Monthly Archives: February 2014






Washington Supreme Court Takes On Loan Fraud, Foreclosure Fights

Washington Supreme Court Takes On Loan Fraud, Foreclosure Fights

Larry Jametsky visits his family home frequently, even though he was evicted from it almost four years ago.

He and his family have been homeless since then, but they’ve stayed near the blue house in the city of SeaTac. “This was my grandparents’ house, my dad’s house,” Jametsky said.

Jametsky is in the throes of a legal battle over the house after he signed over the deed in what he thought was a loan deal. His case and others have caught the attention of the Washington Supreme Court and attorney general as the effects of the housing crisis continue to be felt.


FHFA settles with Société Générale for $122M

FHFA settles with Société Générale for $122M

The Federal Housing Finance Agency reached a settlement with Société Générale, related companies and specifically named individuals for $122 million.

The FHFA, as conservator of Fannie Mae and Freddie Mac, resolved claims arising from a lawsuit alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities purchased by Fannie Mae and Freddie Mac during 2006.

Under the terms of the agreement, Société Générale will pay roughly half of the settlement monies to Fannie Mae and half to Freddie Mac and certain claims against Société Générale related to the securities involved will be released.


Chase puts homeowners through the ringer

Chase puts homeowners through the ringer

Jack and Ginny Ralston’s problems with their Chase Bank mortgage started three years ago when they separated for a year due to marital difficulties. Because supporting two household caused a severe strain on their budget, Ginny, who remained in the home during the separation, reached out to Chase for mortgage relief. At that time, Chase told her to send in three slightly reduced payments as part of a “Trial Period Plan” loan modification. However, after she made the payments, Chase went back on its word and put her right back to the same payment as before. Although it was a struggle, Ginny was able to soldier through and make the mortgage payments through the period of separation with Jack, and eventually they reunited, making life easier.

In the fall of 2013, the Ralston’s fell behind on their mortgage payments again. Knowing that they had financial issues, Chase made no real effort to assist them through the troubled times. Instead, it chose to file a foreclosure action, seeking that the Ralston’s home be sold to satisfy their $57,000 mortgage. In its rush to foreclose, Chase missed a critical step which was a precondition to foreclosure. That is, it failed to send the Ralston’s a notice informing them they had the right to reinstate the mortgage by paying the past due payments. Had Chase done so, the Ralston’s could have come with the required sum and avoided foreclosure.
However, it may very well turn out that Chase’s victimization of the Ralston’s will work in their favor. I say that because a careful inspection of a copy of the promissory Note allegedly signed by Jack when he took out the loan in 2004, attached to the foreclosure Complaint, reveals an apparently bogus signature by a Chase employee endorsing the Note over from the original lender to Chase. Unless Chase can produce a Power of Attorney from the original lender granting the Chase employee authority to execute such documents on its behalf, which I highly doubt, then what we have is a classic case of robosigning, a practice which Chase has admitted to, and agreed to pay billions of dollars in restitution for having engaged in. 

Morgan Stanley Agrees to Pay $275 Million to End SEC Probe

Morgan Stanley Agrees to Pay $275 Million to End SEC Probe

Morgan Stanley (MS) agreed to pay the U.S. Securities and Exchange Commission $275 million to resolve a probe into the sale of subprime mortgage-backed securities in 2007.

The SEC hasn’t presented the proposed settlement to the commission and offered no assurance it will be accepted, the New York-based bank said today in an annual regulatory filing. The firm said it’s also responding to subpoenas and requests for information from federal and state regulators in mortgage-related matters.

Ocwen, Dubbed “Next Generation Subprime Lender” By Moodys

As The FT reports,


Non-bank mortgage servicers are poised to become the “next generation” of subprime lenders as the companies seek to diversify their rapidly expanding businesses in the face of mounting regulatory scrutiny, Moody’s says.


The warning from the credit rating agency comes as specialised mortgage servicers, particularly Ocwen Financial, face increasing criticism from regulators, who argue that the companies have grown too quickly in recent years.



Mortgage servicers such as Ocwen, Nationstar and Walter Investment have been buying hundreds of billions of dollars worth of “mortgage servicing rights” from big banksincluding JPMorgan Chase and Bank of America.


Under these MSRs, the companies collect payments on US mortgages in exchange for a small portion of the income. Banks have sold the rights in the face of a wave of troublesome post-financial crisis foreclosures as well as regulatory pressure to offload the assets. The amount of outstanding mortgages serviced by Ocwen, the biggest non-bank mortgage servicer in the US, has risen from $43bn in 2005 to more than $500bn now.


Ocwen estimates that banks still have $1tn worth of MSRs to sell, but servicing mortgages has a finite shelf life and originations of the subprime loans in which the company has historically specialised are unlikely to recover to pre-crisis levels.


That could spur Ocwen to expand its nascent prime lending business to include making subprime loans, which have historically been the domain of banks.


Barclays trio charged with Libor conspiracy in London

Barclays trio charged with Libor conspiracy in London

Three former Barclays bankers have been formally charged with conspiring to make false Libor submissions to benefit of the bank at a court in central London.

Jonathan Mathew, 31, Peter Johnson, 58, and Stylianos Contogoulas, 42, all former employees of Barclays, appeared at Westminster Magistrates court on Wednesday and spoke only to confirm their names.

The Serious Fraud Office (SFO) is alleging that Mr Mathew, Mr Johnson, and Mr Contogoulas were involved in a conspiracy to knowingly submit false or misleading US dollar Libor rates between June 1, 2005 and August 31, 2007.


Ocwen Faces New York Regulator Probe

Ocwen Faces New York Regulator Probe

New York’s financial regulator is examining mortgage-servicing firm Ocwen Financial Corp.’s relationships with several businesses, saying that borrowers may be harmed because of the companies’ close ties.

Benjamin Lawsky, superintendent of the New York Department of Financial Services, sent a letter Wednesday to Ocwen seeking information about the company’s financial stakes in affiliated firms, services that the other firms provide Ocwen and agreements between the firms. Ocwen’s executive chairman, William Erbey, serves as chairman of the other firms.

Mr. Lawsky and other authorities recently have raised concerns that Ocwen and other nonbank mortgage-servicing firms have grown too quickly, resulting in many of the same problems for borrowers that were seen following the financial crisis.

The agency’s “ongoing review of Ocwen’s mortgage servicing practices has uncovered a number of potential conflicts of interest between Ocwen and other public companies with which Ocwen is closely affiliated,” Mr. Lawsky said in the letter, adding that “this tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure.”


Federal judge sides with Fannie, Freddie shareholders

Federal judge sides with Fannie, Freddie shareholders

Court of Federal Claims Judge Sweeney granted theFairholme Funds motion for discovery against America.

In December the Defendant, listed as THE UNITED STATES in court documents, filed a motion to dismiss the lawsuitbrought by investors in Fannie Mae and Freddie Mac.

“Plaintiffs argue that defendant’s dismissal motion challenges many of the allegations of their complaint and, in light of this, they are entitled to discovery,” the documents say.

That discovery is now granted.

At one point during the lawsuit, Fairholme offered to buy parts of Fannie and Freddie.


Bank of America Says New Probes Launched Into Forex, Mortgage Practices

Bank of America Says New Probes Launched Into Forex, Mortgage Practices

Bank of America Corp. BAC -1.15% said new international and federal investigations have been launched into its foreign exchange and mortgage practices, respectively.

The bank, which has already paid billions of dollars to settle cases related to the housing and financial crisis, said in a filing with the Securities and Exchange Commission Tuesday afternoon that “government authorities” in North America, Europe and Asia are “conducting investigations” and launching inquiries into the firm’s “conduct and practices in certain FX markets over multiple years.”

BofA said it is cooperating with the probes, according to the filing. Foreign exchange practices at several banks have recently have drawn interest among regulators