Daily Archives: May 9, 2014

Link

Ocwen showing a pattern of deception?: Lois’ story

Ocwen showing a pattern of deception?: Lois’ story

Lois’ Story
 
Lois called the other day to tell us of her mortgage woes with her loan servicer, Ocwen. The story she relayed seems to demonstrate a pattern of deception on Ocwen’s part, as it is at least the third time we’ve heard it, or something very similar to it. The problem is simply this: since Ocwen took over the servicing of her loan recently, Lois has unable to get a month statement from it showing how her payments are being credited or how much she owes on her loan. So even though Lois is current on her payments, (Ocwen has been dutifully accepting them), she has no idea whether it, as the party in control of her mortgage, is recognizing this fact. Obviously, this puts Lois in the very precarious position of not knowing whether the next piece of mail she gets from Ocwen will be a foreclosure notice. 
 
This case is eerily similar to others we’ve seen recently. In one case, our client’s loan servicing changed to Ocwen about a year ago. And even though our client has proof positive that she made every payment on time, it only took Ocwen two months to declare that she was behind, and start adding on substantial late charges to her loan balance. Later, Ocwen stopped sending her monthly statements altogether, leaving her, like Lois, in a state of mortgage limbo. We have taken the lead in calling Ocwen out on its misconduct in this case, but are awaiting its response. Should Ocwen fail to heed our warnings, it will certainly be making a big mistake.
 
In yet another case, our client first came into our office several years ago, claiming that Ocwen was charging her late fees on payments she made on time. Over the years, the amount of unwarranted charges grew to over $9,000. And even though she complained numerous times about the charges, Ocwen continued to pile them on. Eventually, it put her into foreclosure, a case we are now defending her on. Soon we will be filing counterclaims against Ocwen for fraud and wrongful foreclosure. And as with the other cases, Ocwen’s pattern of misconduct will be exposed to the light of day.
 
In Lois’ matter in the meantime, we will recommend to her that we go after Ocwen aggressively by sending it a qualified written request requiring it not only ante up Lois’ monthly statement, but also every other document pertinent to her loan, including a copy of the current Note, Mortgage and Payment History. When we receive these documents, we will scour them intently for fraud. Should we find overcharges, as we suspect we will, Ocwen will be sorry that it ever decided to mess with Lois. The lesson in these stories is that if you are a homeowner making loan payments to Ocwen, take pains to make sure that your payments are being properly credited to your account so that you will not be paying more than you owe on your loan. 
Link

NY judge: JPMorgan/Bear Stearns committed MBS fraud; dismisses case anyway

NY judge: JPMorgan/Bear Stearns committed MBS fraud; dismisses case anyway

For the last two years, MBIA Insurance Corp. and J.P. Morgan Securities have been fighting in court. In September 2012, MBIA sued JPMorgan (and Bear Stearns, which was acquired by JP Morgan in 2008), alleging that Bear Stearns altered a third-party due diligence report so that MBIA would insure a $1.16 billion mortgage securitization.

The securitization in question, 2006-HE4 Securitization, originated from a pool of risky mortgages and MBIA alleged that Bear Stearns, as lead underwriter, manipulated the deal’s due diligence report to make the securitization look safer than it actually was. 

And according to New York State Supreme Court Justice Alan Scheinkman, that’s exactly what Bear Stearns did. But Scheinkman dismissed the case anyway because MBIA could not prove that it used the fraudulent information in its decision to insure the securitization.

According to Scheinkman’s ruling (which can be read in full here), Bear Stearns sent the “altered report” to MBIA “a scant few hours” before closing on the insurance policy. Scheinkman’s ruling states that there is evidence to support MBIA’s assertion that Bear Stearns “altered due diligence information (and) intentionally misrepresented existing material facts.”

But MBIA also claimed that it “relied on this misinformation to its detriment.” Scheinkman’s ruling states that there is no evidence of that.

“Had the underwriter (Bear Stearns) simply passed on the third-party due diligence information without alteration, the insurer (MBIA) would have only itself to blame for failing to review the information before issuing the policy,” Scheinkman wrote.

“Likewise, had the third party merely sent on the unaltered due diligence information, the underwriter could have kept to itself its opinion of what that information revealed,” Scheinkman continued. “But there is evidence that is not what happened.”

Scheinkman writes that there is evidence that shows that Bear Stearns realized that the due diligence results showed the loan pool was problematic and that if MBIA had seen the unaltered report, it may have balked at insuring the deal.

Link

Fannie Mae soft pedals $4B mistakes

Fannie Mae soft pedals $4B mistakes

The Street is reporting that Fannie Mae has had $4 billion in mistakes in its earnings statements, going back to last quarter of 2011.

Fannie Mae quietly acknowledged several errors in its financial statements that have largely gone unnoticed, even by sophisticated investors who made daring contrarian bets on the turnaround of the controversial mortgage giant.

Fannie Mae reported the errors, which add up to nearly $4 billion, during five consecutive quarters from the fourth quarter of 2011 through the fourth quarter of 2012 and also in the second quarter of 2010. 

Olga Usvyatsky, an accountant with a research firm called Audit Analytics, believes the errors may point to “control deficiencies” — a catch-all accounting phrase that encompasses issues such as poorly trained or inadequate staffing, inadequate technological capabilities or ineffective business processes, among other examples.

Link

N.Y. AG Investigating Goldman, Barclays, Credit Suisse — Update

N.Y. AG Investigating Goldman, Barclays, Credit Suisse — Update

New York’s attorney general is scrutinizing the private stock-trading venues run by Goldman Sachs Group Inc., Barclays PLC, Credit Suisse Group AG and others as part of a sweeping probe into whether high-frequency trading firms have enjoyed unfair advantages over other investors.

The banks have received requests for information from New York Attorney General Eric Schneiderman’s office, which is investigating whether high-speed firms made secret arrangements with venues that allow them to gain advantages other investors have, people familiar with the matter said.

Many large banks operate private venues that allow investors to trade more anonymously and reduce their trading costs, and clients have said they want them to remain among the services they receive from Wall Street. But the venues, called dark pools, also have drawn concerns for their relationships with high-frequency traders, among other things. Their proliferation also has left the stock market more fragmented, contributing to the risks of a technical glitch that could roil investors.

Link

Nationstar moves one step closer to total mortgage market domination

Nationstar moves one step closer to total mortgage market domination

No one from the government agencies and Congress are mining the mortgage industry store for non-banks…

Nationstar Mortgage Holdings (NSMreported net income of $24 million, or $0.27 per share, compared to a loss of $51 million, or $0.56 per share in the fourth quarter 2013.

That is $0.19 worse than the Capital IQ Consensusestimate of $0.72, but judging by CEO Jay Bray’s call this morning and company stock trading this afternoon, investors are not the least bit concerned.

And they shouldn’t be.

Nationstar is moving one step closer to total mortgage market domination.

EXCLUSIVE: Christie officials gave millions in public funds to VC firm, despite “pay to play” rules

Link

Geithner in Book Says U.S. Considered Nationalizing Banks

Geithner in Book Says U.S. Considered Nationalizing Banks

Former Treasury Secretary Timothy F. Geithner said in his new book that members of the Obama administration “talked openly” about nationalizing banks such as Citigroup Inc. (C) in the aftermath of the financial crisis, according to an article in the New York Times Magazine.

Geithner disagreed when Lawrence Summers, then head of the White House’s National Economic Council, suggested to President Barack Obamathat the administration “pre-emptively nationalize” banks including Citigroup and Bank of America Corp., or try to embarrass them into changing their pay structures, according to the Times. The article includes quotes from the book, “Stress Test: Reflections on Financial Crises,” and interviews with Geithner.

Geithner feared “fueling unrealistic expectations about our ability to eradicate extravagance in the financial industry,” he wrote in the book, to be published May 12.