Daily Archives: February 25, 2014


Argument preview: Justices to assess penalties for subprime mortgage fraud

Argument preview: Justices to assess penalties for subprime mortgage fraud

The Court has considered surprisingly few cases arising directly out of the subprime mortgage crisis, but it will get one in February in Robers v. United States, in which it will consider the proper amount of restitution due from a defendant convicted of wire fraud related to a home mortgage loan.

The issue is a simple one of statutory interpretation.  Robers participated in a mortgage-fraud scheme in which he submitted fraudulent loan applications to obtain mortgages that he had no intention of paying. When he did not pay the mortgages, the lenders conducted foreclosure sales, at which they purchased the homes that the fraudulent mortgages encumbered.  Under the relevant statute, Robers must pay restitution equal to the difference between the amount of money he took from the banks by fraud and the amount of any property he “returned” to the lenders.  He claims that the value of the homes declined between the date of the foreclosure and the date that the lenders eventually sold the homes on the open market.  The question is whether the credit he gets for returning the homes to the lenders should be based on the appraised value of the homes on the date of the foreclosure or their value as of the date that the lenders sold them (and thus converted them into cash).


First Circuit rejects “robo-signing” allegation as basis to challenge assignment of mortgage

First Circuit rejects “robo-signing” allegation as basis to challenge assignment of mortgage

Wilson v. HSBC Mortg. Services, Inc., — F.3d —-, 2014 WL 563457 (1st Cir. Feb. 14 2014)

Mortgagors argued that they had standing to challenge the assignment of mortgage from Mortgage Electronic Registrations Systems, Inc. (MERS) to HSBC Mortgage Services, Inc. (HSBC) because they alleged in their complaint that the assignment was, inter alia, fraudulent and thus, void, because it was “robo-signed.”

Under Massachusetts law, a mortgagor has standing only “to challenge a mortgage assignment as invalid, ineffective or void (if, say, the assignor had nothing to assign or had no authority to make an assignment to a particular assignee).” Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282, 291 (1st Cir. 2013). Likewise, “a [Massachusetts] mortgagor does not have standing to challenge shortcomings in an assignment that render it merely voidable at the election of one party but otherwise effective to pass legal title.” Id. The Court’s own research confirmed that there is neither a definition of the term “robo-signing” nor any authority showing that the term has any legal significance under Massachusetts law or in the First Circuit. Although the mortgagors alleged, at most, that the assignment of mortgage was potentially voidable under Massachusetts law, the Court held that “the bare allegation of ‘robo-signing’ does nothing to undermine the validity” of the assignment of mortgage.


Libor Traders Said to Face U.K. FCA Fines of Up to $4.2 Million

Libor Traders Said to Face U.K. FCA Fines of Up to $4.2 Million

Libor traders face fines of as much as 2.5 million pounds ($4.2 million) by the U.K. markets regulator for misconduct in relation to the interest rate benchmark, according to people with knowledge of the situation.

The Financial Conduct Authority is talking with several traders implicated in the London interbank offered rate manipulation scandal as it prepares to issue the first civil fines for individuals in the investigation, two people said, asking not to be named because the discussions are private.

While the penalties wouldn’t set records, “these fines are unusually high and reflect the severity of the Libor scandal and the regulator’s view of the behavior that has taken place,” said Richard Burger, a regulatory lawyer in London.


@GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator)

@GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator)

A three-year parlor game has been taking place on Wall Street to identify the Goldman Sachs employee behind a Twitter account that purports to reveal the uncensored comments overheard in the firm’s elevators.

The Twitter account, @GSElevator, reports overheard remarks like, “I never give money to homeless people. I can’t reward failure in good conscience,” and “Groupon…Food stamps for the middle class.”

The Twitter account, which has an audience of more than 600,000 followers, has been the subject of an internal inquiry at Goldman to find the rogue employee. The tweets, often laced with insider references to deals in the news, appeal to both Wall Street bankers and outsiders who mock the industry. Late last month, the writer sold a book about Wall Street culture based on the tweets for a six-figure sum.

There is a good reason Goldman Sachs has been unable to uncover its Twitter-happy employee: He doesn’t work at the firm. And he never did.

The author is a 34-year-old former bond executive who lives in Texas. His name is John Lefevre.

He had tried to remain anonymous, scrubbing the Internet of mentions of his name and pictures of himself on all but a handful of sites. Some people had already speculated that @GSElevator was not hanging around the halls of Goldman.


Another “Successful Banker” Found Dead

Another “Successful Banker” Found Dead

The dismal trail of dead bankers continues.

As The Journal Star reports, a successful Lincoln businessman and member of a prominent local family died last week. Former National Bank of Commerce CEO James Stuart Jr. was found dead in Scottsdale, Ariz., the morning of Feb. 19. A family spokesman did not say what caused the death. This brings the total of banker deaths in recent weeks to 9 as Stuart is sadly survived by three sons and four daughters.

Mr Stuart’s background (via The Journal Star),


Stuart was a native of Lincoln and graduated from the University of Nebraska-Lincoln with a degree in Business Administration.


In 1969, Stuart joined Citibank in New York City and served as a loan officer until 1973, when he joined First Commerce Bancshares (then NBC Co.) as executive vice president. He was named president in 1976, chairman and CEO in 1978, and also became chairman and CEO of National Bank of Commerce in 1985. Stuart spent his life building the organization into an important business voice in Lincoln, friend and colleague Brad Korell said.


“He was a very successful banker,” said Korell, who worked with Stuart for more than 30 years. “I always felt that he was a visionary. He really did build one of the most successful and admired banking organizations in the Midwest.”


Stuart spent much of his career with First Commerce Bancshares, a $3 billion multi-bank holding company headquartered in Lincoln. First Commerce was sold to Wells Fargo in 2000.


He is a former member of the Nebraska Game and Parks Commission and was appointed by Gov. Dave Heineman to the board of the Nebraska Environmental Trust in 2008. Stuart was also involved with natural resources-related groups such as Nature Conservancy, Ducks Unlimited and U.S. National Forest Foundation.


He served on the international board of the Juvenile Diabetes Foundation and the boards of the University of Nebraska Foundation and Nebraska Wesleyan University.


According to Korell, Stuart was living in Scottsdale, overlooking his family’s financial investments, as well as golfing and fishing.

Which brings the total number of recent banker deaths to 9 (via Intellihub)


JPMorgan Chase & Co. : J.P. Morgan Likely to Cut More Than 2,000 Mortgage Jobs Beyond 13,000-15,000 Announced Last Year -FT

JPMorgan Chase & Co. : J.P. Morgan Likely to Cut More Than 2,000 Mortgage Jobs Beyond 13,000-15,000 Announced Last Year -FT

J.P. Morgan Chase & Co. (JPM) is expected to cut 2,000 mortgage jobs in addition to the 13,000 to 15,000 cuts announced a year ago, the Financial Times reported Monday, citing people familiar with the matter.

The cuts may be announced at the bank’s investor day on Tuesday, the FT reported.

Website: http://www.ft.com