Daily Archives: October 31, 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.