Daily Archives: October 24, 2012

Business Insider reveals Countrywide mortgage origination program called ‘The Hustle’.

The article published parts of the lawsuit that allege Countrywide eliminated nearly every underwriting checkpoint to push these mortgages through. Be warned: Some of the examples are shocking.

U.S. District Attorney Preet Bharara just announced that he’s filed a complaint against Bank of America alleging that Countrywide, its mortgage unit, purposely defrauded Fannie Mae and Freddie Mac.

It all centers around something called “the Hustle,” or (HSSL- High Speed Swim Lane) a strategy started in August of 2007 the D.A.’s office says Countrywide implemented in order to speed up the mortgage origination process.

From the complaint:

the hustle complaint

the hustle

The complaint goes on to allege that Countrywide was warned that this new process would result in loans of the poorest quality.

“Loans move forward, never backward,” became a Countrywide motto after the Hustle, the D.A. alleges, and executives removed “toll gates” that were supposed to slow down and force underwriters to review loan applications that were processed through Countrywides automated loan approval system, CLUES.

For example, one property in Miami was approved with the information that the mortgage holder made over $15,000 a month, when if fact they made just over $2,6000. The loan defaulted within 7 months of closing.

Then there’s the Alabama property where Countrywide allegedly failed to disclosed over $81,000 of debt held by the mortgage holder. to the GSEs.

Additionally, in order to boost the Hustle, Countrywide allegedly changed its compensation policy by giving out bonuses based on the quantity of loans originated, not on the quality of those loans.

Read more: http://www.businessinsider.com/bank-of-americas-hustle-program-2012-10#ixzz2AFAbyruo

Barclays faces Libor claim in landmark UK court case

(Reuters) – Barclays(BARC.L) will on Monday face the first claim for damages stemming from manipulation of the Libor interest rate in a landmark case before Britain’s High Court that could have major implications for all UK banks.

Guardian Care Homes, a residential care home operator based in Wolverhampton, central England, is suing Barclays over the alleged mis-selling of interest rate hedging products known as swaps on which it has lost 12 million pounds.

The company says it should be fully compensated for its losses because the swap rates were based on Libor. Barclays agreed to pay $450 million in fines to U.S. and British authorities in June to settle allegations that it manipulated Libor and other key interest rates. More than a dozen other banks are also being investigated.

Monday’s hearing will be a test case for thousands of small British firms who believe they were mis-sold such swaps and raises the prospect of other companies linking future claims to interest rate rigging by banks.

Read on.

US Treasury Rejects Request to Stop Using Libor in Bailouts

The U.S. Treasury Department said it plans to continue using Libor in rates tied to the Troubled Asset Relief Program, rejecting a request from the watchdog of the U.S. financial crisis bailouts.

Neither the Treasury nor the Federal Reserve has “the authority to change unilaterally the interest rate on the small number of remaining loans that rely on Libor,” Timothy Massad, the Treasury’s assistant secretary for financial stability, said in a letter to Christy Romero, special inspector general for TARP. “If we sought to renegotiate the rate, it is likely that borrowers either would not agree to a rate change or would agree only to a change that would result in a lower payment to the taxpayers.” The letter, dated Oct. 9, was obtained by Bloomberg News.

Read on.

Sheila Bair Called It – Foreclosure Lookback Reviews Are A “Ruse”

Forbes:

Bair says in the book she tried to influence the OCC/Fed “lookback” review process but came up short. She wrote to Geithner on February 7, 2011 suggesting an independent claims commission for foreclosures occurring after January 1, 2008. The independent commission would determine the amount of compensation for damaged borrowers. The OCC, now in charge of drafting consent orders with the Fed to enforce the ‘lookback” reviews, was against this approach.

The OCC/FED consent orders signed in April 2011 fall short, in Bair’s opinion, in three big ways:

  1. No hard metrics that can be used to measure improvement in servicing borrowers legally and efficiently.
  2. Treat all the servicers the same, even though there are huge difference in size and quality of operations.
  3. Allow banks to use well-paid consultants to calculate damages to borrowers and to base the calculations, in many cases, on sampling not a full review of each borrower’s case.

October surprise? Mitt Romney LIED under oath when he testified in the divorce of his good friend and screwed the friend’s wife out of a lot of money in the process: Claims ex-wife of Staples’ founder Tom Stemberg

Wow, I don’t know where to start on this story. Today Donald Trump announces his “big surprise” about Obama and how this would change the election. There were internet rumors yesterday that the Obama filed divorce papers which stemmed from a story from UK Daily Mail newspaper which appear to not to be Trump’s announcement. Trump announced he’s offering to give $5 million to charity if President Obama releases college records. Again, a waste of time. But lawyer Gloria Allred announced a bombshell on Romney. I read the headlines of the Romney bombshell today. But, on TMZ, the story gets more interesting because TMZ  tells the story of absolutely pure greed and lies by Romney told by ex-wife of Staples’ founder Tom Stemberg. Sounds more of a soap opera but will this story damaged Romney politically? Here is the story:

Mitt Romney LIED under oath when he testified in the divorce of his good friend and screwed the friend’s wife out of a lot of money in the process … so claims the ex-wife of Staples’ founder Tom Stemberg.

Multiple sources connected with the divorce tell TMZ … during Tom’s uber nasty divorce case with ex-wife Maureen, Mitt Romney gave a deposition and testified during the trial that Staples was worth virtually nothing. Romney testified that the company was worth very little and Tom was a dreamer and “the dream continues.”

Romney characterized the Staples stock as “overvalued,” adding, “I didn’t place a great deal of credibility in the forecast of the company’s future.” 

Partly as a result of Romney’s testimony, Maureen got relatively little in the divorce, but we’re told just weeks after the divorce ended, Romney and Tom went to Goldman Sachs and cashed in THEIR stock for a fortune.  Short story — Romney allegedly lied to help his friend and screw the friend’s wife over.

And there’s more …

Read more: http://www.tmz.com/2012/10/24/mitt-romney-tom-stemberg-staples-lied-perjury-divorce-case-maureen/#ixzz2AEx14esC

Assured trial: Loan file fraud fireworks mask key sampling issue

The bond insurer Assured Guaranty couldn’t have asked for a more engaged judge than U.S. Senior District Judge Jed Rakoff of Manhattan, who threw some tough questions at a Flagstar underwriting manager on Monday, as Assured’s $110 million bench trial against Flagstar nears an expected end this week. Rakoff was fixated on one of the loans underlying the Flagstar mortgage-backed securities that Assured insured, in which the borrower — a Detroit police officer — claimed to be the president of a mortgage brokerage. The judge was so disturbed by the loan-level details that emerged Monday that he twice mused whether to refer the matter to prosecutors in Michigan. It made for great theater, as you’ll see below. But don’t let the fraud kerfuffle fool you: Rakoff is poised to issue substantive rulings that will have a broad impact on bond insurers’ attempts to recoup money from MBS issuers.

Read on.

Transcript 2: Assured vs. Flagstar–Appraisal applications, credit scores, securitization, underwriting

RBS settles Nevada AG subprime securitization charge for $42 million

Royal Bank of Scotland ($8.95 0.1%)-owned RBS Financialagreed to pay a $42 million settlement to resolve an investigation into the firm’s role in purchasing and securitizing subprime and payment option adjustable rate mortgages, according to the office of Nevada Attorney General Catherine Cortez Masto.

Additionally, RBS will change practices associated with securitization operations in regards to mortgages originated and serviced within the state.

Masto publicly announced that her office would pursue such cases. The February 2012 issue of HousingWire magazine featured the attorney general on the cover

Read on..

BofA hit by $1 billion civil fraud suit for mortgages sold to Fannie, Freddie

The U.S. Attorney for the Southern District of New York slappedBank of America ($9.40 0.04%) with a $1 billion lawsuit, claimingCountrywide loans were originated in a manner that disguised underwriting flaws leading to substantial losses at Fannie Mae and Freddie Mac.

This is the first civil fraud suit in the mortgage space filed by the government due to losses on loans acquired by Fannie Mae andFreddie Mac.

The suit claims Countrywide, which is now part of Bank of America, used an origination process called the hustle to push loans at high speeds through quality control checkpoints, resulting in the creation of fraudulent and deceptive loans that were sold to the government-sponsored enterprises.

Read on.

Corzine Tells Judge That Due To Purchase Of 50,000 MF Global Shares Before Bankruptcy, He Must Acquit

Over to the WSJ:

Indeed, the investors’ claim that Mr. Corzine participated in a fraud “makes no sense” because, just two months before the company collapsed, he bought over 50,000 shares of MF Global stock on the open market. His lawyers argue Mr. Corzine’s stock purchase belies the investors’ claim that he sought to defraud them.

As lawyers for the banks that underwrote MF Global’s securities noted, trading firms can go under without fraud.

“Companies sometimes fail because of unsuccessful business strategies,” said lawyers for the underwriters. “However regrettable that reality, courts long have taught that such failures alone do not give rise to claims under the federal securities laws.”

Mr. Corzine’s large bets on bonds of troubled European countries panicked investors and led to the firm’s undoing. As MF Global frantically tried to sell assets and negotiate a rescue deal, the firm dipped into customer funds that aren’t supposed to be touched under federal regulations.

He testified before Congress last year that he was unaware of a shortfall in customer assets at MF Global until hours before its bankruptcy filing.

The Justice Department and regulators at the Commodity Futures Trading Commission and Securities and Exchange Commission have looked into MF Global’s demise to determine if there was any intent to remove money from customer accounts that should have been kept separate from the firm’s own funds under federal rules. To date, neither Mr. Corzine nor others at MF Global have been charged with a crime.