Lets not act surprised in this as we always knew there was something cooking behind the scenes and not everyone agreed and probably disappointed with the approach Tom Miller from Iowa was heading.
WaPO-
As state attorneys general continue their months-long settlement negotiations with the nation’s largest banks over widespread problems in foreclosure practices, they have yet to resolve differences within their own group on key issues.
Even within the 14-member “executive committee” of attorneys general who are leading the 50-state coalition, some have very different visions of what exactly a settlement should look like.
[…]
A handful of crucial states, including California, Illinois and New York, have undertaken their own investigations into mortgage industry practices, subpoenaing information about business practices and seeking meetings with executives about such things as securitization to faulty court affidavits. Other officials, such as in Oklahoma, have threatened to pursue their own settlements with mortgage servicers.
The nation’s largest mortgage companies are operating on the assumption that they will have to pay as much as $20 billion to resolve claims of widespread foreclosure abuse, an amount four times what they had originally proposed, the top federal official overseeing the discussions told state officials Monday, according to people who participated in the conversation.
Associate U.S. Attorney General Tom Perrelli told a bipartisan group of state attorneys general during a conference call that he believes the banks have accepted the realization that a wide-ranging settlement to the months-long probes will cost them much more than the $5 billion offer they floated last month, according to officials with direct knowledge of the call. Perrelli said he’s basing his belief on his recent conversations with representatives of the five targeted firms: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
Fannie Mae is announcing new servicer requirements to streamline and simplify servicing processes, help servicers to contact delinquent borrowers more effectively, determine eligibility and offer foreclosure prevention alternatives to struggling homeowners. These new requirements begin implementing the consistent mortgage loan servicing and delinquency management requirements described in FHFA’s April 28, 2011 directive to Fannie Mae and Freddie Mac, as well as other related delinquency management policy changes.
Chanel Rosario was supposed to be one of the lucky ones. After years of sending and re-sending documents, waiting on hold and attending court hearings to avoid foreclosure on her Staten Island home, she’d finally received a much-needed reduction on her mortgage. Eagerly, she and her husband signed it and mailed it in last September. “We thought it was over.”
It wasn’t. After months of making payments, Rosario called the bank handling her mortgage, Chase Home Finance, and found out Chase was still reporting her as delinquent, damaging her credit score and putting her home in jeopardy. Despite months of trying to get an explanation with the help of a legal-aid attorney, she still doesn’t know why Chase isn’t abiding by the agreement.
Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, received a subpoena from the Manhattan District Attorney’s office seeking information on the firm’s activities leading into the credit crisis, according to two people familiar with the matter.
Mr. John Walsh
Acting Comptroller of the Currency
Comptroller of the Currency
Administrator of National Banks
Washington, D.C. 20219
The Honorable Ben S. Bernanke
Chairman
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Mr. John E. Bowman
Office of Thrift Supervision
Department of Treasury
Washington, D.C. 20552
The Honorable Sheila Bair Acting Director
Chairman
Federal Deposit Insurance Corporation
Washington, D.C. 20429
Dear Acting Comptroller Walsh, Chairman Bernanke, Acting Director Bowman, and Chairman Bair:
I am writing to request copies of “engagement letters” concluded between 14 mortgage servicing companies and the private consultants you directed them to hire to conduct reviews of their widespread foreclosure abuses. Pursuant to consent orders issued by your offices on April 13, 2011, today is the date by which your offices were supposed to have approved these engagement letters.
Findings of “Critical Weaknesses” and “Widespread Risk”
On April 13, 2011, your agencies announced that you had completed an “Interagency Review” of widespread foreclosure abuses by 14 mortgage servicing companies. You issued a public summary of your review with the following conclusions:
The reviews found critical weaknesses in servicers’ foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third-party vendors, including foreclosure attorneys.
Your public summary also found:
[T]he weaknesses at each servicer, individually or collectively, resulted in unsafe and unsound practices and violations of applicable federal and state law and requirements. The results elevated the agencies’ concern that widespread risks may be presented—to consumers, communities, various market participants, and the overall mortgage market. The servicers included in this review represent more than two-thirds of the servicing market. Thus, the agencies consider problems cited within this report to have widespread consequences for the national housing market and borrowers.
Finally, your public summary stated:
[E]xaminers did note cases in which foreclosures should not have proceeded due to an intervening event or condition, such as the borrower (a) was covered by the Servicemembers Civil Relief Act, (b) filed for bankruptcy shortly before the foreclosure action, or (c) qualified for or was paying in accordance with a trial modification.
Order to Hire Private Consultants to Conduct Further Review
To address these major systemic deficiencies, your agencies issued “consent orders” that required these 14 mortgage servicing companies to hire private consultants to conduct a more thorough review of the files of affected homeowners. Rather than conducting these reviews yourselves, you directed each mortgage servicing company to “retain an independent firm to conduct a review of residential foreclosure actions that were pending at any time from January 1, 2009, through December 31, 2010.”
According to your agencies, these more comprehensive reviews were necessary because your Interagency Review covered a “relatively small number of files.” These more thorough reviews by private consultants are supposed to “identify borrowers that have been financially harmed” and “provide remediation to these borrowers.” Specifically, you directed the mortgage servicing companies to “determine any financial injury to borrowers caused by errors, misrepresentations, or other deficiencies identified in the review, and to remediate, as appropriate, those deficiencies.”
As part of this process, your agencies permitted the mortgage servicing companies and their private consultants to propose “the methodology for conducting the Foreclosure Review,” the “selection of criteria for cases to be reviewed,” and “any proposed sampling techniques.”
In response to critics of your decision to allow the mortgage servicing companies to hire their own consultants to conduct these reviews, your agencies asserted that you would “ensure that the reviews are comprehensive and the results are reliable.” As part of this oversight effort, you directed all 14 mortgage servicing companies to submit for your approval “engagement letters” establishing the terms of the review and the methodologies to be used. These engagement letters were due within 45 days of the date of the consent orders.
Request for “Engagement Letters” with Private Consultants
Today is the date these engagement letters are due. I request that you provide copies of all engagement letters by Friday, June 3, 2011. If any of the 14 mortgage servicing companies has not concluded an engagement letter with a private consultant, please provide an explanation of the current status of the engagement letter.
When producing documents, please deliver copies to the Minority Staff in Room 2471 of the Rayburn House Office Building and the Majority Staff in Room 2157 of the Rayburn House Office Building. The Committee prefers, if possible, to receive all documents in electronic format. If you have any questions about this request, please contact Justin Kim at (202) 225-5051 (202) 225-5051. I appreciate your cooperation with this matter.
Sincerely,
Elijah E. Cummings
Ranking Member
cc: The Honorable Darrell E. Issa, Chairman
Committee on Oversight and Government Reform
Federal legislation introduced last week is giving credence to a battle being fought in Middle Tennessee by bankruptcy trustee Henry “Hank” Hildebrand.
U.S. banks and state attorneys general, seeking to avoid $17 billion in court claims over faulty foreclosures, are discussing a settlement framework that may let firms choose from a menu of options for helping borrowers, two people briefed on the talks said.
Under the proposal, Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc. would pay penalties and pledge billions of dollars in relief to home buyers, one of the people said, asking not to be named because the talks are private. Firms may fulfill obligations to borrowers over time, choosing among options such as reducing loan principal, cutting fees or paying moving costs, the people said.
NOTE: We’ll take the $17 Billion over the AG’s “settlement”!
If settlement happens, they SHOULD prohibit any of them from coming at you with a deficiency!
WSJ-
State attorneys general told the nation’s five largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, according to people familiar with the matter.
The figure doesn’t cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven’t proposed a specific comprehensive settlement figure, but Tuesday’s …
“I think we found a white elephant, flying pig and unicorn”
REUTERS–
Goldman Sachs Group Inc (GS.N) executives have good reason to be worried about the risk of receiving subpoenas from the Justice Department, and investors should be concerned too.
The U.S. government has a real chance of finding inconsistencies between Goldman executives’ testimony to Congress and their internal documents, which means subpoenas could turn into something more serious, lawyers said.
The Office of the Comptroller of the Currency met with the 14 mortgage servicers Friday over details in the recently signed consent orders, sources familiar with the matter confirmed.
The orders are meant to settle recent foreclosure investigations. According to the orders, servicers must retain an independent firm to review foreclosure actions pending between Jan. 1, 2009 and Dec. 31, 2010. The review will be conducted to determine any financial injury to borrowers caused by the errors, misrepresentations or other deficiencies.
ATTORNEY GENERAL GEORGE JEPSEN
STATEMENT BY ATTORNEY GENERAL GEORGE JEPSEN
CONCERNING MORTGAGE FORECLOSURE INVESTIGATION
For immediate release ……………………………………..TUESDAY MAY 17, 2011
“The multistate investigation of the nation’s largest mortgage servicing companies confirms what my office has been told by thousands of Connecticut consumers, that these banks have done an incredibly poor job in dealing with the mortgage foreclosure mess they were instrumental in creating. As a result, millions of families have needlessly suffered, homeowners have lost billions of dollars in equity, and the real estate market continues to stagnate. Time is of the essence to fix this problem.
“Thus far, the national servicers have been unwilling to step up to the plate with the money necessary to address the full scope of the problems they themselves created. I believe they face substantial legal liability for their clearly illegal behavior should states be forced to sue. After being bailed out by American taxpayers, the banks owe those same taxpayers a real effort to partner with state and federal officials to clean up this mess.”
Attorney General Jepsen is a member of the National Association of Attorneys General multi-state task force seeking resolution of the mortgage foreclosure crisis
Matt Taibbi has a new article on Rolling Stone on the recent hearings in the U.S. Senate and whether or not Goldman Sachs executives should be facing criminal trials or not in the wake of ongoing investigations into their part in the financial meltdown we went through a few years ago. CNN decided to bring in the Atlantic Monthly’s Wall Street apologist Megan McArdle to debate Taibbi on Your Money.
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges
Rolling Stones-
They weren’t murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Warning: This is a long blog post. But if you follow mortgage servicing, I think you’ll find it worth reading. Despite lots and lots of media coverage of the servicing fraud settlement, nobody seems to understand the real story that’s going on. I think that this post will explain a lot.
Let’s start by recapping what we know. Back in March we started hearing media reports of a proposed penalty for servicers in the $20-$30B range. Then the American Banker published a 27-page term sheet from the AGs for servicing standards. Next, Huffington Post published a 7-page CFPB powerpoint presentation. Then came the draft C&D orders and then in April, the final C&D orders (which eliminated the ridiculous “single point of contact which need not be a single person” and replaced it with “single point of contact as hereinafter defined” and then failed—quite deliberately—to define it anywhere in the document).
Now there’s another round of activity and conflicting reporting. The American Banker reported that there was a new AG term sheet proposed and that principal reductions were off the table. That turns out to be incorrect, as Shahien Nasiripour reported in the Huffington Post. The new AG term sheet that the American Banker referenced deals only with servicing standards. The American Banker assumed that this mean that principal reductions were off the table because they weren’t referenced in the term sheet. In fact they are still very much in play. They’re just in a second, separate term sheet. So now there are two separate term sheets–one covering servicing standard and another covering monetary issues/principal reductions. (Recall that the original AG term sheet did not cover the monetary issues—that was clearly for a separate document.) We are also hearing news reports that the banks are offering to settle for $5B and won’t go above $10B.
For those of you that disagree, please read this post to understand why this makes perfect sense…
HuffPo-
The nation’s five largest mortgage firms may be forced to reduce loan balances for distressed homeowners as part of an agreement with state attorneys general and the Obama administration to settle claims of faulty mortgage practices, a top state official involved in the negotiations said Tuesday.
State attorneys general are descending on Washington again this week for negotiations with federal regulators and the nation’s largest mortgage servicers over the purpose of a multibillion-dollar fund aimed at helping troubled borrowers.
The idea behind the yet-to-be-created fund, the size of which remains in flux but could eclipse $20 billion, is to punish the servicers for their shoddy foreclosure practices, which came to light in the fall, and to put that money toward keeping struggling homeowners in their homes.
This Special Foreclosure Edition describes lessons learned from an interagency review of foreclosure practices at the 14 largest residential mortgage servicers and includes examples of effective mortgage servicing practices derived from these lessons.
First of all, the problems we found were extensive. Our reviews found significant weaknesses in foreclosure governance and document preparation: improper affidavits were submitted and documents were notarized improperly. Servicers devoted insufficient financial, staffing and managerial resources to foreclosure processing. Third party providers of foreclosure-related services, including outside law firms, were not adequately supervised, and, in a limited number of cases, servicers failed to ensure proper endorsement of promissory notes or mortgage documents.
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