Monthly Archives: June 2013


Bank of America lawsuit by by former bank employees under scrutiny of settlement watchdog

Bank of America lawsuit by by former bank employees under scrutiny of settlement watchdog

Claims by former Bank of America employees that they were offered incentives to deny mortgage modifications have caught the attention of the national mortgage settlement’s monitor.

Joseph Smith, who oversees the $25 billion settlement reached last year with 49 states and five major banks, including Bank of America, said he’s examining a lawsuit in federal court in Massachusetts for any evidence that the bank violated the agreement.

The former employees’ allegations are in affidavits filed as part of the lawsuit.

“The allegations are serious,” said Smith, who added he intends to review the court documents.



Sonoma County sues over LIBOR banking scandal

Sonoma County sues over LIBOR banking scandal

Sonoma County has filed its own lawsuit against LIBOR — the collection of banks caught in an international rate-fixing scandal — alleging it was short-changed on investment returns.

The suit filed Friday in U.S. District Court in San Francisco seeks a return of undetermined losses to local investing agencies including schools, special districts and county government.

It comes on the heels of similar suits from San Mateo County and the University of California claiming damages from financial institutions that set the London Interbank Offered Rate, which is the global benchmark for interest rates.


JPMorgan Chase shifts focus back to originations

JPMorgan Chase shifts focus back to originations

Over a month ago, Eric Schuppenhauer oversaw JPMorgan Chase’s($52.79 -0.36%) home loan defaults and mortgage servicing business.

Now, Schuppenhauer is the head of home loan origination operations, the Dallas Morning News reports. 

The industry is shifting away from being servicing minded and reverting back to originations.

“Our originations are up 29 percent year over year” at Chase, Schuppenhauer said. “We absolutely do want to make loans.”


L.A. settles for $10 million in Deutsche Bank slumlord lawsuit

L.A. settles for $10 million in Deutsche Bank slumlord lawsuit

When lawyers for the city of Los Angeles took Deutsche Bank to court two years ago, they decried the world’s-fourth largest bank as among the city’s worst slumlords and sought hundreds of millions of dollars in penalties and restitution.

But a settlement announced by city officials Friday only delivered $10 million —none of which will be paid directly by the bank. The bank does, however, have to ensure its foreclosed properties are properly maintained in the city, L.A. officials said.

That could be a transformative move for some city neighborhoods because the Frankfurt, Germany-based bank foreclosed on more than 2,000 homes between 2007 and 2011 in areas like the San Fernando Valley, South Los Angeles and northeast Los Angeles, according to the suit.

City lawyers had accused Deutsche Bank of letting hundreds of its properties fall into disrepair which, in turn, bred crime. City officials also said that some tenants were illegally evicted, while others lived in squalor and many properties became graffiti-scarred dens for squatters or criminals.

New Bank of America whistle-blower emerges: More customer abuse secrets

From Salon:

Now, another new lawsuit, featuring a separate whistle-blower, contains additional remarkable revelations – and may shed light on Bank of America’s strategy in getting out from under the mountain of legal exposure and costs in which it now finds itself. Simply put, the bank seeks to pocket quick cash and evade practices set forth in major settlements – by cashing out of the subprime mortgage servicing business. The result would be to leave struggling homeowners back at square one, with even fewer protections to avoid foreclosure.

First, some background. Over the past year, non-bank servicers like Nationstar and Ocwen have been buying up servicing rights to millions of mortgages, gradually positioning themselves to become the biggest companies in the space. These non-bank servicers, which process monthly payments and deal with foreclosures but do not originate loans, have an asset not available to their big bank colleagues: They haven’t yet been officially caught scamming customers. Therefore, they are not a party to the various servicer settlements brought by state and federal regulators, and they need not submit to those settlement guidelines. This includes rules like establishing a single point of contact for borrowers, stopping foreclosure operations when a modification is in process (ending what is known as “dual track”) and facilitating proper payment processing.

All of this has come to a head in a class-action lawsuit filed by Leonard Law Office in Massachusetts against Green Tree Servicing, a non-bank servicer based in St. Paul, Minn. As detailed by an insider at Bank of America in a packet of documents, in January 2013, BofA sold servicing rights to 650,000 mortgages (worth $93 billion) to the parent company for Green Tree.

And there is more from Leonard Law Office, LLP:

Soon after Leonard Law Office LLP filed a class action lawsuit against Green Tree Servicing for allegedly violating the Telephone Consumer Protection Act, an anonymous insider from Bank of American (BAC) mailed an untraceable packet of information in a plain manila envelope.  A .pdf of the file is here.

The insider wrote:

“In order to sell the mortgage servicing rights (MSRs) for half of the 800k loans in the BAC book, they had to include approx. 1.5MM current loans. Successor servicers can then solicit HARP refis and get incentive from the govt.

Not many reputable servicers want the bad loans, so BAC is selling to Nationstar, Greentree and M&T. These entities are NOT regulated by the OCC and do not have to abide by the OCC consent order which outlines strict guidelines on dual tracking (can’t foreclose while a modification is in process), payment processing and single point of contact (SOPC) to assist the borrower. This also includes special treatment of borrowers impacted by the hurricane Sandy. It may mean that any modification currently in process with BAC will not be recognized and the borrower will proceed into foreclosure.

These entities haven’t been under any scrutiny regarding TCPA and other consumer protection acts. They do not screen prior to making outbound calls. No one has cared, but now that numerous “good” borrowers are being sent their way, the right people are finally taking notice.

Tony Meola joined BAC from Saxon mortgage early in 2011. Research the execs at Nationstar – many are buddies of Tony’s. Nationstar did not BAC due diligence for subservicing, but the connections allowed them to be approved (subservicing – you pay someone to service the loans, but keep the MSR).

Brian Moynihan, Ron Sturzeneggar and Tony Meola are well aware of the horrible reputation of these sericers. Brian received an email from client/friend who just learned his mortgage had been transferred. He was not pleased and shared a link to a consumer affairs website tracking Nationstar complaints. Brian did nothing buy forward to Ron, who did the same.

The deal was signed in January 2013. They should have thought of that prior to selling the MSRs to these entities; however, the were primarily concerned with getting the bad loans off their books, not with customer experience.

Under Tony’s leadership, BAC has failed at processing default loans. Ron is a dealmaker, not an operations guy. He was brought in to sell stuff. Any they both receive large bonuses.”


Bank of America Said to Send Property Reviews to India

Bank of America Said to Send Property Reviews to India

Bank of America Corp. opened a unit in India to review home-valuation reports as it seeks to rebuild share in U.S. mortgages at a lower cost, said four people with knowledge of the move.

Workers in the new Bangalore office follow checklists to determine if appraisals are complete, said the people, who requested anonymity because they weren’t authorized to comment. The firm also eliminated jobs of licensed U.S. workers in its LandSafe business, the appraisal division of the Charlotte, North Carolina-based company, which made $78.7 billion in loans last year, the people said.


BofA, Wells Fargo Won’t Face Mortgage Deal Enforcement Case

BofA, Wells Fargo Won’t Face Mortgage Deal Enforcement Case

Bank of America Corp. and Wells Fargo & Co. (WFC) won’t face an enforcement action by state and federal officials over claims the banks violated a $25 billion mortgage-servicing settlement.

The agreement established a process for banks to fix violations and remediate harm to borrowers, a committee of states and federal agencies said in a letter today to the New YorkAttorney General’s office, which claims Bank of America and Wells Fargo have violated the settlement.


ResCap to Pay $230M to End Foreclosure Reviews

ResCap to Pay $230M to End Foreclosure Reviews

Residential Capital has won court permission to set aside $230 million for payments to homeowners whom the company may have foreclosed on improperly.

The former subprime mortgage unit of Ally Financial has received approval to enter into an agreement with the Federal Reserve Board that would end regulatory review of its foreclosure practices, Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan ruled on Wednesday.


FHFA reports ‘irrelevant’ to BofA MBS deal, investors say

FHFA reports ‘irrelevant’ to BofA MBS deal, investors say

The institutional investors backing an $8.5 billion Bank of America ($13.01 0.25%) mortgage-backed securities settlement said that the judge overseeing a trial shouldn’t consider two Federal Housing Finance Agency inspector general reports because they’re irrelevant, Law360 reports.

Some investors, including  American International Group Inc., have challenged the proposed settlement because they say $8.5 billion isn’t enough money and they don’t know enough about how the deal was negotiated.


Bank of America rejects AIG bid to reopen MBS settlement

Bank of America rejects AIG bid to reopen MBS settlement

Bank of America  ($13.01 0.25%) has rejected a bid to re-open negotiations into its proposed $8.5 billion settlement with investors in mortgage-backed securities, indicating it plans to take its chances that a judge will approve the deal, Reuters writes. 

American International Group ($44.48 0.86%) and the Federal Home LoanBanks of Boston, Chicago and Indianapolis, which object to the settlement, sent a letter toBank of New York Mellon Corp  ($28.72 0.39%), the trustee overseeing the securities.