Monthly Archives: October 2013


Countrywide mortgage advisers suspended for fraud

Countrywide mortgage advisers suspended for fraud

Countrywide has launched an inquiry after some of its advisers were caught showing buyers how to get around mortgage rules.


Journalists from Channel 4’s Dispatches programme secretly filmed Countrywide staff agreeing to submit mortgage applications from aspiring borrowers who could not prove their income, according to The Sunday Times.

The advisers offered potential homebuyers buy-to-let mortgages, which do not always require proof of income as the amount of money offered is calculated according to the rental value of the property. These loans are not designed for buyers of their own homes.

According to the newspaper, an anonymous whistleblower from one of the UK’s largest estate agents told Dispatches that mortgage advisers were willing to break the rules – effectively committing fraud – because they were under extreme pressure to hit targets in order to earn their commission. The whistleblower said:

“Some consultants I knew, if they weren’t able to get a residential mortgage, would not directly say [that] to the client but they would imply that there’s an option of a buy-to-let mortgage that doesn’t need a minimum income.”

According to the newspaper an undercover reporter, posing as a potential homebuyer who had been travelling and had scant details of earnings to prove his income, visited Countrywide-owned Abbotts estate agents in Essex. He told the adviser he could afford the repayments on a £300,000 mortgage but couldn’t verify his income, and was offered a buy-to-let deal.

The adviser said: “What I need to say on the application is that you won’t be living there, it will be to rent out, which obviously will be a bit of a fib, but it’s just kind of bending the rules a little bit.”


Freddie Mac begins securitizing $1B performing HAMP loans

Freddie Mac begins securitizing $1B performing HAMP loans

Freddie Mac launched the process of securitizing $1 billion performing Home Affordable Modification Program (HAMP) loans that were once at risk of foreclosure, but are now in good standing after going through the government’s HAMP program.

The Treasury launched HAMP back in March 2009, and has since helped 229,000 borrowers, giving them permanent modifications on Freddie-Mac-owned loans.

The HAMP securitizations include modified loans that are “reperfoming into Freddie Mac Mortgage Participating Certificates.”

This process allows the GSE to create more liquidity as well as transparency when it comes to the pricing for HAMP loans, said Adama Kah, Freddie Mac’s vice president of distressed assets management.


Rabobank Admits Wrongdoing in LIBOR Investigation, Agrees to Pay $325 Million Criminal Penalty

Rabobank Admits Wrongdoing in LIBOR Investigation, Agrees to Pay $325 Million Criminal Penalty

WASHINGTON—Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) has entered into an agreement with the Department of Justice to pay a $325 million penalty to resolve violations arising from Rabobank’s submissions for the London InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR), which are leading benchmark interest rates around the world, the Justice Department announced today.

A criminal information will be filed today in U.S. District Court for the District of Connecticut that charges Rabobank as part of a deferred prosecution agreement (DPA). The information charges Rabobank with wire fraud for its role in manipulating the benchmark interest rates LIBOR and Euribor. In addition to the $325 million penalty, the DPA requires the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts. Rabobank has agreed to continue cooperating with the Justice Department in its ongoing investigation of the manipulation of benchmark interest rates by other financial institutions and individuals.

“For years, employees at Rabobank, often working with traders at other banks around the globe, illegally manipulated four different interest rates—EURIBOR and LIBOR for U.S. dollar, yen, and pound sterling—in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank’s counterparties,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “Today’s criminal resolution—which represents the second-largest penalty in the Criminal Division’s active, ongoing investigation of the manipulation of global benchmark interest rates by some of the largest banks in the world—comes fast on the heels of charges brought against three former ICAP brokers just last month. Rabobank is the fourth major financial institution that has admitted its misconduct in this wide-ranging criminal investigation, and other banks should pay attention: our investigation is far from over.”

“Rabobank rigged multiple benchmark rates, allowing its traders to reap higher profits at the expense of their unsuspecting counterparties,” said Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division. “Not only was this conduct fraudulent, it compromised the integrity of globally-used interest rate benchmarks—undermining financial markets worldwide.”

“Rabobank admitted to manipulating LIBOR and EURIBOR submissions, which directly affected the rates referenced by financial products held by and on behalf of companies and investors around the world,” said Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office. “Rabobank’s actions resulted in the deliberate harm to counterparties holding products referencing the manipulated rates. Today’s announcement is yet another example of the tireless efforts of the FBI special agents and forensic accountants who are dedicated to investigating complex fraud schemes and, together with prosecutors, bringing to justice those who participate in such schemes.”


Deutsche Bank rates swap emails refer to customer being ‘screwed’

Deutsche Bank rates swap emails refer to customer being ‘screwed’

(Reuters) – A Deutsche Bank (DBKGn.DE) employee referred to a client not liking to know they were being “screwed” in a 2007 email concerning the sale of an interest rate swap which is now at the centre of a landmark UK court case.

The comments were disclosed in papers submitted to the Court of Appeal on the first day of a three-day hearing into cases involving Deutsche and Barclays (BARC.L), which could set a precedent for whether attempted manipulation of the benchmark interest rate Libor can invalidate bank loans and other deals.


Deutsche Bank widens Libor probe after chatroom found – source

Deutsche Bank widens Libor probe after chatroom found – source

(Reuters) – Deutsche Bank has widened an internal probe into possible manipulation of the Libor benchmark interest rate after discovering a new chatroom where traders may have colluded, a source familiar with the matter said on Monday.

Another source said Deutsche had summoned around 50 employees for questioning as a result of the discovery. The bank declined to comment.


Barclays faces investigation into currency trading manipulation

Barclays faces investigation into currency trading manipulation

Barclays has become the latest bank to admit it is facing an investigation into whether its staff were involved in attempts to manipulate global foreign exchange markets.

The bank confirmed it was reviewing trading activity by its employees for several years, up to as recently as this August, as part of an international inquiry into alleged rigging of currency markets.

Antony Jenkins, chief executive of Barclays, declined to comment further on the probe and said he could not discuss “any ongoing discussions with the regulator”.

The Financial Conduct Authority, the UK’s market regulator, is currently one of several organisations currently in the early stages of an investigation into the potential rigging. Royal Bank of Scotland has said it is cooperating with the inquiry.


U.S. attorney wants DOJ to take civil action against BofA: filing

U.S. attorney wants DOJ to take civil action against BofA: filing

(Reuters) – Staff of a U.S. Attorney’s office recently told Bank of America Corp that they plan to recommend the U.S. Department of Justice file a civil action against the bank related to securitization of mortgages, according to a regulatory filing on Wednesday.

That investigation is one of several the second-largest U.S. bank is trying to resolve over mortgage practices of its own legacy business, as well as those of Countrywide and Merrill Lynch, which it acquired during the 2007-2009 financial crisis.

The bank did not name which U.S. attorney was planning to make the recommendation.


Japan investigates ‘gangster loans’ at top banks

Japan investigates ‘gangster loans’ at top banks

Japan’s financial watchdog is to investigate the country’s top three banks in the wake of a loans-to-mobsters scandal that has raised questions about corporate links with organised crime.

The country’s Financial Services Agency (FSA) will look at Mizuho’s business dealings as well as rivals Mitsubishi UFJ and Sumitomo Mitsui Banking Corp, an agency spokesman said, without giving further details.

Mizuho has been under fire since it emerged last month that it processed hundreds of loans worth about $2m (£1.2m) for the country’s yakuza crime syndicates, which are involved in activities ranging from prostitution and drugs to extortion and white-collar crime.


Dutch Bank Settles Case Over Libor Deceptions

Dutch Bank Settles Case Over Libor Deceptions

Updated, 8:37 p.m. | The Dutch lender Rabobank admitted on Tuesday to criminal wrongdoing by its employees and agreed to pay more than $1 billion in criminal and civil penalties to settle investigations by United States, British and other authorities into its role in setting global benchmark interest rates. Its chief executive stepped down immediately.

The bank is the fifth financial firm to settle accusations that its employees manipulated the London interbank offered rate, or Libor. The settlement with Rabobank is the second-largest agreement after the $1.5 billion penalty imposed onUBS related to the manipulation of benchmark rates, which help determine the borrowing costs for trillions of dollars of mortgages, business loans, credit cards and other financial products.

As part of the settlement, Rabobank, which started out as an agriculture cooperative in the Netherlands in the late 19th century and has become the country’s biggest lender, entered into a so-called deferred prosecution agreement, in which it will avoid criminal charges as long as it continues to cooperate with investigators and stays out of further trouble. Rabobank will pay a $325 million criminal penalty to the Justice Department and $475 million to the Commodity Futures Trading Commission, as well as $170 million to the Financial Conduct Authority in Britain and about $96 million to the Dutch authorities.


House to Vote on Derivatives Bill That Was Written by Citigroup Lobbyists

House to Vote on Derivatives Bill That Was Written by Citigroup Lobbyists

Later this week, the House of Representatives will be voting on a bipartisan bill to repeal financial bailout protections that Congress passed in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill, H.R. 992 or the “Swaps Regulatory Improvement Act,” would severely limit the reach of Sec. 716 in Dodd-Frank, which requires banks that are eligible for Federal Deposit Insurance Corporation or Federal Reserve lending discounts to spin off their derivatives activities into separate corporate entities that would not be eligible for federal assistance.

According to the New York Times, lobbyists from Citigroup played a major role in the bill’s creation: “Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill,” Eric Lipton and Ben Protess write. “Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)”

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