June's job market are terrible: Just 18,000 created jobs.
Saturday, July 09, 2011
Two House committee held hearings to review Federal regulators' role in ongoing mortgage servicing agreement
@ 3:12:30 pm Mr. Stevens on foreclosure mills and robo-signing: “Laws were violated”, “Legal violations” , “Card table with Burger King kids”, and “ Laws broken by some institiutions not all.”
@3:17:50 Mr. Manzullo on MERS: “By-pass recorder”, “That’s the reason now a lot of people who don’t know who owns the note”, don’t know who owns the mortgage”, and “automation thing made it worse”
Washington, Jul 6 - Two Financial Services subcommittees will hold a joint hearing on Thursday, July 7 to review the role of Federal regulators in the ongoing mortgage servicing settlement negotiations and the development of new mortgage servicing standards. Witnesses will include regulators from the Office of the Comptroller of the Currency, the FDIC, and the Consumer Financial Protection Bureau, and two state attorneys general.
The joint hearing is being conducted by the Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Oversight and Investigations.
Witnesses scheduled to testify:
Panel I:
Julie Williams, First Senior Deputy Comptroller and Chief Counsel, Office of the Comptroller of the Currency
Mark Pearce, Director, Division of Depositor and Consumer Protection, Federal Deposit Insurance Corporation
Raj Date, Associate Director of Research, Markets, and Regulation, Consumer Financial Protection Bureau, U.S. Department of the Treasury
Luther Strange, Alabama Attorney General
TBA, State Attorney General
Panel II
David Stevens, President, Mortgage Bankers Association
Michael Calhoun, President, Center for Responsible Lending
http://financialservices.house.gov/News/DocumentSingle.aspx?DocumentID=250054
CitiMortgage Sued by Iraq War Veteran Over Home Foreclosure
A Citigroup Inc. (C) unit was sued by an Iraq War veteran who claims the lender illegally foreclosed on his home while he was on active military duty.
Jorge Rodriguez, a U.S. Army sergeant, claimed in a complaint filed today in federal court in Manhattan that he was in training in preparation for deployment to Iraq in 2006 when CitiMortgage filed a foreclosure suit against his home in Del Valle, Texas.
CitiMortgage lawyers falsely said in an affidavit that Rodriguez wasn’t on active service at the time, depriving him of protection under the Servicemembers Civil Relief Act, or SCRA, according to the complaint. Rodriguez is seeking to have the suit certified as a class action against CitiMortgage on behalf of other service members whose homes were foreclosed.
“This was not an isolated incident,” Rodriguez said in the complaint. Beginning in December 2003, “CitiMortgage initiated thousands of foreclosure proceedings across the United States without adequate safeguards to ensure that service members on active duty were not targeted by CitiMortgage’s foreclosures.”
BofA Freezes Unemployed Single Mom's Accounts After Nearly $3 Million In Mysterious Overdrafts
An unemployed single mom in Orlando either managed to overdraft nearly $3 million from her accounts at Bank of America or the bank's computers went haywire and mistakenly debited each of her three accounts to the tune of around $900,000. Regardless, the woman says BofA is attempting to close those accounts, leaving her and her family in dire financial straits.
When she attempted to log onto her account via the BofA website, the woman found she'd been locked out of her account. So she went to the bank to find out what was going on.
"They wouldn't give me any of my money and said they were in the process of closing my accounts and would send me a check in 10 to 15 business days," she tells Orlando's WESH TV.
She says her unemployment benefits and child support payments are both directly deposited into the closed accounts and if she can't get access to her money by Friday, she won't be able to pay rent.
A Bank of America rep tells WESH that this appears to be a very isolated incident. After being contacted by the TV station, BofA agreed to keep one of the woman's accounts open while it investigates.
Woman's Accounts Frozen After $3M Overdraft [WESH.com]
When she attempted to log onto her account via the BofA website, the woman found she'd been locked out of her account. So she went to the bank to find out what was going on.
"They wouldn't give me any of my money and said they were in the process of closing my accounts and would send me a check in 10 to 15 business days," she tells Orlando's WESH TV.
She says her unemployment benefits and child support payments are both directly deposited into the closed accounts and if she can't get access to her money by Friday, she won't be able to pay rent.
A Bank of America rep tells WESH that this appears to be a very isolated incident. After being contacted by the TV station, BofA agreed to keep one of the woman's accounts open while it investigates.
Woman's Accounts Frozen After $3M Overdraft [WESH.com]
Can Brian Moynihan fix BofA?
Source: Fortune
It's hard to think of a company that emerged from the financial crisis more despised than Bank of America. Sure, Goldman Sachs gets pilloried as a symbol of Wall Street greed and excess. But when you count up the various constituencies that have a beef with BofA — homeowners, consumers, investors, regulators — it's really no contest. The infamous 2008 acquisition of mortgage giant Countrywide saddled America's biggest bank with the largest, most toxic portfolio of home loans in the business, as well as an ongoing public relations nightmare. Due in large part to its mortgage woes, Bank of America's stock remains some 80% off its pre-crisis high of $55. In the minds of many, BofA epitomizes the sorry state of the whole damaged U.S. economy.
In his first 17 months on the job, Bank of America CEO Brian Moynihan did little to dispel that image — or to win the confidence of Wall Street.
It's hard to think of a company that emerged from the financial crisis more despised than Bank of America. Sure, Goldman Sachs gets pilloried as a symbol of Wall Street greed and excess. But when you count up the various constituencies that have a beef with BofA — homeowners, consumers, investors, regulators — it's really no contest. The infamous 2008 acquisition of mortgage giant Countrywide saddled America's biggest bank with the largest, most toxic portfolio of home loans in the business, as well as an ongoing public relations nightmare. Due in large part to its mortgage woes, Bank of America's stock remains some 80% off its pre-crisis high of $55. In the minds of many, BofA epitomizes the sorry state of the whole damaged U.S. economy.
In his first 17 months on the job, Bank of America CEO Brian Moynihan did little to dispel that image — or to win the confidence of Wall Street.
Biloxi Buzz for Saturday
Dems Hit Eric Cantor For Potentially Profiting From U.S. Default
[Update 1: Adds HUD commentary on GSEs] An $8 billion program launched by the Federal Housing Administration in September to help underwater borrowers refinance into a new mortgage has quietly sputtered out of the gate. The FHA Short Refi program was initially...
[Update 1: Adds HUD commentary on GSEs] An $8 billion program launched by the Federal Housing Administration in September to help underwater borrowers refinance into a new mortgage has quietly sputtered out of the gate. The FHA Short Refi program was initially...
Ex-News Of The World Editor Secretly Recorded During Staff Meeting
BP Wants To End Payments To Spill Victims
As Wall St. Polices Itself, Prosecutors Use Softer Approach
As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.
Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.
Read on.
Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
The guidelines left open a possibility other than guilty or not guilty, giving leniency often if companies investigated and reported their own wrongdoing. In return, the government could enter into agreements to delay or cancel the prosecution if the companies promised to change their behavior.
Read on.
CALIFORNIA ATTORNEY GENERAL PUBLISHES LIST OF BUSINESSES AND INDIVIDUALS WHO ARE INTO LOAN MOD FRAUD
CURRENT LIST PROVIDED BY THE STATE ATTORNEY GENERAL OF CALIFORNIA OF LOAN MOD FRAUDSTERS-BOTH INDIVIDUALS AND BUSINESSES. ALSO SOME TIPS ON HOW TO AVOID: http://ag.ca.gov/loanmod/index.php
July 2011 From the Office of the Attorney General State of California -Loan Mod Fraud List and Tips to avoid
July 2011 From the Office of the Attorney General State of California -Loan Mod Fraud List and Tips to avoid
Massachusetts bankruptcy judge, other courts validate MERS assignments
Mortgage Electronic Registration Systems, the real estate registry at the center of foreclosure litigation, says a U.S. Bankruptcy Court in Massachusetts validated a MERS title assignment this week despite the promissory note moving through a succession of owners.
The case was decided by Bankruptcy Judge Melvin Hoffman who said "Massachusetts law allows a mortgagee with no interest in the underlying obligation to foreclose, the trustee's argument that MERS did not have a sufficient interest in the debtor's property to foreclose the mortgage fails."
The judge added, "the fact the debtors' promissory note passed like a hot potato down a line of owners, including some in bankruptcy and liquidation, with no accompanying assignment of the note holders beneficial interest in the mortgage, changes nothing."
"The court has taken note of MERS' unchanging role as mortgagee when a loan is transferred, and also noted that this role does not change unless and until MERS itself assigns the mortgage to another entity," the Reston-Va.-based company said.
Read on.
The case was decided by Bankruptcy Judge Melvin Hoffman who said "Massachusetts law allows a mortgagee with no interest in the underlying obligation to foreclose, the trustee's argument that MERS did not have a sufficient interest in the debtor's property to foreclose the mortgage fails."
The judge added, "the fact the debtors' promissory note passed like a hot potato down a line of owners, including some in bankruptcy and liquidation, with no accompanying assignment of the note holders beneficial interest in the mortgage, changes nothing."
"The court has taken note of MERS' unchanging role as mortgagee when a loan is transferred, and also noted that this role does not change unless and until MERS itself assigns the mortgage to another entity," the Reston-Va.-based company said.
Read on.
Friday, July 08, 2011
AG Settlement Over Foreclosures Won't Meet OCC’s July 13 Deadline
A settlement over foreclosure practices between the nation's five largest mortgage servicers, federal agencies and the states’ attorneys general will not be reached by next Tuesday.
July 13 is the deadline for the banks to submit plans for improving their servicing standards on loan modifications and foreclosures to the Office of the Comptroller of the Currency (OCC). The deadline was extended by 30 days last month at the request of the Department of Justice, which is coordinating the actions of the states attorneys general and the OCC.
There was a possibility the attorneys general and the OCC would coordinate the settlement and the submission of the action plans as both require banks to adopt more stringent standards for carrying out loan modifications and foreclosures. Whether this happens now depends on whether the DOJ asks for another extension.
Jailed for cashing Chase check at Chase bank
AUBURN, Wash. - Buying his own home was a big accomplishment for construction worker, Ikenna Njoku, of Auburn. He’s only 28 years old.
“I was really excited. For the first time, I actually got to buy a lawn mower, mow my lawn and everything,” said Njoku.
Njoku qualified for the first time home buyer rebate on his tax return.
"It was really important, I had a vehicle I was looking on paying off," said. Njoku. And it wasn’t just any vehicle. “It was a 2001 Infinity I-30, silver…just like my favorite car, “he said.
Njoku signed up to have the rebate deposited directly into his Chase Bank account. But when the IRS rebate arrived, there was a problem. Chase had closed Njoku’s account because of overdrawn checks in the past. The bank deducted $600 to cover what he owed them and mailed him a cashier’s check for the difference--$8,463.21.
But when Njoku showed up at the Chase branch near his house intending to cash the check, he was in for a nasty surprise.
The check had Njoku’s name and address on it and was issued by JP Morgan Chase. But the Chase Customer Banker who handles large checks at the Auburn branch was immediately suspicious.
“I was embarrassed,” Njoku said. “She asked me what I did for a living. Asked me where I got the check from, looked me up and down—like ‘you just bought a house in Auburn, really?’ She didn’t believe that,” he said.
The Customer Banker said the check looked fake, so she took it, along with Njoku’s driver license and credit card, and called Bank Support.
After waiting for about 15 minutes, Njoku said he got impatient and told Chase he was leaving to do an important errand. By the time he got back, the bank was closed. Njoku said he called customer service and asked them what he should do. He says they told him to go back to the bank the next day to get his money.
But when Njoku arrived, it wasn’t the money that was waiting for him.
“They just threw me in jail; they called the police and said this guy has a fraudulent check,” Njoku said.
Auburn police arrested him for forgery - a felony crime.
“I was like - you’re making a mistake, you’re making a mistake, don’t take me to jail, I got work tomorrow. I can’t afford to miss work,” he said.
Njoku was taken to jail on June 24, 2010, which was a Thursday. The next day, Chase Special Investigations, realized it was a mistake. The check was legitimate. The Investigator called Auburn Police and left a message with the detective handling the case, but it was her day off. So Njoku stayed in jail for the entire weekend. Finally, on Monday, he was released.
“I was really excited. For the first time, I actually got to buy a lawn mower, mow my lawn and everything,” said Njoku.
Njoku qualified for the first time home buyer rebate on his tax return.
"It was really important, I had a vehicle I was looking on paying off," said. Njoku. And it wasn’t just any vehicle. “It was a 2001 Infinity I-30, silver…just like my favorite car, “he said.
Njoku signed up to have the rebate deposited directly into his Chase Bank account. But when the IRS rebate arrived, there was a problem. Chase had closed Njoku’s account because of overdrawn checks in the past. The bank deducted $600 to cover what he owed them and mailed him a cashier’s check for the difference--$8,463.21.
But when Njoku showed up at the Chase branch near his house intending to cash the check, he was in for a nasty surprise.
The check had Njoku’s name and address on it and was issued by JP Morgan Chase. But the Chase Customer Banker who handles large checks at the Auburn branch was immediately suspicious.
“I was embarrassed,” Njoku said. “She asked me what I did for a living. Asked me where I got the check from, looked me up and down—like ‘you just bought a house in Auburn, really?’ She didn’t believe that,” he said.
The Customer Banker said the check looked fake, so she took it, along with Njoku’s driver license and credit card, and called Bank Support.
After waiting for about 15 minutes, Njoku said he got impatient and told Chase he was leaving to do an important errand. By the time he got back, the bank was closed. Njoku said he called customer service and asked them what he should do. He says they told him to go back to the bank the next day to get his money.
But when Njoku arrived, it wasn’t the money that was waiting for him.
“They just threw me in jail; they called the police and said this guy has a fraudulent check,” Njoku said.
Auburn police arrested him for forgery - a felony crime.
“I was like - you’re making a mistake, you’re making a mistake, don’t take me to jail, I got work tomorrow. I can’t afford to miss work,” he said.
Njoku was taken to jail on June 24, 2010, which was a Thursday. The next day, Chase Special Investigations, realized it was a mistake. The check was legitimate. The Investigator called Auburn Police and left a message with the detective handling the case, but it was her day off. So Njoku stayed in jail for the entire weekend. Finally, on Monday, he was released.
But on Thursday, Chase issued an apology.
JPM Pays $35 Million To Settle Bid Rigging Case
Reuters announced that the firm will settle a charges of a 6 year long bid-rigging fraud in municipal securities with the SEC... for the princely sum of $35 million.
"JPMorgan Chase was ordered to pay more than $35 million to settle allegations that employees participated in a bid-rigging scheme for derivatives sold to municipalities and non-profit organizations. The Office of the Comptroller of the Currency said JPMorgan employees engaged in the scheme beginning in at least 1999 though 2005, submitting false or sham courtesy bids and communicating with direct competitors to fix prices. The OCC said the enforcement action is part of a global resolution with the U.S. Department of Justice, Internal Revenue Service, Securities and Exchange Commission, Federal Reserve Board, and about 25 state attorneys general."
Moody's downgrades JPMorgan Chase mortgage servicer rating
Moody's Investors Service downgraded the mortgage servicer rating of JPMorgan Chase (JPM: 41.42 +2.12%) and Chase Home Financing.
Analysts said continued deterioration of JPMorgan's mortgage portfolio is largely responsible for the downgrade. Additionally, ongoing problems with foreclosures and operational challenges due to changes from Dodd-Frank financial reform also contributed to the downgrade.
Biloxi Buzz for Friday
Small banks need a place at mortgage table: Bair
Small banks need a role at the table in originating residential mortgages, and servicers need to simplify the loan modification process, according to Sheila Bair, outgoing Federal Deposit Insurance Corp. chairman. In an interview with Institutional Risk Analytics, Bair also said...
Small banks need a role at the table in originating residential mortgages, and servicers need to simplify the loan modification process, according to Sheila Bair, outgoing Federal Deposit Insurance Corp. chairman. In an interview with Institutional Risk Analytics, Bair also said...
OCC to release foreclosure review results without naming banks
Federal regulators will release findings from the upcoming mortgage servicer reviews along with the amount of financial remediation needed, leaving bank-specific information under wraps.
When 14 major mortgage servicers signed consent orders to settle an investigation into their foreclosure practices, the companies were required to hire third-party auditors to conduct a review. The goal is to find how widespread the robo-signing and other mishandled foreclosure practices had become and determine the amount of remediation needed.
The Office of the Comptroller of the Currency previously said the report would not be made public. But Julie Williams, the first senior deputy comptroller and chief counsel to the OCC told the House Finance Services Committee Thursday at least some of the reports will be released.
Mortgage forbearance programs for unemployed extended to one year
The Federal Housing Administration and the Treasury Department will require mortgage servicers to extend the forbearance period for unemployed homeowners to one full year.
The Obama administration also said Thursday it would remove "upfront hurdles" to the FHA Special Forbearance Program, which previously provided a four-month forbearance, to make it easier for unemployed borrowers to qualify.
The Treasury will require servicers participating in the Home Affordable Modification Program's unemployment initiative to extend the minimum forbearance period from three months to of 12. Borrowers participating in the HAMP Unemployment Program, or UP, will be able to obtain a forbearance if they are seriously delinquent.
Read on.
Fed Tells Lawmakers It Will Further Monitor Mortgage Servicers
The Federal Reserve Board will monitor mortgage servicers as they work to address “significant deficiencies” in servicing and foreclosure practices.
“We will continue to monitor and assess the corrective actions taken by the servicers and the holding companies, as required by the enforcement actions, and take further action when necessary to address failures,” the Fed’s Washington-based Board of Governors said in testimony to a House Financial Services subcommittee today.
The Fed’s testimony provided an overview of actions the central bank and other regulators took against mortgage servicing companies in recent years, including previously announced enforcement actions against 14 mortgage servicers in April.
Wells Fargo to Pay $125 Million to Settle Mortgage-Backed Securities Case
Wells Fargo & Co. (WFC) agreed to pay $125 million to settle accusations by investors that the bank misled them about the risks of mortgage-backed securities it sold.
The plaintiffs in the consolidated group case, or class action, include the General Retirement System of Detroit, New Orleans Employees’ Retirement System and other public pensions, according to the settlement filed yesterday in federal court in San Jose, California.
Wells Fargo, the largest U.S. home lender, and several investment banks that underwrote the securities were sued in 2009 over alleged violations of securities laws in connection with sales of mortgage pass-through certificates. The bank and the underwriters deny wrongdoing, according to the court filing.
Read on.
Thursday, July 07, 2011
News Corp To Shutter News Of The World On Sunday As Phonehacking Scandal Claims First Victim
Full statement from James Murdoch:
News International today announces that this Sunday, 10 July 2011, will be the last issue of the News of the World.
Making the announcement to staff, James Murdoch, Deputy Chief Operating Officer, News Corporation, and Chairman, News International said:
“I have important things to say about the News of the World and the steps we are taking to address the very serious problems that have occurred.
It is only right that you as colleagues at News International are first to hear what I have to say and that you hear it directly from me. So thank you very much for coming here and listening.
You do not need to be told that The News of the World is 168 years old. That it is read by more people than any other English language newspaper. That it has enjoyed support from Britain’s largest advertisers. And that it has a proud history of fighting crime, exposing wrong-doing and regularly setting the news agenda for the nation.
Making the announcement to staff, James Murdoch, Deputy Chief Operating Officer, News Corporation, and Chairman, News International said:
“I have important things to say about the News of the World and the steps we are taking to address the very serious problems that have occurred.
It is only right that you as colleagues at News International are first to hear what I have to say and that you hear it directly from me. So thank you very much for coming here and listening.
You do not need to be told that The News of the World is 168 years old. That it is read by more people than any other English language newspaper. That it has enjoyed support from Britain’s largest advertisers. And that it has a proud history of fighting crime, exposing wrong-doing and regularly setting the news agenda for the nation.
Quote for Thursday; Open thread
Republican
Bank of America Loses Bid to Dismiss Homeowner Mortgage Modification Suit
Bank of America Corp. (BAC) must face claims from homeowners who accuse the biggest U.S. bank of failing to honor agreements for modifying their mortgage loans, a federal judge ruled.
Homeowners who say they met requirements for permanent modifications under contracts with the bank can proceed with their cases, according a decision filed today by U.S. District Judge Rya Zobel in Boston. Zobel dismissed some claims against the bank.
“The complaint meticulously details each plaintiff’s initial and ongoing compliance with all conditions,” Zobel wrote.
recentops.pl
JPMorgan, BofA Among Banks Said to Be Near $20 Billion Foreclosure Accord
JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and three other U.S. mortgage servicers are in advanced talks to resolve state and federal claims over faulty foreclosures, according to two people briefed on the matter.
Negotiators tentatively set a July 13 target for a settlement, which may exceed $20 billion, the people said, speaking on the condition of anonymity because the talks are private. Some banks are briefing their boards on deal terms, which would form state and federal funds to resolve claims and provide relief to borrowers, they said. The target date may be postponed as parties iron out details.
Attorneys general and federal officials are negotiating with the group of lenders -- also including Citigroup Inc. (C),Wells Fargo & Co. (WFC) and Ally Financial Inc. -- to resolve probes into how banks treated borrowers during a surge in mortgage defaults. A final agreement, setting standards for servicing loans and processing foreclosures, may serve as a template for claims against the rest of the industry.
The July 13 target corresponds with a separate deadline the Office of the Comptroller of the Currency set for banks to submit an “action plan” for fixing deficiencies and compensating people whose homes were improperly seized. If talks aren’t done by then, the OCC may push back its date, the people said.
Also,Sources close to the negotiations between the state attorneys general and mortgage servicers told the New York Post Wednesday they are nearing a $60 billion settlement in the robo-signing investigation.
But analysts said the that not all of the reported $60 billion would go to the state as a fine. Some would go to modify mortgages. If so, the settlement could be offset by the amount of loss provisions these banks have already set aside on these loans.
Atlanta School Cheating Scandal Unveiled By Reporters
Three years ago, Heather Vogell, an investigative reporter at the Atlanta Journal Constitution, sat down with a data analyst to crunch some numbers.
She had just received the latest crop of scores for the CRCT, a state standardized test. Curiously, Vogell noted, several schools statewide had changed in status between the spring 2008 administration of the test and the summer retest in 2008, going from not meeting Adequate Yearly Progress rates, a calculation set by federal legislation that determines the fates of individual schools, to meeting the measure.
"We saw there were a lot more schools that met AYP than we had expected. It was a larger shift," Vogell told The Huffington Post.
Like any intrepid reporter, she had some questions. "We were poking around. We saw some schools that had very hard to believe gains, just looking with the naked eye," she said.
After performing a statistical analysis with her data guru, she found something curious: a handful of schools had increased their performance so much more than they had been expected to that it raised questions over whether educators had intervened in the testing process. She published her first story in December 2008, highlighting schools where the gains seemed astronomical.
Three years later, the answers to those questions made national news, with Tuesday’s revelation that a state-commissioned investigation found rampant, systemwide cheating in 44 Atlanta public schools, with 178 teachers and principals routinely erasing incorrect answers on standardized tests and replacing them with correct ones. The cheating inflated the scores of thousands of students, giving the false impression of their -- and Atlanta's -- success.
She had just received the latest crop of scores for the CRCT, a state standardized test. Curiously, Vogell noted, several schools statewide had changed in status between the spring 2008 administration of the test and the summer retest in 2008, going from not meeting Adequate Yearly Progress rates, a calculation set by federal legislation that determines the fates of individual schools, to meeting the measure.
"We saw there were a lot more schools that met AYP than we had expected. It was a larger shift," Vogell told The Huffington Post.
Like any intrepid reporter, she had some questions. "We were poking around. We saw some schools that had very hard to believe gains, just looking with the naked eye," she said.
After performing a statistical analysis with her data guru, she found something curious: a handful of schools had increased their performance so much more than they had been expected to that it raised questions over whether educators had intervened in the testing process. She published her first story in December 2008, highlighting schools where the gains seemed astronomical.
Three years later, the answers to those questions made national news, with Tuesday’s revelation that a state-commissioned investigation found rampant, systemwide cheating in 44 Atlanta public schools, with 178 teachers and principals routinely erasing incorrect answers on standardized tests and replacing them with correct ones. The cheating inflated the scores of thousands of students, giving the false impression of their -- and Atlanta's -- success.
Federal Bank Regulators Scrutinizing Mortgage Lawsuits Against Banks, Opening New Worry For Investors, Bankers
WASHINGTON -- Federal bank regulators are scrutinizing more than 150 home loan-related lawsuits directed at lenders and mortgage companies, a top official at the Federal Deposit Insurance Corporation plans to say Thursday, underscoring the threat the largest U.S. banks face from faulty and improper mortgage and foreclosure practices.
The revelation will likely add to large banks' woes, as the five biggest servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- currently face up to $30 billion in penalties from state attorneys general and federal agencies for wrongful foreclosures and other mortgage-related misdeeds.
Lenders and servicers, which collect borrowers' monthly payments and foreclose on them when they fall behind, face 67 pending class-action suits in more than 20 states that challenge foreclosures based on so-called "robo-signing" and other poor documentation practices, according to FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel.
The companies face 57 additional suits in 25 states over alleged improprieties resulting from loan modifications in the Obama administration's signature foreclosure-prevention initiative, known as HAMP, and 24 lawsuits over non-HAMP modifications, according to the remarks. Further, investors in mortgage securities have filed 21 suits that allege misconduct and seek to force banks to buy back the loans at face value, an outcome that could cost banks hundreds of billions of dollars.
The FDIC is also tracking separate suits launched by state attorneys general in Ohio, Nevada and Arizona against Ally and Bank of America.
The revelation will likely add to large banks' woes, as the five biggest servicers -- Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial -- currently face up to $30 billion in penalties from state attorneys general and federal agencies for wrongful foreclosures and other mortgage-related misdeeds.
Lenders and servicers, which collect borrowers' monthly payments and foreclose on them when they fall behind, face 67 pending class-action suits in more than 20 states that challenge foreclosures based on so-called "robo-signing" and other poor documentation practices, according to FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel.
The companies face 57 additional suits in 25 states over alleged improprieties resulting from loan modifications in the Obama administration's signature foreclosure-prevention initiative, known as HAMP, and 24 lawsuits over non-HAMP modifications, according to the remarks. Further, investors in mortgage securities have filed 21 suits that allege misconduct and seek to force banks to buy back the loans at face value, an outcome that could cost banks hundreds of billions of dollars.
The FDIC is also tracking separate suits launched by state attorneys general in Ohio, Nevada and Arizona against Ally and Bank of America.
Read on.
Here is FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel. READ THE STATEMENT: Mark Pearce 7-7-11 testimony
Here is FDIC Director of Depositor and Consumer Protection Mark Pearce's prepared remarks for a Thursday congressional panel. READ THE STATEMENT: Mark Pearce 7-7-11 testimony
Treasury to reward servicers for quicker mortgage modifications
The Treasury Department will pay mortgage servicers more for modifying loans in an earlier stage of delinquency and less the longer the process takes, according to guidance released Wednesday.
The Treasury said these same guidelines, effective Oct. 1, will be adopted by Fannie Mae and Freddie Mac when the Federal Housing Finance Agency aligns the new mortgage servicing fee structures that same month.
Through HAMP, a servicer receives $1,000 when a homeowner is placed into a verified income trial modification that would last three months before turning permanent. Since the program launched in March 2009, servicers started 1.6 million trials and started roughly 731,000 permanent modifications through May.
Obama administration pressures banks to reduce mortgage principal
The Obama administration is putting more pressure on banks to help underwater borrowers by reducing the principal on current home loans.
"We are continuing work with the issuers of the mortgage, the bank or service company to convince them to work with homeowners who are paying to see if they can modify the loan and possibly lower principal so that they are not burdened by these huge debts," President Obama said during the Twitter town hall meeting Wednesday.
More on $8.5 Billion BofA Settlement Conflicts: 2/3 of Trustee’s RMBS Business is From BofA
In a 2011 paper on mortgage servicing in the Yale Journal on Regulation, Adam Levitin and Tara Twomey present data that shows that over 3/5 of BoNY’s RMBS trustee business comes from BofA/Countrywide. From pages 60 and 61:
Additionally, there is often a very close relationship between the servicer and the trustee; many originators and servicers have a ―pet‖ or ―pocket‖ trustee that they use for most of their deals. For example, nearly two-thirds of Bank of New York Mellon‘s (―BNY Mellon‖) RMBS trusteeships are for Countrywide-Bank of America deals.228 This is hardly unique given the concentration in the trustee market, shown in Figures 13 and 14, with seven trustees making up around 90% of the market, and four trustees comprising around two-thirds of the market. This broader relationship has the potential to reduce monitoring of the servicer by the trustee. Because such a large portion of BNY Mellon‘s RMBS trustee business comes from one single depositor, BNY Mellon will inevitably have to be deferential to that depositor. And because the depositor frequently serves as the servicer, BNY Mellon as trustee will have a strong incentive to be deferential to Countrywide as servicer.
And a couple of pages later…
Corporate trustees can easily have oblique conflicts of interest like a business relationship dependency, such as the one between Countrywide and BNY Mellon. This oblique conflict further diminishes the trustee‘s already limited incentive to monitor the servicer, even within its limited duties.
Additionally, there is often a very close relationship between the servicer and the trustee; many originators and servicers have a ―pet‖ or ―pocket‖ trustee that they use for most of their deals. For example, nearly two-thirds of Bank of New York Mellon‘s (―BNY Mellon‖) RMBS trusteeships are for Countrywide-Bank of America deals.228 This is hardly unique given the concentration in the trustee market, shown in Figures 13 and 14, with seven trustees making up around 90% of the market, and four trustees comprising around two-thirds of the market. This broader relationship has the potential to reduce monitoring of the servicer by the trustee. Because such a large portion of BNY Mellon‘s RMBS trustee business comes from one single depositor, BNY Mellon will inevitably have to be deferential to that depositor. And because the depositor frequently serves as the servicer, BNY Mellon as trustee will have a strong incentive to be deferential to Countrywide as servicer.
And a couple of pages later…
Corporate trustees can easily have oblique conflicts of interest like a business relationship dependency, such as the one between Countrywide and BNY Mellon. This oblique conflict further diminishes the trustee‘s already limited incentive to monitor the servicer, even within its limited duties.
Allstate files $104 million lawsuit against Morgan Stanley for RMBS loans
Allstate Insurance (ALL: 30.67 -0.36%) filed a $104 million lawsuit against Morgan Stanley (MS: 22.66 -2.12%) this week, claiming the investment bank misrepresented toxic loans underlying residential mortgage-backed securities sold to Allstate.
Allstate's complaint against Morgan Stanley is the latest in a series of legal filings initiated by the insurer against big banks on the grounds they sold RMBS without disclosing some of the dangers tied to the underlying collateral.
By mid-March, Allstate had sued seven banks over RMBS sales, including Credit Suisse (CS: 38.63 -1.55%), Bank of America (BAC: 10.71 -2.64%) and JPMorgan Chase (JPM: 40.495 -1.30%). Three months ago, Allstate estimated it had acquired $2.78 billion in mortgage-backed securities during the run-up to the financial meltdown.
In the suit filed this week, Allstate claims it purchased $104 million in RMBS securitized by Morgan Stanley (MS: 22.66 -2.12%) after trusting the bank's assertion that loan originators used conservative underwriting guidelines.
Read on.
Allstate's complaint against Morgan Stanley is the latest in a series of legal filings initiated by the insurer against big banks on the grounds they sold RMBS without disclosing some of the dangers tied to the underlying collateral.
By mid-March, Allstate had sued seven banks over RMBS sales, including Credit Suisse (CS: 38.63 -1.55%), Bank of America (BAC: 10.71 -2.64%) and JPMorgan Chase (JPM: 40.495 -1.30%). Three months ago, Allstate estimated it had acquired $2.78 billion in mortgage-backed securities during the run-up to the financial meltdown.
In the suit filed this week, Allstate claims it purchased $104 million in RMBS securitized by Morgan Stanley (MS: 22.66 -2.12%) after trusting the bank's assertion that loan originators used conservative underwriting guidelines.
Read on.
Supreme Court Justice Schack orders HSBC CEO appear in court and explain why it should not be penalized for submitting false docs in a foreclosure case
A Brooklyn judge has ordered the head of one of the nation's biggest banks to appear in court and explain why it should not be penalized for submitting false documents in a foreclosure case.
In a scathing decision issued Friday, Supreme Court Justice Arthur Schack dismissed HSBC's case against Bedford-Stuyvesant homeowner Ellen Tahrer as a "frivolous motion" and a "waste of judicial resources."
The bank failed to prove it even owned the $475,000 mortgage on Tahrer's home, Schack ruled. Instead, its lawyers submitted documents from several notorious "robo-signers," all of which claimed the original loan had been transferred to HSBC from Delta Funding Corp., the original lender, which declared bankruptcy in 2007.
Those documents were "replete with false statements," Schack ruled. He ordered the British bank's North American CEO, Irene Dorner, to appear July 15 to explain.
Tahrer, 55, the delinquent homeowner, still lives in the two-story home and had no idea what had happened with her case.
Goldman Sachs Took Biggest Loan During Fed's Emergency Program
WASHINGTON - Goldman Sachs, Lehman Brothers, and European banks RBS and UBS were the biggest beneficiaries of very short-term Federal Reserve loans extended at the height of the financial crisis, according to data released on Wednesday.
The details of the lending program were disclosed after a lengthy legal battle eventually won by Bloomberg News LLP. The data, available on the Fed's website, showed Goldman took $15 billion in exchange for securities ranging from Treasuries to mortgage bonds. Swiss-based UBS AG (UBSN.VX), UK-based RBS Royal Bank of Scotland (RBS.L) and Lehman took $10 billion each.
The program worked as an emergency lending facility for large primary dealer banks that deal directly with the Fed.
The details of the lending program were disclosed after a lengthy legal battle eventually won by Bloomberg News LLP. The data, available on the Fed's website, showed Goldman took $15 billion in exchange for securities ranging from Treasuries to mortgage bonds. Swiss-based UBS AG (UBSN.VX), UK-based RBS Royal Bank of Scotland (RBS.L) and Lehman took $10 billion each.
The program worked as an emergency lending facility for large primary dealer banks that deal directly with the Fed.
A Tale of Two Orange Counties
“We never had any problems until Chase purchased our note. As soon as Chase purchased our loan, we started getting notices that we had not paid our taxes and that we were therefore in default under the terms of the mortgage. This was never true, and I spent hours and hours on the phone with the callers from Chase, explaining that the taxes had been paid but it did not work.” , said homeowner Mary Mason in a sworn statement filed with the Superior Court of New Jersey Chancery Division : Essex County.
“I could not understand how I could explain to them that the taxes were paid, that I had receipts from the town and cancelled checks, and that the city tax clerk’s records showed no taxes due, and still the bank representatives claimed that we were in default for not paying our taxes or insurance.”
The Masons sent Chase records of payments, copies of checks, tax payment receipts, all to no avail.
“It is difficult to explain to this Court the pain that this has caused to me and to my family. My mother, who is very elderly and ill, is in my care. I lost many nights of sleep worrying about what would happen to my mother and to us if the bank threw us out on the street. I really believed that there was nothing we could do.”
So as the back and forth correspondence and phone calls continued over two years, the Masons eventually contacted and retained a lawyer. The first lawyer they contacted may have found the clerical mistake that Chase had made with the Mason’s loan.
“I think he spoke to the bank at least once, because he told me that it seemed as though Chase had made an error when they purchased the note and mortgage on our home. We live in Orange, New Jersey, and he seemed to think that what was told to him was maybe Chase had put our home in as Orange, California, a much more well- known Orange. I have no idea what the problem is, but I do know that the problem belongs to Chase because none of the other banks who owned our note and mortgage ever made any mistakes on the loan.” testified Mary Mason.
You can check out the rest of the report here…Chase v Mason Motion to Dismiss
Donald Trump Trumps Bank of America, Buys Front Yard, Most of the Driveway and a Large Chunk of Back Yard Before Foreclosure
Before the February foreclosure, Mr. Trump paid $500,000 for about 200 acres around the house. The property included most of the front yard, most of the driveway and a large chunk of the back yard. The deal also included a right of first refusal on the mansion, meaning that Mr. Trump had the right to match the offer of any other would-be buyer.”
From the WSJ…
As Ms. Kluge’s empire collapsed, Mr. Trump bought. Over the past six months, he swooped in and picked up many of the pieces of her palatial Virginia estate and winery. He bought the 1,000-acre vineyard and winery for a fraction of their original value. He bought 200 acres nearby for less than $500,000, with help from Ms. Kluge and her son.
Now, the pompadoured billionaire and reality-TV star may have outplayed a much bigger rival in a bid for Ms. Kluge’s crown jewel: her mansion. Bank of America owns the house after foreclosing and is trying to sell it for $16 million. The 24,000-square-foot neo-Georgian palace has 45 rooms, a spa, home theater, 3,500-bottle wine cellar and 2,000-square-foot sitting room.
One thing the house doesn’t have, however, is a front yard. Mr. Trump owns that, having purchased it with his 200 acres. He also owns most of the driveway and the backyard, making a sale to any other buyer difficult. Mr. Trump said he would buy it from Bank of America for $3.6 million.
To make his point, he has erected signs on the front lawn of the mansion that read, “No Trespassing. This Land is Owned by Trump Virginia Acquisitions LLC,” aimed at warding off possible buyers. He has also let the lawn go to seed.
“Maybe someone is stupid enough to buy the house,” Mr. Trump said. “I wish them luck.”
Full story here…
DOJ claims MGIC refused to insure mortgage for woman on maternity leave
The Department of Justice filed a lawsuit against Mortgage Guaranty Insurance Corp. (MTG: 6.78 +12.07%), alleging the mortgage insurer violated the Fair Housing Act by requiring a woman on paid maternity leave to return to work before insuring her mortgage.
The case, which was filed Tuesday in the U.S. District Court for the Western District of Pennsylvania, claims the move by MGIC could hurt the women's chances of obtaining a home loan in the future. The plaintiff claims MGIC discriminated on the basis of sex and familial status.
Wednesday, July 06, 2011
3 Hitches in Bank of America’s Big Mortgage Settlement
The group of bond investors challenging the settlement — we don’t know their identities — may not succeed in the courts, of course. But at the very least their potential challenge shows BofA’s path out of mortgage hell may not be smooth.
The investor group, called Walnut Place, has at least three main objections to the BofA mortgage settlement reached last week:
1) Not Enough Money: Walnut Place said BofA is getting off too easy in only agreeing to dole out $8.5 billion — which is more than the bank’s collective profits since the financial crisis. According to the investor group’s court filing:
“[BofA unit] Countrywide may be liable to repurchase loans with unpaid principal balances of as much as $242 billion. The $8.5 billion that Countrywide and Bank of America have agreed to pay is therefore only a small fraction of the potential liability that they would have faced in litigation on behalf of the trusts.”
2) Settlement Investors Are Conflicted: Walnut Place sees conflicts-of-interest in the investors — including Pimco, BlackRock and the Federal Reserve Bank of New York — that negotiated the $8.5 billion settlement with BofA deal. Walnut Place said in its filing:
“[M]any of these 22 investors have substantial ongoing business relationships with Bank of America other than their ownership of certificates in Countrywide-sponsored trusts. For example, BlackRock Financial Management, Inc., is one of the 22 investors. During the time in which the Settlement Agreement was being negotiated, Bank of America owned up to 34 percent of BlackRock….Many other of the 22 investors also have substantial business dealings with Bank of America or its subsidiaries other than their ownership of certificates in Countrywide-sponsored trusts.”
3) Settlement Process Was Secret and Unfair: The Walnut Place group reserves much of its vitriol for Bank of New York Mellon, the trustee for the BofA bondholders. According to the filing:
“Walnut Place has serious concerns about the secret, non-adversarial, and conflicted way in which the proposed settlement was negotiated and about the fairness of the terms of the proposed settlement….In short, despite the fact that BNYM owes at least the same duties to Walnut Place that it owes to every other certificateholder in the 530 Countrywide-sponsored trusts, BNYM is asking this Court to approve a settlement that it negotiated in secret and that would release Walnut Place’s claims without its consent while it is in the middle of an active litigation…”
Facing Foreclosure? Bank of America Thumbs Its Nose at You
This Los Angeles resident, who is part of a class-action lawsuit alleging that B of A and one of its subsidiaries flouted rules governing the Home Affordable Modification Program. From USA Today:
It seemed Maria Campusano’s financial problems were behind her when the mortgage on her Victorian home in a Massachusetts mill town was chopped by hundreds of dollars a month.
She soon learned that her troubles had just begun. Weeks after making her first payment under the new rate, the school district staffer began receiving past-due notices, documents showing wildly inaccurate loan balances and letters threatening foreclosure. She now fears she’ll lose her home.
It seemed Maria Campusano’s financial problems were behind her when the mortgage on her Victorian home in a Massachusetts mill town was chopped by hundreds of dollars a month.
She soon learned that her troubles had just begun. Weeks after making her first payment under the new rate, the school district staffer began receiving past-due notices, documents showing wildly inaccurate loan balances and letters threatening foreclosure. She now fears she’ll lose her home.
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