If you were to read the news headlines and the fierce-sounding lawsuit filed by the Department of Justice against DeutscheBank on it “egregious” violations of FHA lending standards, you might be persuaded that Team Obama was getting serious about mortgage abuses.
Think again.
Read more...If you thought the Friends of Angelo program, via which Countrywide gave very favorable mortgage terms to assorted Congresscritters, was pretty bald-faced, you ain’t seen nothin’ yet.
It appears the best way to get a deep principal mod in America is to represent a clear and present danger to the mortgage industrial complex.
Read more...There’s a sad little story in the “NY/Region” section of the New York Times, which illustrates a not often enough discussed sort of wreckage resulting from the housing mess: that of deaths resulting from foreclosures.
Think I’m exaggerating? There have been cases of suicides, or murder/suicides of people losing their homes. But that can’t necessarily be attributed to foreclosure per se, but of personal financial disaster, with the foreclosure being the literally fatal blow. So while one can attribute their deaths to the financial crisis and therefore to the reckless behavior of major financial firms, it’s hard to pin it on foreclosures per se.
But there are some deaths that can, indisputably, be blamed on foreclosures or more specifically, the negligent management of foreclosed properties.
Read more...As established readers know, we’ve been writing since mid 2010 about the widespread, possibly pervasive, failure of mortgage securitization originators to convey the notes (the borrower IOU) to securitization trusts as stipulated in the deal documents, well before the robo signing scandal broke. This abuse matters because the transaction procedures were designed carefully to satisfy certain legal requirements, among them rules contained in the 1986 Tax Reform Act regarding REMICs, or real estate mortgage investment conduits, which required that the securitization trust receive all its assets by 90 days after closing and that all assets conveyed to the trust have to be “performing”, as in not in default. Failure to comply with the rules is a prohibited act and subject to taxation at a rate of 100%, and additional penalties may apply.
Now, with the Federal government under enormous budget pressure, shouldn’t the authorities be keen to go after tax cheats? The headline of a Reuters article, “IRS weighs tax penalties on mortgage securities,” would suggest so. But don’t get your hopes up. The lesson is don’t jump to conclusions when big finance is involved.
Read more...The very fact that this item “LPS fires back with motion seeking sanctions against Alabama attorney,” was treated as a news story by Housing Wire is further proof that Housing Wire is above all committed to promoting client and mortgage industry interests and only incidentally engages in random acts of journalism.
LPS is desperate to create a shred of positive-looking noise in the face of pending fines under a Federal consent decree, mounting private litigation, and loss of client business under the continued barrage of bad press. Housing Wire, who has LPS as one of its top advertisers, is clearly more than willing to treat a virtual non-event as newsworthy to help an important meal ticket.
Read more...It’s time we come up with a new handle for the Office of the Controller of the Currency. It is difficult to convey how shameless this regulatory-agency-turned-slut for the banking industry has become. It’s the Stage 4 disease version of where our government is heading at a rapid clip: officials masquerading as serving the public interest when they are uber lobbyists for the pet whims of their supposed charges.
So what do we call the OCC? The Office of Capital Corruption? The Office of Criminal Capitulation? I have no doubt readers will have even better ideas (and don’t be constrained by the acronym).
Read more...A Financial Times article discusses an unlikely indicator of recovery: divorce rates have risen. One divorce attorney commented, “There is huge pent up demand.” Another lawyer, who was apparently a decent representative, said her business had increased 25% compared to the same period last year.
But the post crisis economy has led to some changes in tactics:
Read more...The noose is tightening around Lender Processing Services.
Last week, various news outlets revealed that Federal banking regulators had issued consent orders against major servicers, MERS, and LPS. Kate Berry of American Banker pointed out that LPS is exposed to making payments to servicers:
Read more...In addition to the 14 biggest mortgage servicers, two of the biggest vendors to the industry received cease-and-desist orders from regulators Wednesday. One was stronger than the other.
Lender Processing Services Inc. and Merscorp Inc.’s Mortgage Electronic Registration System were both cited for “significant compliance failures” and “unsafe and unsound business practices” related to foreclosures. Regulators are requiring both companies to hire independent consultants, take remedial steps to address past failures and hire additional staff.
But only LPS, a publicly traded company in Jacksonville, Fla., that provides foreclosure-related services to banks, faces the possibility of having to reimburse servicers and borrowers if an independent review finds anyone was financially harmed by its failure to properly execute mortgage documents….
We’ve taken aim repeatedly at Tom Miller’s obvious soft touch toward banks in his role as lead negotiator in the 50 state attorney generals negotiation over foreclosure abuses. Some of his questionable actions:
Read more...Promising to put people in jail, then quickly reversing himself
Working closely with the bank-friendly Treasury Department when the state and Federal legal issues are very different, rendering the rationale for cooperation suspect…..
By Douglas K. Smith, author of On Value and Values: Thinking Differently About We In An Age Of Me
The recent federal budget deal eliminated $88 million of HUD funding for non-profit housing counselors. According to this report, these groups use roughly half the funds for foreclosure counseling and half for homebuyer education and qualification. The report says a separate foreclosure counseling effort is also being reduced by $65 million.
Historically, non-profit housing groups focused on low-income folks. But, for many years, people with moderate incomes – nurses, police, teachers and others in what used to pass for the middle class – have also sought help. The core purpose of the non-profits is simple: help people achieve affordable home ownership. This entails educating them on the realities of ownership, helping them shift credit, consumption and savings behavior, advising on how to avoid the worst practices of real estate and mortgage brokers — even at times doing lending. All of which together means, in effect, doing the real work of underwriting that has long since been abandoned by the too big to fail banks who, in their eagerness to increase volumes and squeeze out costs through technology and ‘modeled’ strategies, eliminated the capacity for this careful work.
Most non-profit groups are quite good at what they do. Yet, Obama, Boehner and others have now taken resources away from these groups. These cuts are cruel. They are also mind-numbingly stupid.
Read more...Admittedly, this act of rebellion against MERS, the electronic mortgage registry by a Pennsylvania county is comparatively minor, but nevertheless illustrates the efforts various local bodies are taking to assert their authority against a system imposed without regard to state and local real estate laws.
Montgomery County estimates that it has lost $15 million in recording fees due to MERS, which its Recorder of Deeds, Nancy Becker, says has also made a mess of title records. She is working to get the county to cease doing business with banks that make use of MERS, and has launched an effort to get other counties in the state to follow suit.
Read more...Yves here. This post by Bill Black is important because it presents and dissects an ugly example of failure of morality and common sense within what passes for the elite in the US.
Earlier this week, Matthew Yglesias defended the Administration’s distaste for pursuing fraud investigations against financial players:
….the Obama administration felt it was important to restabilize the global financial system. That meant, at the margin, shying away from anxiety-producing fraud prosecutions. And faced with a logistically difficult task, that kind of pressure at the margin seems to have made a huge difference. There simply was no appetite for the kind of intensive work that would have been necessary.
I’m not as persuaded as, say, Jamie Galbraith is that the failure to do this is a key causal element in our economic problems. Indeed, I’d say that if you look at the situation literally, Tim Geithner’s judgment was probably correct.
This line of thinking is a favorite of authoritarians. Democracy, justice, and capitalism are messy affairs. All sort of repressive measures can be justified in the name of stability and safety. And the irony here is that the firms directly responsible for the most disruptive economic event of the last eighty years are to be shielded from the long arm of the law….in the name of stability, the one output they have clearly failed to provide.
Read more...It’s more than a tad ironic that Senator Carl Levin released a strongly-worded report on Wall Street’s role in the financial crisis, focusing on abuses and failures of oversight in the residential mortgage and CDO markets, when the officialdom is engaged in yet another whitewash of further crisis fallout, that of servicing and foreclosure related abuses.
One effort at pushback comes via a bill proposed today by Senator Sherrod Brown and Representative Brad Miller, the Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011. While some provisions need further work, it’s an ambitious and badly needed effort that targets many servicer abuses.
Read more...As readers may know, the Senate Permanent Subcommittee on Investigations just issued another report, Wall Street and the Financial Crisis. This is a far more focused and damning document than the Financial Crisis Inquiry Commission report, which was produced at considerably more expense and was undermined by dissent among its commissioners (which in fairness appears to have been by design).
I confess to having only gotten partway through the document and plan to issue a more thorough discussion in the next few days. However, some things are clear at this juncture.
Read more...Last week, we inveighed against an effort by Federal banking regulators to undermine the 50 state attorney general settlement negotiations on foreclosure and mortgage abuses. This affair is becoming a pathetic spectacle, in that the state initiative, which looks to be an exercise in form over substance, still might prove to be enough of a nuisance to the banks that the Powers that Be in Washington feel compelled to do what they can to hamstring it. The first effort was to have a joint settlement, which we dismissed as a barmy idea given the disparity in state and Federal issues. Not surprisingly, the Feds withdrew after the first negotiating session with the banks.
The current end run is apparently led by the Ministry of Bank Boosterism more generally known as the OCC and comes via consent decrees that were issued Wednesday.
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