Securitization Lobby in Disarray After Most Directors Quit
The main trade association for the securitization industry is in turmoil after most of the board resigned in a dispute with the group’s executive director over governance and bonuses, according to six people with knowledge of the matter.
The exodus at the American Securitization Forum puts the future of the group in question, said the people, who spoke on condition of anonymity because the dispute isn’t public. Members that quit include Bank of America Corp (BAC)., JPMorgan Chase & Co. (JPM), Deutsche Bank AG, Citigroup Inc. (C) and law firm Cadwalader, Wickersham & Taft LLP, the people said.
The resignations came after the board attempted to remove the forum’s executive director, Tom Deutsch, but was unable to fire him because of the way the association’s governing documents are written, said the people. Part of the dispute concerns bonuses that Deutsch was paid, the people added.
Apparently part of the bank flaks’ talking points regarding the foreclosure reviews is that to the extent homeowners harmed by wrongful foreclosures, they were actually drug dealers. The message: we didn’tforeclose on anyone who didn’t deserve it. We were just foreclosing on some scumbags and doing you all a favor by getting the meth lab out of the neighborhood before it blew up. We’re part of the war on drugs.
This talking point is particularly revealing, I think, both about how seriously our largest financial institutions take sanctity of contract, and about the nature of the whole independent foreclosure review sham.
Running a meth lab in your basement may be an event of default on a mortgage–but if that’s going to be the default that triggers a foreclosure, the bank is going to have to prove that you’ve been running a meth lab on the property. The lender’s relationship with the borrower is contractual, not moral. If the borrower does something morally objectionable, it only matters if there is a breach of the contract. If sanctity of contract matters as a social principle, then even meth lab owners rights’ must be respected. We have criminal forfeitures to the government, but that doesn’t result in civil forfeitures to private lenders other than pursuant to contract. We’ve seen this vigilante foreclosure line before.
A great many people around the county were rightfully shocked and horrified by the recent excellent and hard-hitting PBS documentary, The Untouchables, which looked at the problem of high-ranking Wall Street crooks going unpunished in the wake of the financial crisis. The PBS piece certainly rattled some cages, particularly in Washington, in a way that few media efforts succeed in doing. (Scroll to the end of this post to watch the full documentary.)
Now, two very interesting and upsetting footnotes to that groundbreaking documentary have emerged in the last weeks.
The first involves one of the people interviewed for the story, a former high-ranking executive from Countrywide financial who turned whistleblower named Michael Winston. You can see Michael’s segment of The Untouchables at around the 4:20 mark of the piece. The story Winston told during the documentary is essentially an eyewitness account of the beginning of the financial crisis.
When I spoke to him last week, Winston was still as amazed and repulsed by what he saw at Angelo Mozilo’s crooked subprime mortgage company as he was when he worked there. Winston, who had worked for years at high-level positions at companies like Motorola and Lockheed before joining Countrywide in the 2000s, described a moment in his first months at the company, when he rolled into the parking lot at the company headquarters.
“There was a guy there, a well-dressed guy, standing next to a car that had a vanity plate,” he said. “And the plate read, ‘FUND’EM.’”
Be sure to check out the rest here…
Concerns surface over FHA Servicer Scorecard
Servicers are feeling the heat of new regulations and compliance standards from both the state and federal level.
National Mortgage News details one of the servicing industries latest concerns: the fact that the Federal Housing Administration is implementing a servicer scorecard that will impact their business.
The news agency writes:
The Federal Housing Administration is the process of implementing a new servicer scorecard and mortgage bankers are afraid it will be used to penalize servicers with high re-default rates.
Banks, subprime lender face lawsuit over mortgages
A federal appeals court has reinstated a class-action lawsuit that charges a defunct subprime lender and several banks with misleading investors in the run-up to the financial crisis.
The suit by the New Jersey Carpenters Health Fund, a pension fund, against representatives of NovaStar Mortgage, Royal Bank of Scotland, Deutsche Bank and other defendants can continue, the U.S. Court of Appeals for 2nd Circuit ruled on Friday.
Mortgage Settlement Relief Fails To Reach Millions Of Foreclosed Homeowners
Betsy Berry was worried she would lose her home just outside of New Orleans. Though she had never missed a payment on her mortgage, she says, Bank of America was demanding thousands of dollars worth of late fees, and threatening to take her home if she failed to pay.
But when she called her lender in October with the hope of eliminating the fees, more confusion ensued, she says. Banks had pledged to assign borrowers a single point of contact in earlier agreements with regulators and the federal government. Still, she found herself talking to five different people in the space of two days.
First, she spoke with a Bank of America employee named “Shane,” who referred her to “Pamela,” she claims in a lawsuit filed recently on her behalf in New Orleans federal district court. The next day, she talked to “Debra,” “Jarquis” and “Jennifer.”
None of these people solved her problem, Berry alleges in the lawsuit, leaving her to continue sliding to the brink of foreclosure. A few weeks later, frustrated, exhausted, and worried about the consequences of her rapidly deteriorating credit, Berry sent Bank of America a check for $5,556, she says.