgage Electronic Registration Systems Inc., so there is a “common thread” among them.
Cooper et al v. DJSP Enterprises, Inc. et al
Filed: July 20, 2010 as 0:2010cv61261 Updated: July 20, 2010 21:15:00
Plaintiffs: Neeraj Methi and Stan Cooper
Defendants: David J. Stern, DJSP Enterprises, Inc. and Kumar Gursahaney
Presiding Judge: William J. Zloch
Referring Judge: Robin S. Rosenbaum
Cause Of Action: Securities Exchange Act
Court: Eleventh Circuit > Florida > Southern District Court
Type: Other Statutes > Securities/Commodities…
After reading this, why don’t you take a hop over and take a listen to an audio recording of Mr. Stern at a recent DJSP Conference. Oh and Mr. Obama…According to Mr. Stern we will see historical levels of foreclosures going well into 2017 seems like “A Plan” for the future of whats to come?
“No matter what Obama rolls out, there is no stopping this inflow of continued defaults that we anticipate to go for another two or three years late behind that is the math of REO’s that need to be liquidated and at the end of the day, the cycle will start again. Well, foreclosure volumes through 2012 are expected to increase dramatically and remain at high levels going on till 2017″
It’s a little hard to listen to him because he sounds too excited and on helium but trust me it was close enough to what he says. I wonder if his “Clients” would be pleased to listen to this convo detailing what’s in store for the future?
He did say one thing that caught my attention…”there is 50,000 REO’s in Florida that are not in the system” or something like that…Go ahead and take a listen for yourself…I am not quite certain what to make of all this …if it’s even legal? Where is the Client-Attorney Privilege? http://www.americansunitedforjustice.org/Stern.html
Copyright (c) 2010 Pepperdine University School of Law
Pepperdine Law Review
Author: Dale A. Whitman*
The premise of this paper is that the concept of negotiability of promissory notes, which derives in modern law from Article 3 of the Uniform Commercial Code, is not only useless but positively detrimental to the operation of the modern secondary mortgage market. Therefore, the concept ought to be eliminated from the law of mortgage notes.
This is not a new idea. More than a decade ago, Professor Ronald Mann made the point that negotiability is largely irrelevant in every field of consumer and commercial payment systems, including mortgages. 1 But Mann’s article made no specific recommendations for change, and no change has occurred.
I propose here to examine the ways in which negotiability and the holder in due course doctrine of Article 3 actually impair the trading of mortgages. Doing so, I conclude that these legal principles have no practical value to the parties in the mortgage system, but that they impose significant and unnecessary costs on those parties. I conclude with a recommendation for a simple change in Article 3 that would do away with the negotiability of mortgage notes.
I. The Secondary Mortgage Market
In this era, it is a relatively rare mortgage that is held in portfolio for its full term by the originating lender. Instead, the vast majority of mortgages are either traded on the secondary market to an investor who will hold them, 2 or to an issuer (commonly an investment banker) who will securitize them. Securitization …
The agency accuses the managers of the defunct bank’s Homebuilder Division of acting negligently by granting loans to developers who were unlikely to repay the debts.
By E. Scott Reckard, Los Angeles Times
July 14, 2010
Launching a new offensive against leaders of failed financial institutions, federal regulators are accusing four former executives of Pasadena’s defunct IndyMac Bank of granting loans to developers and home builders who were unlikely to repay the debts.
The lawsuit by the Federal Deposit Insurance Corp. alleges that the IndyMac executives acted negligently and seeks $300 million in damages.
It is the first suit of its kind brought by the FDIC in connection with the spate of more than 250 bank failures that began in 2008. Regulators said it wouldn’t be the last.
“Clearly we’ll have more of these cases,” said Rick Osterman, the deputy general counsel who oversees litigation at the agency.
The FDIC has sent letters warning hundreds of top managers and directors at failed banks — and the insurers who provided them with liability coverage — of possible civil lawsuits, Osterman said. The letters go out early in investigations of failed banks, he added, to ensure that the insurers will later provide coverage even if the policy expires.
The four defendants in the FDIC lending negligence case, who operated the Homebuilder Division at IndyMac, collectively approved 64 loans that are described in the 309-page lawsuit.
They are:
•Scott Van Dellen, the division’s president and chief executive during six years ending in its seizure;
•Richard Koon, its chief lending officer for five years ending in July 2006;
•Kenneth Shellem, its chief credit officer for five years ending in November 2006;
•William Rothman, its chief lending officer during the two years before the seizure.
Through their attorneys, they vigorously denied the allegations.
“The FDIC has unfairly selected four hard-working executives of a small division of the bank … to blame for the failure of IndyMac,” said defense attorney Kirby Behre, who represents Shellem and Koon. “We intend to show that these loans were done at all times with a great deal of care and prudence.”
Defense attorney Michael Fitzgerald, who represents Van Dellen and Rothman, said no one at the company or its regulators foresaw the severity of the housing crash before it struck, and that IndyMac was one of the first construction lenders to pull back when trouble struck the industry in 2007.
Fitzgerald added that the FDIC thought Van Dellen trustworthy enough that it kept him on to run the division after the bank was seized.
The suit naming the IndyMac executives was filed this month in federal court in Los Angeles, two years after the July 2008 failure of the Pasadena savings and loan. The bank is now operated under new ownership as OneWest Bank.
IndyMac, principally a maker of adjustable-rate mortgages, was among a series of high-profile bank failures early in the financial crisis that were blamed on defaults on high-risk home loans and the securities linked to them.
But the majority of failures since then have been at banks hammered by losses on commercial real estate, particularly loans to residential developers and builders — and IndyMac had a sideline in that business as well through its Homebuilder Division.
The suit alleges that IndyMac’s compensation policies prompted the home-building division to increase lending to developers and builders with little regard for the quality of the loans.
“HBD’s management pushed to grow loan production despite their awareness that a significant downturn in the market was imminent and despite warnings from IndyMac’s upper management about the likelihood of a market decline,” the FDIC said in its complaint.
An investigation of IndyMac’s residential mortgage lending practices could lead to another civil suit, potentially naming higher-up executives, attorneys involved in the case said.
I don’t know about you but this is an awful lot of dollars. Meanwhile they are cutting budgets in some places such as California and just last week in Chicago!
I’m still puzzled how no conflict of interest exist when MERS is named a defendant with the borrower in a foreclosure suit??
Well here is your answer COUNTIES!!!
Wednesday July 7, 2010
Reston-based company sued on fraud charges
Nevada law firm says Mortgage Electronic Registration Systems deprives counties of fees
A Nevada law firm has filed two civil lawsuits against Reston-based Mortgage Electronic Registration Systems alleging billions of dollars worth of fraud.
The suits, filed in Nevada and California district courts, claim the company has deprived county and state governments of revenue “used among other things to maintain county real property records, fund the judiciary, school systems and other government services.”
“They tout themselves as being a recording-fee avoidance scheme,” said attorney Robert R. Hager of Nevada law firm Hager & Hearne, which has filed the suits against MERS.
“If a loan is registered on the MERS system, it will save the financial institution involved in that loan from paying recording fees. MERS claims to have saved at least $2.4 billion in recording costs that would have otherwise gone to a county where the property is located. This system is depriving counties of fees legitimately owed them and contributing to the financial deficits that many local governments are currently experiencing,” he said.
MERS spokeswoman Karmela Lejarde on Friday called both suits “baseless” and pointed out that the attorney generals of both California and Nevada refused to accept them as false claims cases, essentially forcing Hager & Hearne to file civil suits.
“These same law firms have brought many other lawsuits against MERS and every one has failed,” she said. The MERS website further claims the MERS system is approved by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing Administration and Veterans Affairs, and the California and Utah housing finance agencies, as well as all of the major Wall Street rating agencies.
“The statement that any of our cases against MERS have failed is a lie,” Hager said. “It is true that we have other active cases involving them, but none have failed.”
According to its website, MERS “streamlines” the mortgage process for the mortgage banking industry by electronically registering mortgage loans for lending institutions. The company currently has about 2,500 clients or “members,” Lejarde said. The members list reads like a who’s who of the mortgage banking industry, including Bank of America, Countrywide Home Loans and Citimortgage, all three of which are named as co-defendants in the suits.
The MERS website also claims that since 1997, more than 63 million home mortgages have been registered on its system. “These include loans delivered to Fannie Mae, Freddie Mac, Ginnie Mae, all major conduits and state housing authorities,” the website states.
According to the company, once a loan is registered in its system, MERS acts as the mortgagee in all county land records for the lender and servicer, even though it does not actually own or lay any claim to any of the mortgages.
“Any loan registered on the MERS System is inoculated against future assignments,” the company website states, “because MERS remains the nominal mortgagee no matter how many times servicing is traded.”
The lawsuits claim this means that lenders are able to avoid recording fees every time individual mortgages are bought, traded and sold by banking institutions. As a byproduct, borrowers never know who actually holds their individual loans.
“Falsely recording MERS as the beneficiary on their deeds of trust creates an oversimplified, illusory and false chain of title that purports to justify payment of less money in recording fees; depriving the counties and the state from those fees …. [S]uch identification creates the illusion of a recorded chain of title whereby the actual creditors and/or loan beneficiaries remain hidden from public record,” the suits claim.
A Reno law firm has filed two lawsuits alleging fraud against a nationwide mortgage registration firm, and if those legal actions prevail, the firm and dozens of mortgage lenders could be liable to Nevada’s counties for billions of dollars in compensation and penalties.
Law partners Robert R. Hager and Treva J. Hearne, with Reno attorney Mark Mausert, have filed a case in Nevada and one in California against Mortgage Electronic Registration Systems, which operates an electronic registry of mortgage loans in the United States. MERS serves as the mortgagee of record for lenders, investors and loan servicers in county land records, but doesn’t own any mortgages.
By using the firm’s names on deeds and other paperwork, the lenders are able to avoid county recording fees, according to the firm. MERS has no financial interest in the loans, but is listed as actual owner or surrogate for the owner on millions of deeds of trust, even as individual mortgages are repeatedly traded and packaged inside of mortgage pools.
The lawsuits argue that listing the firm as the owner of mortgages in which it has no interest in order to avoid filing fees and taxes that are legally required constitutes fraud.
“We look forward to holding these financial institutions and foreclosure mills responsible for their actions that have deprived the states and counties of much-needed revenue,” said Hager.
Karmela Lejarde, communications manager, for the Reston, Va.-based firm, noted that the attorneys general of two states declined to take on the cases as false claims suits pressed by the government, instead leaving the plaintiffs to pursue the civil suits in the court systems.
“The lawsuits are completely without merit,” Lejarde said. “…The suits were filed by the same lawyers who have brought countless lawsuits against MERS, and every single one of them has failed. The most recent (fraud case) actions are just the latest in a line of baseless claims.”
Christopher Peterson, a law professor and associate dean of the University of Utah Law School, has written articles and lectured about MERS’s activities. He said the firm being listed as proxy owner of more than half the nation’s mortgages is contrary to 200 years of American legal precedent.
AMID the legal battles between investors who lost money in mortgage securities and the investment banks that sold the stuff, one thing seems clear: the investment banks appear to be winning a good many of the early skirmishes.
But some cases are faring better for individual plaintiffs, with judges allowing them to proceed even as banks ask that they be dismissed. Still, these matters are hard to litigate because investors must persuade the judges overseeing them that their losses were not simply a result of a market crash. Investors must argue, convincingly, that the banks misrepresented the quality of the loans in the pools and made material misstatements about them in prospectuses provided to buyers.
Recent filings by two Federal Home Loan Banks — in San Francisco and Seattle — offer an intriguing way to clear this high hurdle. Lawyers representing the banks, which bought mortgage securities, combed through the loan pools looking for discrepancies between actual loan characteristics and how they were pitched to investors.
You may not be shocked to learn that the analysis found significant differences between what the Home Loan Banks were told about these securities and what they were sold.
The rate of discrepancies in these pools is surprising. The lawsuits contend that half the loans were inaccurately described in disclosure materials filed with the Securities and Exchange Commission.
These findings are compelling because they involve some 525,000 mortgage loans in 156 pools sold by 10 investment banks from 2005 through 2007. And because the research was conducted using a valuation model devised by CoreLogic, an information analytics company that is a trusted source for mortgage loan data, the conclusions are even more credible.
The analysis used CoreLogic’s valuation model, called VP4, which is used by many in the mortgage industry to verify accuracy of property appraisals. It homed in on loan-to-value ratios, a crucial measure in predicting defaults.
An overwhelming majority of the loan-to-value ratios stated in the securities’ prospectuses used appraisals, court documents say. Investors rely on the ratios because it is well known that the higher the loan relative to an underlying property’s appraised value, the more likely the borrower will walk away when financial troubles arise.
By back-testing the loans using the CoreLogic model from the time the mortgage securities were originated, the analysis compared those values with the loans’ appraised values as stated in prospectuses. Then the analysts reassessed the weighted average loan-to-value ratios of the pools’ mortgages.
The model concluded that roughly one-third of the loans were for amounts that were 105 percent or more of the underlying property’s value. Roughly 5.5 percent of the loans in the pools had appraisals that were lower than they should have been.
That means inflated appraisals were involved in six times as many loans as were understated appraisals.
David J. Grais, a lawyer at Grais & Ellsworth in New York, represents the Home Loan Banks in the lawsuits. “The information in these complaints shows that the disclosure documents for these securities did not describe the collateral accurately,” Mr. Grais said last week. “Courts have shown great interest in loan-by-loan and trust-by-trust information in cases like these. We think these complaints will satisfy that interest.”
The banks are requesting that the firms that sold the securities repurchase them. The San Francisco Home Loan Bank paid $19 billion for the mortgage securities covered by the lawsuit, and the Seattle Home Loan Bank paid $4 billion. It is unclear how much the banks would get if they won their suits.
As outlined in the San Francisco Bank’s amended complaint, it did not receive detailed data about the loans in the securities it purchased. Instead, the complaint says, the banks used the loan data to compile statistics about the loans, which were then presented to potential investors. These disclosures were misleading, the San Francisco Bank contends.
In one pool with 3,543 loans, for example, the CoreLogic model had enough information to evaluate 2,097 loans. Of those, it determined that 1,114 mortgages — or more than half — had loan-to-value ratios of 105 percent or more. The valuations on those properties exceeded their true market value by $65 million, the complaint contends.
The selling document for that pool said that all of the mortgages had loan-to-value ratios of 100 percent or less, the complaint said. But the CoreLogic analysis identified 169 loans with ratios over 100 percent. The pool prospectus also stated that the weighted average loan-to-value ratio of mortgages in the portion of the security purchased by Home Loan Bank was 69.5 percent. But the loans the CoreLogic model valued had an average ratio of almost 77 percent.
IT is unclear, of course, how these court cases will turn out. But it certainly is true that the more investors dig, the more they learn how freewheeling the Wall Street mortgage machine was back in the day. Each bit of evidence clearly points to the same lesson: investors must have access to loan details, and the time to analyze them, before they are likely to want to invest in these kinds of securities again.
NEW YORK (Reuters) – An Australian hedge fund is suing Goldman Sachs Group Inc over an investment in a subprime mortgage-linked security that contributed to the fund’s demise in 2007.
The lawsuit filed on Wednesday accuses Goldman of misrepresenting the value of the notorious Timberwolf collateralized debt obligation, which garnered a lot of attention during a recent congressional hearing.
Basis Yield Alpha Fund sued Goldman to recoup the $56 million it lost on the CDO, said Eric Lewis, a Washington-based lawyer for the fund. The suit also seeks $1 billion in punitive damages.
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