A report at the Dylan Ratigan show confirms what we’ve argued for some time is happening: that banks are not making mods to viable borrowers because servicing is more profitable. In addition, an insider on the HAMP program says that the pressure to make trial mods to make the program look good wound up hurting […]
Read more...We’ve said repeatedly that findings of the multi-agency Foreclosure Task Force review late last fall, which looked at 2,800 mortgages from 14 servicers, was a worse than stress test type review, with a deliberately narrow focus designed to find very little wrong.
One of its remarkable findings was that that banks were on solid grounds in foreclosing, both in the borrower owing the money (which would inevitably be the finding given the failure to investigate servicer-driven foreclosures) and that banks were able to find the borrowers’ notes, which was taken to be tantamount to them having the legal authority to foreclose. Anyone who has been following this issue here or on specialist legal blogs knows that mere possession of the note is often a not sufficient threshold for successful action if the foreclosure is challenged.
In a gratifying show of candor and independence (or perhaps because she recognizes that the facts on the grounds make the Administration/banking industry party line untenable) Bair took exception to the “nothing to see here” stance of the officialdom and took exception to the findings of the Foreclosure Task Force in Congressional testimony earlier today.
Read more...Ooh, this is getting fun. Peter W found this tidbit in the May 10 Lender Processing Services 8K:
Read more...The Federal Deposit Insurance Corporation, in its capacity as Receiver for Washington Mutual Bank, filed a complaint on May 9, in the U.S. District Court for the Central District of California to recover alleged losses of approximately $154,519,000. The FDIC contends these losses were a direct and proximate result of the defendants’ alleged breach of contract with WAMU and alleged gross negligence of the defendants with respect to the provision of certain services by LPS’s subsidiary LSI Appraisal, an appraisal management company.
As readers know, we’ve been very critical of the 50 state attorneys general mortgage “settlement” talks. The reason has been very simple. The leader of the negotiations, Tom Miller of Iowa, early on cast his lot with the Administration’s banking regulators, who are at best cognitively captured and at worst corrupt, rather than siding with the rule of law or the interests of the nation’s citizens. He took their lead and pushed for a quick resolution, when any “settlement” by definition depends on the prosecutors having a real case with decent odds of serious damages as a cudgel to bring the perps to the table and extract real concessions from them.
In the absence of doing investigations to develop a case, all the banks have to “settle” is robosigning abuses, which since they are sorta cleaning those up anyhow, does not add up to any kind of threat. Thus all the banks have to do is the obvious: call Miller’s bluff.
Read more...I participate in various e-mail threads where people chat among themselves (my hedgie bunch can be wickedly funny on slow market days) and one of the groups is focused on the mortgage mess.
I thought readers might be able to help with a query from one of the participants:
On May 23 the House Financial Services Committee will be having a briefing session on Securitization and risk retention proposals under Dodd-Frank. The following parties will be presenting and available for questions:
· David Moffitt, Global Head of Structured Solutions and Securitization, Morgan Stanley
· Tom Deutsch, Executive Director, American Securitization Forum
· Evan Siegert, Managing Director, Senior Counsel, American Securitization Forum
· Jim Johnson, Managing Director, Public Policy, American Securitization Forum
He is skeptical of the Dodd Frank risk retention rules and asked:
Does anybody who thinks differently have any questions regarding risk retention that should be asked of a person listed above? How about questions for any of these participants regarding securitization generally?
I find it impressive that the American Securitization Forum, which to date has been consistently in the wrong on foreclosure fraud and chain of title issues, is still treated with such deference, particularly since the sell side of the securitization industry, which is what the ASF represents (despite its pious claims otherwise) has fought meaningful securitization reform tooth and nail, with the result that the industry is almost entirely on government life support. Therefore I hope readers can come up with some suitable questions.
Read more...A potentially important North Carolina appeals court case, In re Gilbert, has not gotten the attention it warrants.
In very short form, the borrowers, who were unable to obtain a loan modification, tried to halt a foreclosure by arguing that the lenders had failed to make required disclosures under the Truth in Lending Act (which they hoped would allow for recission of the loan, and that the party seeking to foreclose had not proved that it was the holder of the Note with the right to foreclose under the instrument. The judges nixed the TILA argument, affirming lower court decisions, but reversed the superior court on the question of the standing of the petitioner.
Read more...The kindest thing that can be said about the 50 state attorneys’ general negotiations over foreclosure abuses is that it is increasingly obvious that there will not be a deal. The leader of the effort, Iowa’s Tom Miller, has completely botched the effort. There was no way to have any negotiating leverage with intransigent banks in the absence of investigations. Miller has changed his story enough times on this and other fronts so as to have no credibility left. But whether there were no investigations (as other AGs maintain) or whether they did some (as Miller, contrary to a staffer’s remarks, now insists), they were clearly inadequate.
We’ve found the rumor, that Miller was angling to head the Consumer Financial Protection Bureau, credible. It would explain his unduly cozy relationship with Federal banking regulators, as well as his efforts to wrap up negotiations quickly, which reduced what little bargaining power he had (time pressure means a party that drags its feet can extract concessions).
But like so many zombies that inhabit the financial landscape, the mortgage settlement negotiations refuse to die.
Read more...We’ve taken a dim view of the “worse than stress tests” review by Federal regulators of foreclosure practices late last fall. This was an obvious effort to alleviate concerns in the wake of the robosigning scandal. When the bank-friendly OCC released the results of the review, the guts of which was a look at 2800 seriously delinquent loans from all the major servicers, it confirmed our reservations:
Read more...Jamie Dimon has finally managed the difficult feat of making Lloyd Blankfein look good.
When Blankfein said Goldman was “doing God’s work,” as offensive and laughable as that sounds, it’s an arguable position.
Read more...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).
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