Daily Archives: May 6, 2014

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UK City watchdog could be stripped of penalty powers amid criticism of the way the authorities currently handle the penalty process of banks, brokers

UK City watchdog could be stripped of penalty powers amid criticism of the way the authorities currently handle the penalty process of banks, brokers

British regulators could be forced to hand over decision-making powers on fining and banning banks, brokers and asset managers to an independent body amid criticism of the way the authorities currently handle the penalty process.

The Treasury has begun a consultation on changes to the existing regulatory regime that could lead to the creation of a new body to oversee the decisions, such as whether to fine and ban an individual or their firm.

At present, the UK’s two watchdogs, the Financial Conduct Authority and the Prudential Regulation Authority, have complete autonomy to investigate wrongdoing and decide on any punishment, though all decisions can be appealed.

“The government has taken action to provide a welcoming business environment for those in the financial services industry who play by the rules whilst ensuring that those intent on breaking them are held to account,” said George Osborne, the Chancellor.

He added: “I am committed to ensuring that the financial services regulators pursue a model of enforcement that delivers the appropriate balance of fairness, transparency, speed and efficiency.”

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US Bank Gets MBS Claims Pared In Suit Over WaMu Loans

US Bank Gets MBS Claims Pared In Suit Over WaMu Loans

Law360, New York (May 06, 2014, 11:32 AM ET) — A New York federal judge partially dismissed class claims that U.S. Bank NA ignored defects in Washington Mutual NA loans after buying a loan-trust business from Bank of America NA, ruling Monday that U.S. Bank isn’t contractually responsible for the sins of previous trustees.

The judge granted U.S. Bank’s March motion for partial summary judgment regarding 23 trusts — out of a total of 34 requested in the motion — in two suits against U.S. Bank and Bank of America in which a dozen funds allege the banks…

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Older investors sue UBS over risky Puerto Rico bond funds – filing

Older investors sue UBS over risky Puerto Rico bond funds – filing

UBS AG (>> UBS AG) has been sued by older investors who claimed it steered them into mutual funds that invested heavily in Puerto Rico bonds, costing much of their life savings and causing billions of dollars of losses because of the commonwealth’s fiscal woes.

UBS AG (>> UBS AG) has been sued by older investors who claimed it steered them into mutual funds that invested heavily in Puerto Rico bonds, costing much of their life savings and causing billions of dollars of losses because of the commonwealth’s fiscal woes.

According to a complaint made public on Tuesday, UBS viewed the 23 closed-end funds as “cash cows,” generating tens of millions of dollars of extra fees by stuffing them with Puerto Rico government bonds it underwrote, and which it should have known were risky given the economy’s instability.

The complaint filed in Manhattan federal court said UBS exacerbated the problem by using leverage in the funds, and encouraging clients who needed to preserve capital ahead of retirement to instead take out $500 million (294.4 million pounds) of costly loans to boost their investments in the funds.

“This combination of high leverage and exposure to high-risk debt securities made the funds ticking time bombs,” and by March the funds had lost more than half their value, it said.

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Fannie Mae: Single point of contact benefits mortgage servicing

Fannie Mae: Single point of contact benefits mortgage servicing

Gee, ya think?

And one of the biggest drivers behind the change: having a single point of contact.

Part of the NMS is the requirement for a “single point of contact” (SPOC) for troubled mortgage holders. Under the SPOC directive, servicers must assign a single relationship manager for each borrower in the HAMP or other foreclosure-prevention options, and that SPOC can’t be a third-party contractor.

Fannie Mae recently studied homeowner responses to working with a SPOC, as advocated by Fannie Mae’s Know Your Option Customer CAREprogram, which provides free training for a servicer’s SPOC.

The study looked at eight servicers using the SPOC model and was designed to help determine its impact on homeowner engagement.  

The study found two distinct insights:                                          

1. Homeowners who remembered being assigned a SPOC were twice as likely to receive and accept a mortgage modification and half as likely to be denied a modification. In addition, they reported higher overall satisfaction than those who did not (true for homeowners awaiting a solution, denied, or receiving a liquidation solution).  

2. Borrowers who remembered being assigned to a SPOC were happier with the solution they received than those who did not. Since solutions are based on common underwriting guidelines, these differences likely exist because the SPOC stayed engaged throughout the loss mitigation process, which helped the homeowner understand the reasons behind the servicer’s decision.

Kevin Kanouff, president and CEO of Statebridge Company, explained that having a single point of contact allows them to do three primary things.

1. It allows us to provide a predictable and familiar high touch line of communication between the borrower and the Servicer. This has proven to result in higher right party contact rates (because we provide the SPOC’s first and last name, email address and direct line in the hello letter) and more consistent, longer lasting communication between the specialist and the borrower (because they build a mutual relationship).

2.  The single point of contact shortens servicing timelines, because the files are not transferred from department to department.

3. The single point of contact provides a high touch relationship between the investor and the Servicer. This is because the investor can talk to one person to get the full story on a loan. 

Documents contradict Blackstone CEO’s boasts about high-fee alternative investments

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Federal Prosecutors Said to Seek Records From Cuomo Anticorruption Panel’s Members

Federal Prosecutors Said to Seek Records From Cuomo Anticorruption Panel’s Members

Federal prosecutors in Manhattan have issued a grand jury subpoena seeking emails, text messages and other records from all the members of the anticorruption commission that Gov. Andrew M. Cuomo abruptly shut down in March, three people briefed on the matter said on Monday.

The action by prosecutors from the office of Preet Bharara, the United States attorney for the Southern District of New York, comes just weeks after he took the unusual step of publicly criticizing the governor’s shutdown of the panel and took possession of its investigative files.

The subpoena, which was served on the commission’s former counsel, Kelly Donovan, seeks documents pertaining to the formation of the panel, known as a Moreland Commission, based on the 1907 Moreland Act. It also sought documents about how the panel was run, overseen and closed, according to the people briefed on the matter, who spoke on the condition of anonymity because they were not authorized to discuss the investigation publicly.

The issuance of the subpoena, and new details about recent meetings of several Moreland Commission employees and prosecutors in Mr. Bharara’s office, provided the strongest suggestion to date that the criminal investigation may be examining allegations of interference with the commission.

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Default Mode: How Ocwen Skirts California’s Mortgage Laws

Default Mode: How Ocwen Skirts California’s Mortgage Laws

Lost documents. Incomplete and confusing information. Mysterious fees. Payments received but not applied. Homeowners waiting for a loan modification and suddenly placed in foreclosure. A nightmare of uncertainty, frustration and fear.

These incidents, described to me by numerous homeowners, mortgage counselors and defense lawyers, were supposed to be a thing of the past in California. After revelations of fraud and abuse throughout the mortgage business, including tens of billions of dollars in corporate penalties, state Attorney General Kamala Harris pushed through the 2012 California Homeowner Bill of Rights (HBOR), designed to standardize conduct by mortgage servicers – those companies that manage day-to-day operations on mortgages by collecting monthly payments and making decisions when homeowners go into default and seek help.

Yet one company allegedly committed all these HBOR violations: Ocwen, the nation’s fourth-largest mortgage servicer. According to the complaints, Ocwen (“New Co.” spelled backwards) either skirts around the edges of California law or simply ignores it, causing headaches for homeowners – and potentially illegal foreclosures. (Ocwen did not respond to a request for comment for this article, but in the past, it has pointed to its track record of assisting homeowners to avoid foreclosure.)

“Ocwen is one of the worst servicers in the state,” says Kevin Stein, Associate Director of the California Reinvestment Coalition, a nonprofit advocate for low-income communities.

Ocwen may not even be aware of the rules of the road. One lawyer, who requested anonymity because his client is currently negotiating with Ocwen on a mortgage, described a conversation with one of the company’s specialized home retention consultants. The lawyer asked the Ocwen representative about the servicer’s HBOR compliance efforts and the representative replied that she had never heard of the statute, had no training for it and knew of no process established to conform to it.

“Ocwen doesn’t give a hoot about the Homeowner Bill of Rights,” the lawyer told me. “They ignore the statute. It’s cheaper for them to ignore than to implement.”