Daily Archives: September 2, 2013

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OIG Says Fed Violated Internal Policy In Email Release

OIG Says Fed Violated Internal Policy In Email Release

Law360, New York (August 30, 2013, 4:03 PM ET) — The Federal Reserve’s violation of its own rules for handling sensitive information led to an accidental email release in April of the minutes of a Federal Open Market Committee meeting to a group that included financial services company professionals, according to a report Thursday.

The report by the Federal Reserve’s Office of the Inspector General, which disclosed the findings of an audit it conducted at the request of Chairman Ben Bernanke, stated that the Fed’s congressional liaison office did not handle the minutes in accordance with…

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Citibank Settles Conn. AG Suit Over Online Security Breach

Citibank Settles Conn. AG Suit Over Online Security Breach

Law360, New York (August 30, 2013, 7:22 PM ET) — Citibank NA has agreed to pay $55,000 and undergo an independent security audit to resolve the Connecticut attorney general’s allegations that the company failed to adequately protect the personal data of online banking customers whose information was compromised in a 2011 breach, the regulator said Thursday.

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Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory

Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory

Christopher L. Peterson used to be a professor at Quinnie Law School in Utah and is now the senior counsel for enforcement for the CFPB.

By Christopher L. Peterson

Abstract

In the mid-1990s, mortgage bankers created Mortgage Electronic Registration Systems, Inc. (MERS) to escape the costs associated with recording mortgage transfers. To accomplish this, lenders permanently list MERS as the mortgagee of record instead of themselves to avoid the expense of recording any subsequent transfers. MERS’s claim that it is both an agent of the lender and the mortgagee, and the huge gaps left in the public record, give rise to a range of legal issues. This Article addresses whether security agreements naming MERS as a mortgagee meet traditional conveyance requirements and discusses the rights of counties to recover unpaid recording fees. The author explores the challenges facing judges, legislators, county recorders, and investors who must resolve these issues to rebuild confidence in real property recording systems.

Read more:

http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=3399&context=wmlr

How to Search the SEC for a Securitized Trust

Deadly Clear

SEC webWhen a unknown bank named as a Trustee for a securitized trust (usually Deutsche Bank, Bank of NY Mellon, US Bank National, etc.) sends you a letter stating you owe them money and you are in default, the first thing you should do is contact a local title company and have them look for an Assignment of Mortgage under your address or tax key number (it won’t likely be under your name).  Chances are the Assignment of Mortgage is fabricated and void; however, this is the breeder document that allows the banksters to foreclose.

The following information will assist you in searching the Securities and Exchange Commission (SEC) for the alleged trust.   

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OCC – Correcting Foreclosure Practices

Deadly Clear

Correcting Foreclosure Practices – Updated August 28, 2013

foreclosure_review_cartoon1While cruising the Internet looking for the status of a particular bank, the Office of the Comptroller of the Currency(OCC) Independent Foreclosure Review website jumped into view. The OCC website is worth an examination even though the Submission Window is closed (way too early IMHO) as there are numerous CONSENT ORDERS made available for viewing. 

Of course the accused financial and/or financial related companies never admit or deny the the “Findings” from the examination by the:

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Is there a contract between servicer, homeowner, & gov’t in HAMP?

I wrote this 3 years ago from my previous blog:

Written by Biloxi

I had posted this story a couple of days ago. But, it is worth posting. There has been so many lawsuits with banks by homeowners that applied for the Making Home Affordable Program and qualified for the three month plan but only to get rejected for a permanent modification after making the trial plan and then get threatend with foreclosure. Let’s review the case of Anthony and April Soper. From USA Today:

Bank of America, their mortgage servicer, put them on a HAMP trial payment plan in December that cut their monthly payment by more than half from almost $4,000 to about $1,826.


They say they made their reduced monthly payments early and did everything else that was asked of them. But they didn’t get a permanent modification, and they say they don’t know why.


Instead, according to a lawsuit they’ve brought against Bank of America, they are now more than $8,000 behind on a mortgage that had been current 12 months ago. Each of their credit scores has dropped by nearly 100 points. And, they allege, Bank of America has threatened them with foreclosure.

Now, Bank of America says that the Sopers don’t have a case because the trial plans are notcontracts:

Most of the lawsuits allege that the three- or four-month trial payment plans are contracts, and that Bank of America and other servicers broke them by not giving permanent modifications to homeowners who made their trial payments on time and provided the necessary documentation.

Servicers have asked courts to dismiss some of the cases, saying the trial plans are not contracts. 

Bank of America, which says it plans to seek dismissal of the Soper case, argues in a court filing in a similar case that it must consider borrowers for a HAMP modification, but that it has discretion in granting permanent modifications.

The bank also argues that homeowners have no case because courts have dismissed earlier HAMP-related lawsuits against mortgage servicers. Those cases claimed that in denying some homeowners modifications, the servicers had breached the contracts they made with the Treasury Department when they agreed to participate in HAMP. Courts said homeowners could not sue on those grounds because they weren’t parties to the contracts between the government and the servicers.

Lawyers for homeowners say they are now making a different legal argument: that Bank of America and others broke contracts made directly with homeowners.

“Borrowers have said we should be able to enforce the contract between Treasury and mortgage servicers, and many courts have rejected that. Our cases are the first filed that touch on a contract between servicers and borrowers,” says Kevin Costello, a lawyer with Roddy Klein & Ryan in Boston, which represents homeowners in cases against Bank of America, JPMorgan Chase and Wells Fargo.

One has to question from the Making Home Affordable Program: Is there a contractual agreement with servicer, homeowner, and government? Well, the answer is.. sort of. I looked at the Making Home Affordable Program guidelines. And it says:

Trial loan modifications consistent with these Guidelines may be offered to homeowners beginning on this date, March 4, 2009, and may be considered for acceptance into the Home Affordable Modification Program upon completion of the trial period and other conditions. These Guidelines, however, do not constitute a contract offer binding on the Department of the Treasury.

Now from this verbiage, it sounds like the guidelines don’t constitute a contract offer binding regarding the trial loan modification on the Treasury Dept. In addition, at the time, banks were encouraged to participate. It was an option. However, all servicers for loans owned or guaranteed by Fannie Mae and Freddie Mac are required to participate in theMaking Home Affordable Program. So, if the Sopers’ loan was owned by Fannie Mae and Freddie Mac, then Bank of America has a problem. And here is more of the guidelines on the Servicer Incentive Payments and Pay for Success Fees:

Servicers will receive an up-front Servicer Incentive Payment of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive Pay for Success payments –as long as the borrower stays in the program – of up to $1,000 each year for up to three years. 

Similar incentives will be paid for Hope for Homeowner refinances 

So, the servicers received an up-front Servicer Incentive Payment for each eligible homeowner’s meeting guidelines and a Pay for Success payments for each homeowner that stays in the program. Does this sound like a contractual agreement? I believe so. And this guideline of Program payment conditions:

No payments under the program to the lender/investor, servicer, or borrower will be made until the servicer has entered into the program agreement with the Treasury’s financial agent.

And the deadline for servicer to enter program agreement was December 31, 2009. By the way, the CEO of Bank of America at that time was Ken Lewis and not Brian Moynihan who is now the current CEO. The Sopers applied for the program in October 2009 which was under Ken Lewis’ leadership.

And here is the list of all of the servicers participating into Making Home Affordable Program. Click here.

Bank of America as well as all bank servicers who are participating in this program unfortunately are legally binded to this contract. Yes, according to the guidelines, the trial plan isn’t a contract. However, if Bank of America and other servicers took the Servicer Incentive Payments of each homeowners that met those modification guidelines and later denied those homeowners a modification, then the servicers would be a serious trouble. But, in the case of the Sopers and other similar cases, this is a contract because the guidelines including incentives for the homeowners who stayed on the program. This case will be interesting as Bank of America and other banks such as Wells Fargo, JP Morgan Chase, Citigroup, and so on try to toss out lawsuits by the homeowners claiming that the banks broke contracts. These are the same banks that took bailout money in the financial crisis. Yet, these same banks are participants and received incentives from the Making Home Affordable Program. All I can say is that the banks need to worry about the Fruit of the poisonous tree doctrine which is a legal metaphor used to describe evidence that is obtained illegally. What will bite the banks who participated in the Making Home Affordable Program with the U.S. Treasury since there was money exchange with the bank servicers and U.S. Treasury such as incentives, it is a contract regardless if it is verbal or written and the upfront fees given to the bank servicers.

The banks thought they can take the upfront fee incentives given by the U.S. Treasury and hoodwink the homeowners that applied for the program and made their three trial payment plans and later denied those homeowners a permanent modification with a reason. Unfortunately, the banks don’t realize that once they took the upfront fees that they are bind in a contract with the U.S. Treasury.

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Fairview Heights man nearly lost home due to Wells Fargo term violation

Fairview Heights man nearly lost home due to Wells Fargo term violation

(KMOV) —  Seven years after the recession hit, the battle is dragging on for area residents attempting to save their home from foreclosure.

Arza Mumma bought his Fairview Heights home in 2006 but in October of 2008 he sought out help from Wells Fargo after his finances had “turned upside-down.”

Wells Fargo told Mumma he was “pre-qualified” for a loan modification and for two years he thought he was working toward a new loan agreement.

In 2010, Mumma found out Wells Fargo had put his home up for auction.  He contacted his attorney, Jim Davis and sued Wells Fargo.

A few weeks ago, the 9th Circuit Federal Court found that Wells Fargo violated the terms of the Making Homes Affordable loan modification act.

Davis believes the ruling has national implications. “What this case recognizes is that directive that federal government  gave to these banks was part of the bailout, part of the TARP, saying, we’re going to give you this money but there are certain things we ask you to do for us to help these borrowers.”

The court ordered Wells Fargo to modify the homeowner’s mortgage which Mumma is hoping will happen to him in his case.