Thursday, January 30, 2014

Enough Is Enough: Fraud-ridden Banks Are Not California’s Only Option


Global Research, January 30, 2014
money4
  “Epic in scale, unprecedented in world history. That is how William K. Black, professor of law and economics and former bank fraud investigator, describes the frauds in which JPMorgan Chase (JPM) has now been implicated. They involve more than a dozen felonies, including bid-rigging on municipal bond debt; colluding to rig interest rates on hundreds of trillions of dollars in mortgages, derivatives and other contracts; exposing investors to excessive risk; failing to disclose known risks, including those in the Bernie Madoff scandal; and engaging in multiple forms of mortgage fraud.
So why, asks Chicago Alderwoman Leslie Hairston, are we still doing business with them? She plans to introduce a city council ordinance deleting JPM from the city’s list of designated municipal depositories. As quoted in the January 14th Chicago Sun-Times:
The bank has violated the city code by making admissions of dishonesty and deceit in the way they dealt with their investors in the mortgage securities and Bernie Madoff Ponzi scandals. . . . We use this code against city contractors and all the small companies, why wouldn’t we use this against one of the largest banks in the world?
A similar move has been recommended for the City of Los Angeles by L.A. City Councilman Gil Cedillo. But in a January 19th editorial titled “There’s No Profit in L A. Bashing JPMorgan Chase,” the L.A. Times editorial board warned against pulling the city’s money out of JPM and other mega-banks – even though the city attorney is suing them for allegedly causing an epidemic of foreclosures in minority neighborhoods.
 “L.A. relies on these banks,” says The Times, “for long-term financing to build bridges and restore lakes, and for short-term financing to pay the bills.” The editorial noted that a similar proposal brought in the fall of 2011 by then-Councilman Richard Alarcon, backed by Occupy L.A., was abandoned because it would have resulted in termination fees and higher interest payments by the city.
It seems we must bow to our oppressors because we have no viable alternative – or do we? What if there is an alternative that would not only save the city money but would be a safer place to deposit its funds than in Wall Street banks?

The Tiny State That Broke Free

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Wednesday, January 29, 2014

8th USCCA W. Mo. reinstated $6 million punitive damage arbitration award against servicer

 
8th USCCA W. Mo. reinstated $6 million punitive damage arbitration award against servicer (Stark v. Sandperg, Phoenix & von Gontard, et al.) -
 
 
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-2366
___________
*
*
Defendants - Appellees. *
___________
Submitted: January 15, 2004
Filed: August 26, 2004

Texas jury rules against Ocwen


by Jim Freer
A jury in Galveston, Texas, has awarded $11.5 million to a customer of Ocwen Financial Corp. and its former Ocwen Federal Bank subsidiary, after determining they committed fraud in servicing her home equity loan.
The verdict against West Palm Beach-based Ocwen Financial (NYSE: OCN) and Ocwen Federal was issued Tuesday in Texas's 212th District Court. The jury ordered the Ocwen companies to pay Sealy Davis $10 million in actual damages and about $1.5 million for mental anguish and economic damages.
Ocwen Financial had $1.3 billion in assets on Sept. 30, according to its Securities and Exchange Commission filings.
The jury found the Ocwen companies made fraudulent, deceptive and misleading representations to Davis after she missed a loan payment while hospitalized in 2003.
Documents filed in the civil suit assert Ocwen began demanding additional money to make up for the missed payment and then began foreclosure proceedings on Davis's home in Texas City, Texas.
Davis retained the home after filing for Chapter 13 bankruptcy protection, court documents state. MORE

Jury gives woman $1.25M in lawsuit over mortgage


by Eli Segall, Staff
A Baltimore native who defaulted on a subprime loan has been awarded $1.25 million in damages from her lender, Wells Fargo Bank N.A. The case may lead to similar lawsuits nationwide, and also may help Baltimore City's suit against the bank, claiming it targeted minority neighborhoods with subprime loans, legal and banking experts say.
Kimberly L. Thomas was awarded $250,000 in damages and $1 million in punitive damages in Montgomery County Circuit Court July 31. A six-member jury convicted Wells Fargo of fraud, negligence and other charges for inflating Thomas' income and assets on her mortgage application, and locking her into a bigger loan than she had applied for -- one she couldn't afford.
Thomas, 41, said in an interview with the Baltimore Business Journal that her case "destroys the myth" that the subprime mortgage meltdown is fueled by homebuyers taking loans they can't handle.
"They make it seem like it's the person's fault," Thomas said from her Silver Spring townhouse. "But they don't know what's going on behind the scenes."
Brian Maul, her attorney, said Thomas' loan agent pushed through a bigger mortgage to reap a higher commission. Teri Schrettenbrunner, a Wells Fargo spokeswoman, said the bank followed "responsible lending practices" and will appeal the verdict.  MORE

Quicken Loans on losing end of $3 million predatory lending verdict



WHEELING – An Ohio County judge has ruled against Quicken Loans in a $3 million predatory lending case.
Circuit Court Judge Arthur M. Recht concluded an eight-day trial that spanned 17 months by awarding punitive damages, attorney fees and costs to mother and daughter Wheeling residents Lourie Jefferson and Monique Brown.
The award of more than $2.1 million in punitive damages, along with attorney fees and costs, brought the total verdict in the case against Quicken Loans to more than $3 million.
Jefferson and Brown also had previously reached a settlement for a confidential amount with the loan appraiser.
Bordas & Bordas attorneys were representing Jefferson and Brown in foreclosure proceedings initiated by Quicken Loans, their mortgage lender.
They alleged abusive and predatory conduct on Quicken Loans’ part and filed a 12-count complaint on behalf of Jefferson and Brown, detailing predatory lending practices against Quicken Loans and its appraiser in Ohio Circuit Court.
At the first phase of the trial, the Court ruled in favor of Jefferson and Brown on numerous counts. The court found the lending practices of Quicken Loans unconscionable, based in part on Quicken’s utilization of a highly inflated appraisal in making the loan.
The court also found that Quicken Loans defrauded the homeowners by misleading them into paying excessive loan origination fees; falsely promising to favorably refinance the loan in the near future; and concealing an enormous balloon payment from its own borrowers.
As a result, the court ruled the $144,800 loan that grew to $227,000 was unenforceable as a matter of law and would not have to be repaid and that Quicken Loans must return $17,000 in payments to Jefferson.
The second phase of the trial resulted in the punitive damage award and an order that Quicken Loans must pay Jefferson and Brown’s attorney fees and costs.  MORE


Saturday, January 25, 2014

Real / NTC Sees Fewer Differences Among Lenders / SLS Expands


By Paul Muolo
It doesn’t take a genius to figure out that the Treasury Department’s point man on GSE reform, Michael Stegman, doesn’t think all that much about the huge profits Fannie Mae and Freddie Mac have been generating the past year. As IMFnews reported this week, Stegman noted that $86 billion of GSE profits were tied to “one-time” tax reversals and the recapture of loan loss reserves. Okay, fair enough. But then the question becomes: who at the GSEs (or at the Federal Housing Finance Agency) was responsible for telling the two to set aside so much money for loan losses and were those assumptions way off base? It’s not an unfair question – and maybe it’s time for the chairman of the House Financial Services Committee or Senate Banking Committee to press for an investigation into why Fannie and Freddie’s loan loss reserves were so high. Anyone familiar with the GSEs knows that when they bought non-agency securities most of the product was AAA rated. Also, some of the underlying loans had coverage from mortgage insurance firms. Well, guess what? The MIs made good on their policies. Might someone in government conclude that the two GSEs should never have been taken over in the first place, or is all this Monday morning quarterbacking? Will Rep. Jeb Hensarling, R-TX, lead the charge of an investigation into potential government abuse? Will Sen. Rand Paul of Kentucky? Don’t hold your breath…
Keep in mind that one of the plaintiff’s in the “takings” case against the government estimated that the GSEs were over-reserved by $109 billion…
Meanwhile, certain investors in Fannie/Freddie junior preferred shares are sitting on huge paper gains on their investments. Fairholme Capital Management, run by Bruce Berkowitz, is one of them. A few weeks ago there were scattered reports that FCM was unloading some of its holdings in the GSE, only to be followed by speculation that the investment firm was doubling down…
Adapt or die – that’s how mortgage firms have always survived light production years. Late this week we were hearing reports that two banks were in the process of rolling out first lien HELOCs as hybrid ARM products “as a way to circumvent” the qualified mortgage rule. We’re not sure what that means exactly, but look for additional coverage in the week ahead…

Fourth quarter earnings are rolling in. Thus far, most banks reporting have earned money on their mortgage operations – but a lot less than in earlier periods. However, some are actually losing money. Cardinal Financial Corp., Tysons Corner, VA, reported that its mortgage banking affiliate, George Mason Mortgage, had a net loss of $1.6 million in the fourth quarter. In the year ago quarter, it earned $3.7 million…

Also, competition for new production will be intense this year. John Hillman, CEO of Nationwide Title Clearing, noted recently that the new ability-to-repay will play a role as well. “The new rules are likely to regiment the industry, so there will be fewer differences between mortgages offered by different lenders, thereby intensifying the competition and making compliance of the utmost importance”…

MORE

Thursday, January 16, 2014

History of Mortgage Assignment Fraud


by Phil Grove 

Much has been made recently on the news about mortgage assignment fraud and the bank’s overall bad behavior during the housing crisis.  The purpose of this article is to give you an understanding about why banks did what they did and how it constitutes mortgage assignment fraud.

Mortgage Assignment Fraud | Background

Mortgage Assignment Fraud
Mortgage Assignment Fraud
In the past ten years, thousands of residential mortgages were bundled together into securitized trusts, with banks selling shares off to Wall Street investors in a manner similar to selling shares of stock. Since banks were no longer holding onto their mortgages, their motivation was to create mortgages rather than to avoid creating ‘bad mortgages’ because these bad mortgages would be someone else’s problem.
These trusts were given a name, and the name of the trust detailed the bank involved and the year the trust was created.  For example, a trust name may be ”XXX Home Loan Trust 2006 Bank.”  The name indicates information about the particular trust such as the year it was created (2006).  Each securitized trust had a Closing Date. The closing date is the date that the individual mortgages were put into the Trust by its custodian.  The custodian must certify that each mortgage note is endorsed in blank and that the ownership of the note has been transferred.  This proof is most often an Assignment of Mortgage.

Mortgage Assignment Fraud | The foreclosure problem

Once loans began defaulting, Trustees discovered that the laws regarding Mortgage Assignments varied significantly from state to state.  One of the most significant issues was whether Mortgage Assignments could be back-dated or have retroactive effective dates.  This issue arose because Trustees and their lawyers discovered in the foreclosure process that the Assignments could not actually be located, or that certain states did not allow blank Assignments.  Since this issue hadn’t yet been resolved, the assignments were signed and notarized as if the
transfer took place many years after the actual transfer date.

Mortgage Assignment Fraud | The solution

To solve the dilemma of the missing Assignments, new Assignments were created and recorded, and most of these Assignments did not state the actual date that the Assignment took place.  These new Assignments were prepared by specially selected law firms that specialized in providing mortgage default services to lenders. The new Assignments were prepared in the name of Mortgage Electronic Registration Systems (MERS) as “nominee” for the mortgage company.

Mortgage Assignment Fraud | The solution hitting the fan

The new Assignments were prepared to conceal the actual date that the property was acquired by the Trust.  An examination of the Assignments filed showing the grantee as the Trust – such as our earlier example of “XXX Home Loan Trust 2006 Bank” – shows that most of these new Assignments were prepared and filed in 2008 and 2009.  While the exact closing date can only be determined by looking at the trust documents, any Trust that includes the year in 2006 in its title most likely closed in 2006.  These assignments showing dates 2-3 years later obviously didn’t add up.  The reason is that if a Mortgage Assignment is dated, notarized, and filed in a year after the year set forth in the name of the grantee trust on the Assignment, it is actually an Assignment specially, and in many cases, fraudulently, made to facilitate foreclosures. In many cases, some of these new Assignments were created after the foreclosure process had been initiated.  Hence, we have mortgage assignment fraud.
The mortgage industry was so concerned about this type of mortgage assignment fraud that in the Fall of 2010 it took the unbelievably ballsy step of trying to cram through Congress legislation that would have validated foreclosures by rubber stamping the questionable documentation behind securitized mortgages. Thankfullly, President Obama vetoed that legislation that would’ve allowed mortgage assignment fraud. 

Wednesday, January 15, 2014

Duck Dynasty and the Secular Theocracy

From:  Independent Institute


by David Theroux


With A&E Network facing an avalanche of public protest and in just over one week of its decision to place family-patriarch Phil Robertson on “indefinite hiatus” from its megahit reality series Duck Dynasty, the network caved.

When the PC outrage industry went into high gear with an angry Gay & Lesbian Alliance Against Defamation (GLAAD) demanding Robertson’s head regarding his comments on homosexuality in an article by Drew Magery in the January 2014 issue of GQ (the magazine commonly viewed as having branded the concept of “metrosexual”), A&E executives promptly suspended Robertson from the enormously popular, cable-TV program, and support for his suspension echoed throughout the conventional media with cries of his being “homophobic” and “antigay.”

In the article, when asked about his religious faith, Robertson noted that his own youthful debauchery was self-destructive and put his marriage on the rocks, and that these were reversed only by his conversion to Christianity. He added that he now considers sexual relations other than those between a man and woman in wedlock to be sinful. In so doing, Robertson did not support bans on homosexual advocacy or relations but instead paraphrased Corinthians: “Don’t be deceived. Neither the adulterers, the idolaters, the male prostitutes, the homosexual offenders, the greedy, the drunkards, the slanderers, the swindlers — they won’t inherit the kingdom of God. Don’t deceive yourself. It’s not right.”
In subsequent comments, he included himself as a “sexual sinner”:

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A Requirement for Every Foreclosure Judge – Watch The Wolf of Wall Street

From:  Deadly Clear


By Sydney Sullivan
The Wolf of Wall Street - Sep 2013Without a doubt every foreclosure judge and any judge who has ruled in favor of the banks over duped homeowners should be required to watch The Wolf of Wall Street - not once but several times.
Every time the Courts consider ruling in favor of these decadent Wall Street creatures – they should be shoved into a room with a wide flat screen TV, handed a box of popcorn and ice cold Coca Cola and locked in there for 180 minutes – so they can see exactly what they are sustaining by ruling in favor of the banks.
The Wolf of Wall Street is based on the true story of Jordan Belfort, from his rise to a wealthy stockbroker living the high life to his fall involving crime, corruption and the federal government. Martin Scorcese’s The Wolf of Wall Street with Leonardo DiCaprio in the role of Jordan Belfort opened recently to critical and popular acclaim.  MORE

Thursday, January 9, 2014

Isn’t it a Bitch When They Lie…

From:  Deadly Clear

And then they get caught?! No sense of consequence.
Painter

Failing to be honest costs a lot of money… omitting the truth is just as bad as lying.

Government extracts $2 billion in fines from JPMorgan in Madoff case

By , Published: January 7 E-mail the writer

Years of high investment returns at Madoff Securities left bankers in the London office of JPMorgan Chase skeptical of the methods of company chief Bernard L. Madoff. While the bank reported its suspicions to British authorities in 2008, it never said a word to anyone in Washington, the Justice Department says.On Tuesday, Madoff’s primary banker agreed to pay federal prosecutors and regulators more than $2 billion to resolve criminal charges that it failed to alert the government about Madoff’s Ponzi scheme. [Read more HERE]

Wednesday, January 8, 2014

Connecticut parents say court-ordered expenses bankrupt them

From:  Love Fraud 

by Donna Andersen 

In an article for Washington Times Communities, Lovefraud reader Anne Stevenson writes that Connecticut parents allege they are being forced to hire court appointed vendors such as psychologists and guardians.
In 2013, a group of parents complained to the Legislature that these vendors were bankrupting them through their questionable billing practices. One guardian ad litem allegedly charged $40,000, but billing records indicated she spent very little time with the child she represented.
A task force established to assess Connecticut’s family courts disagreed with the parents and determined that an audit of the court’s books and contracts would be unnecessary.
Anne invites Lovefraud readers to comment on the article on the Washington Times website. More comments will mean more exposure for the article — and the problem.

CT task force spars with parents over billing fraud in family court, from The Washington Times Communities.

Monday, January 6, 2014

PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO FORECLOSURE

From:  [From the U.S. Government Printing Office]

 Looong document
                                                        S. Hrg. 111-987

          PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO 
                              FORECLOSURE

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

     EXAMINING PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO 
 FORECLOSURE AND THE IMPACT THESE PROBLEMS HAVE HAD ON U.S. HOMEOWNERS 
          AND THE HOUSING MARKET DURING THE ECONOMIC DOWNTURN

                               ----------                              

                    NOVEMBER 16 AND DECEMBER 1, 2010

                               ----------                              

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs




                                                        S. Hrg. 111-987

 
    PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO FORECLOSURE

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

     EXAMINING PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO 
 FORECLOSURE AND THE IMPACT THESE PROBLEMS HAVE HAD ON U.S. HOMEOWNERS 
          AND THE HOUSING MARKET DURING THE ECONOMIC DOWNTURN

                               __________

                    NOVEMBER 16 AND DECEMBER 1, 2010

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs


                 Available at: http: //www.fdsys.gov /


                  U.S. GOVERNMENT PRINTING OFFICE
65-258                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, gpo@custhelp.com.  


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

               CHRISTOPHER J. DODD, Connecticut, Chairman
TIM JOHNSON, South Dakota            RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York         JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   MIKE CRAPO, Idaho
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
DANIEL K. AKAKA, Hawaii              JIM DeMINT, South Carolina
SHERROD BROWN, Ohio                  DAVID VITTER, Louisiana
JON TESTER, Montana                  MIKE JOHANNS, Nebraska
HERB KOHL, Wisconsin                 KAY BAILEY HUTCHISON, Texas
MARK R. WARNER, Virginia             JUDD GREGG, New Hampshire
JEFF MERKLEY, Oregon
MICHAEL F. BENNET, Colorado

                    McGinnis, Acting Staff Director
        William D. Duhnke, Republican Staff Director and Counsel

               Jonathan Miller, Professional Staff Member
                     Marc Jarsulic, Chief Economist
                 Beth Cooper, Professional Staff Member
                 William Fields, Legislative Assistant
                  Drew Colbert, Legislative Assistant

            Mark Oesterle, Republican Deputy Staff Director
                    Jim Johnson, Republican Counsel
                 Jeff Wrase, Republican Chief Economist
            Chad Davis, Republican Professional Staff Member

                    Erin Barry, Legislative Assistant

                       Dawn Ratliff, Chief Clerk
        Levon Bagramian, Legislative Assistant and Hearing Clerk
         Brett Hewitt, Legislative Assistant and Hearing Clerk
                      Shelvin Simmons, IT Director
                          Jim Crowell, Editor


                            C O N T E N T S

                              ----------                              

                       TUESDAY, NOVEMBER 16, 2010

                                                                   Page

Opening statement of Chairman Dodd...............................     1

Opening statements, comments, or prepared statement of:
    Senator Shelby...............................................     5
        Prepared Statement.......................................    50
    Senator Akaka................................................    51
    Senator Brown................................................    51

                               WITNESSES

Thomas J. Miller, Attorney General, State of Iowa................     7
    Prepared statement...........................................    53
    Response to written questions of:
        Senator Shelby...........................................   190
        Senator Brown............................................   194
Barbara J. Desoer, President, Bank of America Home Loans.........     8
    Prepared statement...........................................    56
    Response to written questions of:
        Chairman Dodd............................................   195
        Senator Shelby...........................................   197
        Senator Brown............................................   204
R.K. Arnold, President and Chief Executive Officer, Merscorp, 
  Inc............................................................    10
    Prepared statement...........................................    60
    Response to written questions of:
        Chairman Dodd............................................   208
        Senator Shelby...........................................   209
        Senator Brown............................................   212
Adam J. Levitin, Associate Professor of Law, Georgetown 
  University Law Center..........................................    11
    Prepared statement...........................................   102
    Response to written questions of:
        Senator Shelby...........................................   218
        Senator Brown............................................   221
David B. Lowman, Chief Executive Officer for Home Lending, 
  JPMorgan Chase.................................................    13
    Prepared statement...........................................   121
    Response to written questions of:
        Chairman Dodd............................................   224
        Senator Shelby...........................................   225
        Senator Brown............................................   230
Diane E. Thompson, Counsel, National Consumer Law Center.........    15
    Prepared statement...........................................   126
    Response to written questions of:
        Senator Shelby...........................................   235
        Senator Brown............................................   246

              Additional Material Supplied for the Record

Letter from Gibbs & Bruns LLP to Countrywide Home Loans Servicing 
  regarding Pooling Service Agreements...........................   255
Letter from Wachtell, Lipton, Rosen & Katz regarding Gibbs & 
  Bruns LLP letter...............................................   270
Denver Post article, Foreclosure paperwork miscues piling, up, 
  November 14, 2010..............................................   274

                              ----------                              

                      WEDNESDAY, DECEMBER 1, 2010

Opening statement of Chairman Dodd...............................   277

Opening statements, comments, or prepared statement of:
    Senator Shelby...............................................   280
        Prepared statement.......................................   340
    Senator Johnson
        Prepared statement.......................................   340
    Senator Menendez.............................................   280
    Senator Akaka
        Prepared statement.......................................   340
    Senator Tester...............................................   281
    Senator Bailey Hutchison
        Prepared statement.......................................   341

                               WITNESSES

Phyllis Caldwell, Chief, Homeownership Preservation Office, 
  Department of the Treasury.....................................   283
    Prepared statement...........................................   342
Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation..   284
    Prepared statement...........................................   352
Daniel K. Tarullo, Member, Board of Governors of the Federal 
  Reserve 
  System.........................................................   286
    Prepared statement...........................................   358
John Walsh, Acting Comptroller of the Currency, Office of the 
  Comptroller of the Currency....................................   288
    Prepared statement...........................................   368
    Response to written questions of:
        Chairman Dodd............................................   475
        Senator Johnson..........................................   476
        Senator Brown............................................   477
        Senator Merkley..........................................   481
Edward J. DeMarco, Acting Director, Federal Housing Finance 
  Agency.........................................................   289
    Prepared statement...........................................   381
    Response to written questions of:
        Senator Johnson..........................................   481
Terence Edwards, Executive Vice President, Credit Portfolio 
  Management, Fannie Mae.........................................   321
    Prepared statement...........................................   386
    Response to written questions of:
        Senator Johnson..........................................   483
Donald Bisenius, Executive Vice President, Single Family Credit 
  Guarantee Business, Freddie Mac................................   323
    Prepared statement...........................................   392
Tom Deutsch, Executive Director, American Securitization Forum...   324
    Prepared statement...........................................   399
Kurt Eggert, Professor of Law, Chapman University School of Law..   326
    Prepared statement...........................................   451
    Response to written questions of:
        Senator Johnson..........................................   487

              Additional Material Supplied for the Record

Federal Housing Finance Agency Foreclosure Prevention & Refinance 
  Report, August 2010............................................   500


    PROBLEMS IN MORTGAGE SERVICING FROM MODIFICATION TO FORECLOSURE

                              ----------                              


                       TUESDAY, NOVEMBER 16, 2010

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 3:20 p.m., in room SD-538, Dirksen 
Senate Office Building, Hon. Christopher J. Dodd, Chairman of 
the Committee, presiding.

       OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD

    Chairman Dodd. The Committee will come to order. Let me 
first of all thank my colleagues and our witnesses for their 
patience and indulgence. This is a gathering today with the 
various caucuses meeting, unfortunately not at the same time, 
so it has made this a little awkward to try and schedule, Tim, 
the hearing. But you have all come a long way, my good friend 
Tom Miller, the Attorney General from Iowa as well, so I wanted 
to make sure we could have the hearing and yet accommodate the 
interests of all Members of the Committee. So we moved it to 
this time, Bob, and I am sure Senator Shelby will be here at 
some point shortly, and the idea being that I guess the 
Democratic caucus is sort of wrapping up, but there is a 
Republican caucus which is going to start in about an hour.
    Chairman Dodd. To which you are not invited.
    [Laughter.]
    Chairman Dodd. And so I am going to try, and what I would 
like to do--and I have already asked the witnesses to do this. 
I will make some brief opening comments. Senator Shelby 
obviously will do so as well. And then we will turn to our 
witnesses and ask them if they can to try and abbreviate their 
comments even further so I can then accommodate--and I know 
this is a bit awkward, but to accommodate our Republican 
colleagues who are here, who still have an obligation to get to 
that caucus, in which case our own Members as they come out of 
the caucus will be showing up here. So it is a little different 
than we would normally proceed, but I want to make sure we give 
all Members a chance to be heard, and the witnesses who have 
come a long way with prepared testimony are going to get a 
good, healthy discussion.
    I will also, at the appropriate time when we have a quorum, 
ask the Committee to fulfill its obligation of voting on the 
Diamond nomination to serve on the Federal Reserve Board. As my 
colleagues will recall, at the recess period the nomination 
under the law had to be--was sent back to the White House and 
resubmitted, therefore requiring yet another vote by the 
Committee, even though we have had a hearing and voted on the 
Diamond nomination once before. And so when that time comes, I 
will interrupt the hearing to perform that function, knowing 
that a quorum could slip from time to time.
    So with that in mind, I would like to begin, and I will 
make my own opening comments, and then turn to Senator Shelby 
or Senator Bennett, whoever is here, for any thoughts they may 
have. And then we will turn to our witnesses. So I again thank 
all for participating.
    Richard, how are you? Good to see you.
    The hearing today, as you are all aware, is on the problems 
in mortgage servicing from modification to foreclosure. 
Obviously, it has received a great deal of attention over the 
last number of weeks in the media, and we thought it was 
appropriate that even in this lame duck session we invite those 
who have been involved in it, including our Attorneys General, 
represented by Tom Miller, and others including the 
institutions involved, to come and share their thoughts as to 
where we are with this matter and give us an opportunity to 
move forward. And, obviously, as I prepare to leave, Tim 
Johnson, Richard Shelby, and other Members here will pick up 
this issue. Evan Bayh will be traveling out the door with me, 
and then they will be moving to analyze this issue and respond 
accordingly.
    I want to welcome again and thank our witnesses for 
appearing today and for their testimony about the problems in 
mortgage servicing from modification, as I said, to 
foreclosure. As many of us know, or all of you know, we have 
had numerous hearings on the problems of the mortgage industry. 
In fact, the second hearing that I held as Chairman of this 
Committee in the first week of February 2007 was on the 
residential mortgage markets and the problems. During that year 
of 2007, we had almost 80 different hearings on this subject 
matter at one time or another, including informal gatherings in 
this very room with some of the leading servicing companies in 
the Nation to talk about what plans they had to minimize the 
fallout from the mortgage crisis. So it is a subject matter 
over the last 4 years that this Committee has spent a great 
deal of time and attention on.
    In addition to today's hearing, I intend to have another 
hearing--and, again, I will consult with Senator Shelby about 
timing to do this. We are only here for a couple of weeks. We 
have got the break for Thanksgiving. But if we can, we want to 
fit that hearing in to invite the regulators to come before us 
as well to share with us their thoughts on the subject matter.
    First let me explain what we mean by mortgage servicing. 
When a homeowner takes out a mortgage, that loan is often 
bundled with a pool of similar mortgages and sold in the 
secondary market as a mortgage-backed security, commonly known 
as MBSs. After the origination, all processing related to the 
loan is managed by a mortgage servicing company. The four 
largest banks--JPMorgan Chase, Wells Fargo, Bank of America, 
and Citi--are also the largest mortgage servicers. Mortgage 
servicers bill and collect monthly payments, operate customer 
service centers, maintain records of payments and balances, and 
distribute payments according to the terms of a trust. 
Principal and interest are distributed to the investors of the 
mortgage-backed securities through a trustee. Taxes and 
insurance are paid to local governments and insurers--servicers 
retain a servicing fee. That is a brief description of how this 
is supposed to work.
    It is the problems that have arisen with this process that 
have led me to call the hearing today. It has not generally 
been my habit to quote the Wall Street Journal editorials in my 
Committee statements, but I thought the following from a column 
last month captured perfectly the essence of the issues we will 
examine today. The column is entitled ``A Foreclosure Sitcom.'' 
It starts by saying, ``First we learned America's biggest banks 
could not properly lend.'' It goes on to say:

        Then we learned they could not keep themselves solvent without 
        taxpayer assistance. Then we learned they could not effectively 
        work with troubled borrowers in a bursting housing bubble. And 
        now we have learned they do not even know how to foreclose.

    ``This is more than just a little paperwork problem,'' it 
went on.

        Ohio Attorney General Richard Cordray put it best: `This is 
        about the private property rights of homeowners facing 
        foreclosure and the integrity of our court system, which cannot 
        enter judgments based on fraudulent evidence.'

    This editorial provides a sharp description, in my view, of 
the situation in which millions of Americans find themselves 
today, whether we are talking about a homeowner facing possible 
eviction, an investor in an MBS, or simply an average American 
family watching the value of their home drop as more and more 
homes go into foreclosure around them.
    I want to provide a bit more context, if I can, for today's 
proceedings. In April of 2007, after holding a number of 
hearings on predatory lending, as my colleagues will recall, 
and the foreclosure crisis to which it would lead, I hosted a 
meeting of large mortgage servicers in this very room, 
including regulators, civil rights and consumer groups, and 
others, to discuss ways that we could better prepare for the 
wave of loan defaults and foreclosures many of us expected. 
That summit that we held in this very room resulted in a 
statement of principles to which all participants agreed on May 
2nd of 2007.
    Among the items to which the servicers agreed were the 
following: early contact and evaluation, modification to create 
long-term affordability, and providing dedicated teams or 
resources to achieve the kind of scale many knew would be 
necessary to face the coming tidal wave of foreclosures.
    Unfortunately, rather than living up to these commitments, 
many in the industry wasted a lot of time denying culpability 
for the mortgage problems or arguing that the problems would 
not be as severe as they turned out to be. As a result, we see 
even today, more than 2 years later, a number of points: 
servicers struggling to keep up with demand; numerous and 
repeated cases of lost paperwork; serious allegations by 
investors, including the New York Federal Reserve, and 
advocates of self-dealing at some of the largest mortgage 
servicers in the country and people needlessly losing their 
homes, including, according to some press reports, people who 
have no mortgages on their homes at all.
    More than a month ago, the robo-signing scandal, of course, 
hit the press. Many in the industry were too quick, in my view, 
to call the problems technical alone and to insist that nobody 
is losing a home to foreclosure without cause.
    However, the focus of the robo-signing problem is too 
limited, in my view. Many believe that the robo-signing errors 
are simply the tip of a much larger iceberg, that they are 
emblematic of much deeper problems at the mortgage servicing 
business, problems that have resulted in homeowners, of course, 
losing their homes and unjustifiable foreclosures. In fact, 
servicing practices may be putting homeowners at risk.
    Even the industry now acknowledges that the current 
mortgage servicing business model is broken and is simply not 
equipped to deal with the current crisis. Many observers point 
out that the interests of third-party mortgage servicers are 
not aligned with the interests of either homeowners or 
investors. So, for example, a permanent modification might 
result in a homeowner keeping the family's home and the 
investor being assured of a better return. But that same 
modification could cause the servicer to lose money.
    The upshot is that there could be extensive problems 
throughout the servicing process that may have led to, in the 
words of the Federal Reserve Board Governor Sarah Bloom Raskin, 
and I quote her, ``a Pandora's box of predatory servicing 
tactics.''
    According to Governor Bloom Raskin, these tactics include 
padding of fees, strategic misapplication of payments which can 
sometimes cause the loan to be considered in default, what some 
people call service-driven defaults, and the inappropriate 
assessment of forced placed insurance, which is extremely 
costly to the homeowner.
    To her list let me add other issues that have arisen, 
including failure to properly record transfer and ownership of 
notes and/or mortgages, failure to maintain proper custody of 
title, failure to properly administer the Home Affordable 
Modification Program, failure to meet the requirements of the 
foreclosure process, such as by the use of robo-signers, and 
failure to establish or administer mortgage trusts in 
accordance with applicable law or contractual agreements. This 
hearing will explore these potential problems and their 
implications.
    In addition, the Congressional Oversight Panel has raised 
concerns today that the failure of servicers and others to 
correctly handle mortgages and mortgage documents could create 
systemic risk for the financial system. Professor Levitin will 
also discuss this in his testimony this afternoon.
    This is a very important issue to explore, both here today 
and with the regulators at our next hearing. In my view, we 
created the Financial Stability Oversight Council to examine 
exactly this kind of issue. The FSOC needs to really drill 
down, in my view, and find out the scope of the problem and 
determine the steps that may need to be taken to prevent 
systemic problems from growing, if they conclude that there are 
systemic implications, in fact.
    Let me assure everyone here that I do not want this hearing 
to be simply about casting blame. It is extremely important to 
lay out the problems and challenges, and today's hearing is 
designed to do exactly that. But I also hope we can work toward 
solutions. As we do, we need to keep in mind that bad mortgage 
servicing is far more than a technical issue. At the same time, 
we must all acknowledge that not every delinquent borrower's 
home ought to be saved or can be saved. In my view, we need to 
strike a balance; we need more robust loan modifications, 
including loan modifications that result in real principal 
forgiveness that will finally help put an end to our housing 
crisis.
    At the same time, I hope we can agree that we should 
expedite foreclosures that cannot be prevented. For example, a 
significant portion of homes awaiting foreclosure are vacant 
today in the country. There is no reason in the world to slow 
down the process on these homes. We will need to work together 
going forward if we hope to finally put an end to this housing 
crisis, and I look forward to these witnesses' testimony and 
the comments and questions raised by my colleagues.
    We do have a quorum? Oh, good.
    [Whereupon, at 3:33 p.m., the Committee proceed to other 
business and reconvened at 3:44 p.m.]
    Chairman Dodd. Richard, before you came in, what I said is 
I know you have got a caucus to go to as well, so we are going 
to do this a little differently. You make your opening 
statement; they are going to make brief comments, our 
witnesses.
    Senator Shelby. OK.
    Chairman Dodd. And then I am going to turn to my Republican 
colleagues for questions so that you can get your questions in 
before you have to go to the caucus.

             STATEMENT OF SENATOR RICHARD C. SHELBY

    Senator Shelby. Thank you. You are charitable. We like you 
as Chairman right now. We are going to miss you. Thank you.
    Thank you, Mr. Chairman. I will go back to the subject 
matter now. On October the sixth, I called for an investigation 
into the growing controversy surrounding home foreclosures. At 
this point, there appear to be a number of key issues--Senator 
Dodd has raised a lot of them--that need to be examined very 
thoroughly.
    First, we need to determine the extent of the problem. It 
appears that thousands of so-called robo-signers working on 
behalf of banks to service loans signed foreclosure-related 
court documents swearing that they had personal knowledge of 
the facts of each foreclosure case. It now appears that few, if 
any, of these people had such knowledge that they swore to.
    Second, we need to determine whether the flaws in the 
process led to improper results. In other words, were any 
homeowners foreclosed upon when they should not have been? I 
think that is a big issue.
    Third, we need to examine the activities of the law firms 
that work for the servicers. Many questions have been raised 
regarding the conduct of these firms during their engagement in 
foreclosure proceedings.
    Fourth, what role did the GSEs and the larger 
securitization market play in this debacle? Did their actions 
contribute to the problem? Were Fannie and Freddie complicit in 
any way?
    Finally, we need to examine the role of the regulators 
here. Where were they in this process? What were they supposed 
to be doing, and what were they doing, and if not, why not? I 
think these questions have got to be asked and answered.
    And in order to determine the extent of the problem, we 
need to speak with all of the major servicers. Unfortunately, 
we only have a small subset present today. For example, Allied 
Financial was the first major servicer to recognize that it had 
problems with its process. That firm, among others, Mr. 
Chairman, for some reason is not here today.
    Mr. Chairman, it is my understanding that many, if not all, 
of the law firms under investigation were selected by the 
housing GSEs. In order to best understand how and why these 
firms were chosen, I believe we need to hear from Fannie Mae 
and Freddie Mac. Unfortunately, they also did not make the 
witness list today.
    Perhaps the most complex facet of this examination involves 
securitization. As highlighted in the Congressional Oversight 
Panel's most recent report, the most severe potential fallout 
from this will be found in the securitization market. According 
to that report, this could have a devastating effect on our 
broader financial system.
 
MUCH MORE  

Sunday, January 5, 2014

KaBoom!! Wells Fargo Bank, N.A. v Erobobo | NYSC – REMIC Fail, Plaintiff obtained the mortgage and note without an intervening assignment, in violation of the PSA to closed Trust


stopforeclosurefraud.com | January 2, 2014
Decided on April 29, 2013
Supreme Court, Kings County
Wells Fargo Bank, N.A., as Trustee for ABFC 2006-OPT3 TRUST, ABFC ASSET-BACKED CERTIFICATES, SERIES 2006-OPT3, Plaintiff,
against
Rotimi Erobobo, THE CITY OF NEW YORK ENVIRONMENTAL CONTROL BOARD, “JOHN DOE” AND “JANE DOE” said names being fictitious, it being the intention of Plaintiff to designate any and all occupants of the premises being foreclosed herein, Defendants.
IMHO - the trusts are empty, the money is gone, gone to fill pockets of the elite, wars, bribes and a mess of a global economy...
Deadly Clear | January 5, 2014 at 5:01 pm | Categories: Uncategorized | URL: http://wp.me/p1H9BR-1qx

Wednesday, January 1, 2014

June Clarkson and Theresa Edwards Were Fired After Revealing Widespread Foreclosure Fraud


By Stefan Kamph Thursday, Jun 21 2012


After getting booted from the Attorney General's Office a year ago, June Clarkson (left) and Theresa Edwards started a private law partnership in Fort Lauderdale.
June Clarkson
 went to Ernie's Bar-B-Q in Fort Lauderdale to have lunch with her supervisor, Bob Julian; and some coworkers. It was a Friday in May 2011, the end of a hectic workweek at the local economic crimes unit of the Office of the Attorney General.
Clarkson, a small, lively woman with glasses and blond hair, had left a private law firm to accept the sub-$60,000-a-year job. She relished the idea of being a public watchdog, of digging into the records of companies to catch them trying to cheat customer
"It was just right up my alley: people defrauding other people, companies defrauding the public. I thought it was the best thing that had ever fallen into my lap," Clarkson recalls.

She worked closely with colleague Theresa Edwards. Their typical assignments involved consumer fraud, but in 2010, they started getting calls from hard-up homeowners. Millions of families had faced foreclosure in the wake of the housing collapse; most had capitulated under the power of giant banks and simply surrendered their homes. But more and more, Clarkson was hearing from individuals who were fighting back.

These homeowners noticed mistakes in the documents that the banks were using as the basis to seize people's homes: strange signatures, missing information, notary seals with no signature, dates in the future. Skeptics began wondering whether these were in fact not innocent mistakes but symptoms of intentional and possibly systemic fraud. Clarkson and Edwards were some of the first public officials willing to listen to these accusations.
Clarkson noticed Julian's phone ringing during lunch but didn't pay much attention. They drove back to the downtown Fort Lauderdale office building they shared with several of the area's most powerful law firms.

Clarkson returned to her desk, reading through piles of documents. Recently she had been investigating Lender Processing Services (LPS), a company that, by some estimates, helped prepare paperwork for half the foreclosures in the country. Every time she found a red flag — a suspect signature, perhaps, or an intriguing memo — she went next door to Julian's office and showed him. But since lunch, he hadn't been acting normally, she thought. Clarkson came back a couple of times, and each time she announced a discovery, it seemed to pain Julian. Eventually he closed his door, but Clarkson knocked again. Julian just looked up at her. She thought he might be sick. "What's the matter?" she asked. "I'm doing a good job!"