Daily Archives: November 15, 2012

Man (or woman) bites dog story: Florida woman wins against Wells Fargo, wants to foreclose on bank

ST. AUGUSTINE, Fla.– A local woman is taking on a monster megabank by filing a foreclosure of her own.

Wells Fargo tried to take her home. A judge ruled she could keep it and Wells Fargo owes her for the trouble, but the bank still hasn’t paid up.

Rebecca Sharp likes to come home to this house every night. But seven years ago, she thought, that might change. “I was served with a summons pending foreclosure,” said Sharp.

Wells Fargo said she was six months behind on her mortgage. But she fought the foreclosure, and eventually the case was dismissed. The judge also ruled Wells Fargo should pay Sharp. She and the bank settled on nearly 20 thousand dollars for attorney’s fees. Eight months later she still hasn’t seen that money.

So, to try and get it, Sharp and her attorney turned the tables on Wells Fargo. “We filed a foreclosure notice to get our client the money she’s owed,” said attorney Tom Pycraft.

It was filed against a local Wells Fargo branch down in St. Johns County. “Foreclosure cases are based on borrowers not paying bills. Now, Wells Fargo has not paid its bills. There’s an irony there,” said Pycraft.

Read on.

Fraud: Jon Corzine, Congress and the 2005 Bankruptcy Reform

Well, the players got played. And we wonder why Congress has the lowest approval rating and trustworthy to the American people?

New York — Yesterday the House Financial Services Committee confirmed what we already know, namely that former Goldman Sachs CEO Jon Corzine deliberately stole customer funds when he was CEO of MF Global.  See Blomberg News story below:


But what the Republican Committee report does not say is that the mechanism that allows Corzine and many others to walk away from such disasters without any civil liability for fraud is the 2005 Bankruptcy Reform Act, which the Republicans sponsored almost unanimously.  And we wonder why nobody is pursuing this for the theft that it clearly involved?

By the bankruptcy code Congress adopted and which congress alone can change: (i) Bankruptcy Judges are PRECLUDED from appointing “receivers” (Sec. 105(b)), (ii) the stay precludes creditors who were robbed from pursuing a receiver at the District Court, (iii) state receiverships are collapsed into the bankruptcy when it is filed and (iv), at least in the 2nd Cir., only a receiver can pursue claims based on theft.

Ergo:  There is almost no way to go after people to collect stolen money in corporations that are subject to the Bankruptcy Code (particularly in NYC).  As one veteran litigator told me yesterday: “AND WE CONSIDER OURSELVES AS A NATION GOVERNED BY “THE RULE OF LAW”?

Read on.


OPM=Other People’s Money

But in a surprising revelation, the banking giant said that more than half of the nearly $5 billion in principal reductions will be paid for by investors, not the bank itself.

Whether B of A’s report is indicative of progress other banks are making in complying with the landmark settlement won’t be known until Joseph A. Smith, the settlement’s monitor, issues his own progress report on Monday.

Full story here…

FHA faces Treasury draw for first time

The Federal Housing Administration actuarial report to Congress, expected this week, may show the need to tap Treasury to bulk up reserves to cover rising mortgage delinquencies. The potential draw is the first time in the 78-year history of FHA a bailout is needed, reported the Wall Street Journal.

A Treasury draw would put into question the government’s role in housing as it continues to attempt and stabilize the housing recovery. The government already spent $137 billion to bail out Fannie Mae and Freddie Mac.

Read on.

U.S. regulators cut JPMorgan’s ability to trade power, 6 month ban

(Reuters) – U.S. federal energy regulators voted on Wednesday to ban JPMorgan Chase from trading in a segment of the electricity market for six months, marking a hefty penalty for the Wall Street bank.

The move will prevent JPMorgan from receiving competitive market prices for physical power it sells, though it will still be able to sell the power at cost. The bank’s ability to trade derivatives, futures, natural gas and other commodities will not be impacted. The decision will be effective April 2013.

Read on.

F.H.A. Audit Said to Show Low Reserves

The Federal Housing Administration’s annual report is expected to show a sharp deterioration in the agency’s financial condition, including a shortfall in reserves, the result of escalating losses on the $1.1 trillion in mortgages that it insures, according to people with knowledge of the entity’s operations.

The F.H.A., the Department of Housing and Urban Development unit that insures home mortgages, reports on its capital reserves at the end of each fiscal year and makes projections for its financial position in the coming year. If the report, due later this week, showed that the F.H.A.’s capital reserves had fallen deep into negative territory, it would be a stark reversal from projections last year that it would show a positive economic value of $9.4 billion in 2012.

Capital reserves are kept to cover future losses. Outsiders have questioned whether the agency would some day need an infusion from Treasury if its reserves are insufficient.


Read on.

Banks employ thousands to handle mortgage servicing: Treasury

Four years after the housing meltdown, nine of the top U.S. mortgage servicers have 12,000 employees working with distressed borrowers and another 6,000 employees to help process and collect mortgage-related records.

The Treasury made those finding in a new research report that attempts to assess how well servicing firms are complying with single-point-of-contact servicing rules outlined by regulators in the wake of the financial crisis. The report is published on the Treasury’s blog.

Single-point-of-contact was designed to ensure borrowers calling servicers can access information on a timely basis, especially when attempting to avoid a foreclosure.

Read on.