Category Archives: Credit markets

More on the FDIC’s Fight Versus Other Bank Regulators on Servicer Abuses; Rep. Miller Backs More Aggressive Action

We’ve mentioned that the FDIC has been pushing to reform the securitization process, including imposing standards on servicers. That has put it at odds with the bank-friendly Treasury and Office of the Comptroller of the Currency (the SEC has proposed securtization reforms but of a much more modest nature than the FDIC’s). This behind the scenes battle is heating up further because Dodd Frank calls on bank regulators to draft new rules to improve the operation of the mortgage securitization market. The FDIC intends to include mortgage servicer behavior in those provisions and want the rules ready in January.

Please Visit StopServicerScams.com to Stop Servicer Fraud

To further the effort to curb servicer abuses, please visit the website, StopServicerScams, and sign the petition.

Fed Extends Currency Swap Lines Over Eurobank Dollar Funding Concerns

The party line is everything is fine in bank land….even Eurobank land. But some recent developments suggest otherwise.

The business news on Europe has pretty much daily updates on the unfolding and linked sovereign debt/ bank solvency crisis. The officialdom insists this looming problem can be resolved but most observers think it can’t be in the absence of a fiscal union, which is a political bridge too far right now.

In a not-widely-noticed replay of pre-crisis conditions, the cost of swapping euros into dollars to the same high level observed last May, when sovereign crisis fears were at a peak.

Open Letter to Bank Regulators on Mortgage Securitization and Servicing Practices

Today, a letter urging fundamental changes in the mortgage securitization markets, signed by 50 individuals with expertise in this arena, was sent to the Chairmen of the FDIC, the Fed, and the SEC, and the Secretary of the Treasury and the Comptroller of the Currency.

Despite widespread evidence of failings, abuses, and outright fraud in the securitization process, reform measures have been halting at best.

Major Servicers Face Possible Suspension of Foreclosures in New Jersey Over Robo Signing

We had questioned the cheery assumption of the major banks regarding their robo signing abuses, namely, that they could simply resubmit their improper court documents and proceed as if nothing had happened.

Improper affidavits are a fraud on the court, and robo signing is the mass, deliberate production of fraudulent submissions. Some jurisdictions, like New York and Florida, are requiring that attorneys certify the accuracy of documents presented in foreclosure. New Jersey is going one step further by having a Supreme Court justice demand an appearance by six major servicers to explain why their foreclosure operations should not be suspended. I suspect the sort of sanctimonious explanations we’ve seen in Congressional hearings, “We act to correct mistakes as soon as they come to our attention,” would not go over well.

Fannie Increases Restrictions on Lender Processing Services, Other Technology Middlemen; LPS Document Shows Degree of Influence Over Law Firms

We’ve discussed Lender Processing Services, which serves as an outsourcer to the mortgage servicing industry, primarily via a software platform, as well as other companies with similar business models.

One of LPS’s major activities is acting as a middleman in the foreclosure process, reportedly hiring and firing foreclosure mills in the name of servicers. LPS is under fire in two national class action lawsuits for alleged impermissible fee splitting with foreclosure firms. A recent story in Reuters confirmed details we supplied in late October as to how LPS works with foreclosure mills, in particular, the very tight control it exercises over them.

Fannie Mae issued a directive today which effectively eliminates the payment of certain types of fees to firms like LPS.

Is the Ireland Bailout About to Become Bear Redux?

Not being an expert in either the Lisbon Treaty or the rules governing the ECB, I’m restricted in my ability to interpret an article in the Financial Times and the underlying position paper at the ECB on the legality of the Irish bailout. The Irish finance minister asked for a reading on the “draft law”, which is the Credit Institutions (Stabilisation) Bill 2010. There is a certain amount of grumpy harrumphing in the ECB response, namely, that it should have been consulted earlier and its preliminary reading has been made in more haste than it would like.

Regardless, it does not take a lot of expertise to get the drift of this gist:

Joseph Mason on the Myth of Good Servicers

By Thomas Adams, an attorney and former monoline executive, and Yves Smith Joseph Mason, the Hermann Moyse, Jr./Louisiana Bankers Association Professor of Finance, Louisiana State University, has a post up at Housing Wire that not only struck both of us as more than a tad off beam, but even elicited critical e-mails from real estate […]

Mirabile Dictu! Ernst & Young Faces Fraud Charges in Lehman Collapse

had given up on the idea that anyone associated with Lehman would be charged with fraud, even though it was blindingly obvious even before the investment bank failed that it was up to no good. So tonight’s report in the Wall Street Journal, that the New York attorney general Andrew Cuomo is about to file a lawsuit against Lehman accountants Ernst and Young, is welcome news indeed.

The British Mess (III): Bank of England Tiptoes Around Sovereign Risk Worries

By Richard Smith The latest Bank of England Financial Stability Report is worth decoding. My last post on the UK sketched a scenario in which the very large 2011 funding programme for UK banks, discussed in the June BoE FSR (back issues all available here), could be quite problematic, in adverse markets. I hinted that […]

Florida Judge Cancels All Foreclosure Sales in His Division Through Year End

Per the order below (hat tip Matt Weidner) a judge in Broward County appears to have cancelled all foreclosure sales in one of the foreclosure division from December 20 to December 31: Broward County Judicial Order Canceling Foreclosure Sales One might think this has something to with the Fannie and Freddie foreclosure halts, with run […]

Arizona, Nevada Sue Bank of America Over Mortgage Fraud While Treasury Sits on Its Hands

The Administration’s po-faced insincerity on the mortgage crisis front is wearing thin now that other authorities are taking action against the worst abuses.

SEC Examining Role of Servicers, Whether Mortgages Transferred to Trusts

hhm, despite the breezy assurances of the American Securitization Forum that everything was handled properly when residential mortgage backed securitizations were created, the SEC does not seem completely convinced. Reuters reports it has expanded its ongoing probe into foreclosure practices

Some Foreclosure Mills Disregarding Post-Robo-Signing Requirements

As much as a whole bunch of bank executives and securitization industry types have given Congressional testimony in which they maintained that they were duly concerned about “technical” errors like robo signing and would clean up their act, it appears that follow-through has been less than stellar.