Daily Archives: August 9, 2012

FORCED PLACED INSURANCE | TIES TO INSURERS COULD LAND MORTGAGE SERVICERS IN MORE TROUBLE

When banks buy insurance on the homes of borrowers whose policies have lapsed, they get a great deal. Just not for the homeowners and investors who have to pay for it.

Nominally purchased to protect the owners of mortgage-backed securities, such “force-placed” insurancecan be 10 times as costly as regular policies, raising struggling homeowners’ debt loads, pushing them toward foreclosure — and worsening the loss to investors on each defaulted loan.

Evidence of abuses and self-dealing in the force-placed insurance industry suggests that there may be far larger problems in how servicers are handling distressed loans than the sloppy document recording that has been the recent focus of industry woes.

Behind banks’ servicing insurance practices lie conflicts of interest that align servicers and their insurer partners against borrowers and investors. Bank of America Corp. owns a force-placed insurancesubsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors’ and borrowers’ behalf.

“There’s no arm’s-length transaction here, and that creates all sorts of incentives for the servicer to force-place excessive insurance and overcharge consumers for policies that provide minimal benefit,” said Diane Thompson, of counsel for the National Consumer Law Center. “Servicers and insurers have turned this into a gravy train.”

Rest here…

We Will Be Watching. JPMORGAN CHASE LIBOR SUBPOENAS COMING FROM EVERYBODY IN THE WORLD

Pretty much everybody in the world with subpoena power has hit JPMorgan Chase with requests for information in the Libor-rigging scandal.

The biggest U.S. bank revealed the extent of its involvement in the probe in a filing Thursday morning with the Securities and Exchange Commission, saying regulators in the U.S., U.K., Canada, Switzerland and more had asked it for information:

JPMorgan Chase has received subpoenas and requests for documents and, in some cases, interviews, from the DOJ, CFTC, SEC, European Commission, UK FinancialServices Authority, Canadian Competition Bureau, Swiss Competition Commission and other regulatory authorities and banking associations around the world.

That’s a whole lot of subpoenas. For the uninitiated, “DOJ, CFTC, SEC” refer to the Justice Department,Commodity Futures Trading Commission and Securities and Exchange Commission. “Libor” stands for “London Interbank Offered Rate,” a short-term interest rate that affects borrowing costs for homeowners, companies and borrowers throughout the world, along with about $350 trillion in credit derivatives. Despite its importance, the rate has apparently been manipulated constantly for years, in what may be the biggest financial scandal of all time.

Rest here…

SEC drops investigation into Goldman mortgage deal

The Securities and Exchange Commission will not bring charges against Goldman Sachs ($102.50 0%) after a five-month investigation into the offering of a $1.3 billion subprime mortgage deal in 2006.

The SEC sent a Wells notice to Goldman in February asking for disclosures made to investors in the deal. On Monday, however, the SEC notified staff at the investment banking giant that it would not be pursuing enforcement action, according to a financial filing made this week.

The statute of limitations is running out on many financial instruments tied to risky mortgages during the housing bubble.

Read on.

Know pitfalls of mortgage-to-lease option

Know pitfalls of mortgage-to-lease option.

Investors know a good thing when they see one. That’s why they are lining up in droves to get their hands on thousands of government-held problem loans and foreclosures under Uncle Sam’s mortgage-to-own initiative.

The deal makes sense for the government and investors, most of them private investment funds. The government moves its bad FHA, Fannie Mae and Freddie Mac loans off its books, while investors have an opportunity to buy these assets at a deep, deep discount.

The investors will work the bad loans, trying to get people to pay. But if they can’t, owners will be offered the option of staying on as renters instead of moving out. Nonpaying “guests” who haven’t made a mortgage payment in months also will be offered the opportunity to remain as renters.

It’s all designed to clear the shadow inventory that hangs over the housing market, create something of a floor for home prices and push the market back into gear. Even lenders are getting in on the act, allowing at-risk borrowers to remain as tenants as an alternative to foreclosure.

But is mortgage-to-lease a good option for consumers? As usual, it depends.

Judge that has put new LIBOR lawsuits on hold is high invested in Wall Street: 2009 Financial Disclosure Report

Here we go again. Another judge with a conflict of interest as in the Financial Disclosure Report on investments with banks. Daily Clear sent this response to my posting and information on Judge Naomi Reice Buchwald:

Judge Buchwald needs to recuse herself from any case that deals with Wall Street banks and their frauds. She is too highly invested in Wall Street and could not escape an appearance of impropriety by case law standards. Check out her disclosure statement http://www.scribd.com/doc/74639155/Naomi-R-Buchwald-Financial-Disclosure-Report-for-2009 and read Judging DeMinimis on www.deadlyclear.com. The Plaintiffs’ attorneys need to take this to task and ask her recuse herself immediately. The fact that she didn’t do it sua sponte may also add to vacating the decision.

And here is Judge Buchward’s 2009 Financial Disclosure Report:

 

U.S. judge in Libor cases puts new lawsuits on hold

(Reuters) – A federal judge on Wednesday suspended several new lawsuits that allege banks rigged key interest rates, saying she first needed to sort through the issues in an earlier round of related lawsuits.

U.S. District Judge Naomi Reice Buchwald said from the bench in Manhattan federal court that she first needed to see the course of earlier litigation over the same issue before she would allow the new lawsuits to go forward.

“While parties are free to file new complaints – and, indeed, are encouraged by the court to do so if they do so promptly… I am imposing a stay on any action that is not the subject of a pending motion to dismiss,” Buchwald said. “This stay will last until the current motions to dismiss are resolved.”

Read on.

Biloxi Buzz for Thursday

Harmful-Gas Manufacturers Getting Credit For Slowing Climate Change

 

Doctor Accused Of Waterboarding 11-Year-Old Daughter

 

Bank Paid HOW MUCH To Settle $300 Million Scam Charge?!