Daily Archives: June 9, 2014


Ocwen’s mea culpa

Ocwen’s mea culpa

The Roses
It’s been several years now since the Roses first came in to see us regarding their problems with their mortgage loan servicer, Ocwen. At that time they told us that they would repeatedly send in their monthly payment well within the grace period due date (the 15th credit the payment to the account until after the 15th, Over the years, this practice caused thousands of dollars to be added onto the Rose’s loan balance. Of course, Ocwen was totally unresponsive to the Rose’s complaints about this, failing to give them a legitimate explanation as to how or why they owed the deficiency it was claiming. 
This left the Rose’s in the unenviable and precarious position of not know what to expect next, wondering day to day whether they would be receiving a foreclosure complaint. Eventually, the Rose’s decided to stand their ground and fight by stopping to send in their payments altogether. After doing so, almost another year went by before they received the inevitable foreclosure complaint. Upon reviewing that document, it was immediately apparent that serious standing issues (that is, issues concerning Ocwen’s legal right to foreclose) existed, in addition to the substantial questions regarding the unwarranted and ongoing late fees.
Since we raised these questions in the foreclosure case, Ocwen already appears to be backing down from its aggressive, take your home away position. They have made the Rose’s an offer which sure seems like an apology to them for its past sins. Consider the following terms of that offer:
                                       Old Loan Terms                                              Proposed New Loan Terms
Mo. Payment                          $824                                                                             $369
 (principal & interest)
Interest rate                           11%                                                                               4.21%
Loan balance                       $86,000                                                                         $50,000

Port Authority bought land in nearly bankrupt city to help NJ Gov. Christie keep taxes down

Port Authority bought land in nearly bankrupt city to help NJ Gov. Christie keep taxes down

When the Port Authority of New York and New Jersey announced in June 2010 that it had purchased a 131-acre tract of land on the waterfront in the city of Bayonne for $235 million, the deal seemed like an auspicious one for the agency.

The authority trumpeted the acquisition in a news release, saying that the land would allow for expansion of the region’s port facilities; New Jersey’s new governor, Chris Christie, promoted it as a spur for job creation.

But four years later, the peninsula remains mostly barren, and the authority has taken no steps to change that. A review of court records, and interviews with current and former Port Authority officials, suggests that there was a more urgent motivation for the transaction: shifting a looming financial problem for Mr. Christie onto the authority’s ledgers.

The deal, in fact, seems to be the earliest example uncovered so far of the governor and his appointees at the authority using the huge bistate agency as a financial backstop for New Jersey, covering costs that would otherwise be shouldered by the state’s taxpayers and, in the process, enabling Mr. Christie to burnish his image as a tough-minded fiscal conservative to a national Republican audience.

At the time, Bayonne had been essentially on the verge of bankruptcy, facing a shortfall of as much as $33 million after years of budget deficits. Most critically for Mr. Christie, one of his agencies was preparing to take over the city’s finances.

A takeover could have forced the state to pour millions into Bayonne to stabilize it. That would have been problematic for Mr. Christie, who was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes. The Port Authority’s purchase of the land, orchestrated by Bill Baroni, Mr. Christie’s top staff appointee at the agency at the time, spared Mr. Christie from having to confront this dilemma. The agency wound up spending far more for the land than an independent appraisal showed it was worth.


Geithner’s Claim To A Career In ‘Public Service’ Is A Joke

Geithner’s Claim To A Career In ‘Public Service’ Is A Joke

Going down memory lane of Timmy….

Joshua Rosner

  • FEB. 3, 2010, 12:11 PM

In Geithner’s AIG testimony before the House Oversight Committee, the Secretary again tried to sell the notion that ‘if we didn’t act then, millions more would have lost their jobs and thousands of factories would have closed’. Even if this were true, why did they have to pay these counterparties one hundred cents on the dollar? The answer may be because, as President of the New York Fed, the counterparties you paid out on AIG owned your company.

To simply say “we had to” is an oversimplification and a partial story. Those of us who saw the crisis coming and recognized the fragility of the system before the Fed or Treasury disagree with the “we had to act” line, but the story is actually larger than that, and predates the unfolding of the crisis. The full story puts Tim Geithner and Larry Summers dead center in creating the environment that drove us to crisis.

Secretary Geithner can keep repeating his assertion he has worked in public service his whole life. Never mind that this calls into question his tangible market experience, this claim begs the question: How does he define working in the public service?

Geithner’s last job, as the President of the New York Fed highlights that question. The NY Fed’s most important jobs, arguably, are safety and soundness supervision and capital market supervision. Success in carrying out those responsibilities should be the basic litmus test for the measuring how well the NY Fed is serving the public trust. In these roles it is supposed to examine, regulate and oversee the Federal Reserve regulated bank holding companies in the NY Fed’s region, the largest bank holding companies in the country, many of which were AIG’s counterparties.

The New York Fed is not government-owned. Most people fail to recognize this fact. Simply, the Federal Reserve Board (responsible for monetary policy, with a dual mandate of full employment and price stability) is an independent part of the federal government, while the New York Fed is a shareholder-owned or private corporation. In other words, where the Federal Reserve Board is www.frb.gov, the District Bank is www.newyorkfed.org. Historically, the New York Fed has been among the most profitable shareholder-owned corporations in the world. Yet it keeps the details of its shareholders’ ownership information private. What we do know is that its owners include precisely those institutions it is tasked to regulate and supervise and those is has obviously failed to adequately supervise. Unlike the other District Banks of the Federal Reserve system, which have overseen their banks quite well, the New York Fed’s concentration of the largest banks, coupled with its unique role of managing the market operations of the entire Fed system, has built a culture where it sees itself as a market participant and peer to those firms it regulates.

The President of the NY Fed is chosen by, paid by and reports to the private shareholders of that private institution. Only three of the nine Directors of the Board of the New York Fed are chosen by the Federal Reserve Board and, until this year, the NY Fed’s Chair — chosen by the Federal Reserve Board in Washington — was a former Chairman of Goldman Sachs who still sits on Goldman’s Board.

We do not know the full roster of shareholders, but the list of the NY Fed’s Board and management group is particularly interesting, reading like a Who’s Who of sell-side financial corporations that the taxpayer has bailed out and whose systemic riskiness Washington would rather take indirect and half measures to address rather than take a head-on approach of resolving.

In truth, Geithner’s ineffectiveness in his role at NY Fed President and his current political posturing — without any policy substance to directly address too-big-to-fail or the Fed’s flawed powers to bailout firms — seems to have resulted from design rather than accident. After all, in a previous “public service” role, Geithner was the lead negotiator for the WTO’s General Agreement on Tarrifs and Trade for financial services. In this role, Geithner reported to Larry Summers, who in turn reported to Secretary of Treasury Robert Rubin. In 1998, this team won the banks EVERYTHING they requested from that treaty. From open access to new markets to unrestricted growth in equity and credit derivatives, they opened the door to rapid and deregulated growth of the large multinational banks, allowing them to become “too big to fail”. Moreover, the terms of the agreement has made it almost impossible to put the “too big to fail” genie back in the bottle without running afoul of rules of this international agreement. That was the work of Geithner as “public servant”.


Geithner’s comment from January 1998 demonstrates that he was working on behalf of the industry and not necessarily the public:

“Second, we, I think, established — I hope you agree, Bob — very effective cooperation with the U.S. financial community, both in defining priorities, and more importantly in some ways… mobilizing a coordinated approach with other globally active financial institutions in other jurisdictions…Fourth, we worked very closely with the international financial institutions so that they made a very strong, compelling analytical case for the benefits of liberalization, so that they built specific conditions into programs where that was appropriate, and so that they provided technical support and technical assistance to countries who were trying to find the right path of liberalization in an environment of considerable financial stress… the agreement establishes quite substantial new opportunities for access to these rapidly growing markets, with substantial increases in the equity thresholds open to foreign firms… the agreement provides protection for the substantial existing presence of U.S. financial institutions from the threat of future discrimination or future protection. And this is not a static commitment. It means that they can participate fully in the growth of these markets as they evolve further”.



Lawyers Are Now The Driving Force Behind Mortgage Scams

Lawyers Are Now The Driving Force Behind Mortgage Scams

From the very first day she was allowed to speak with clients at her new law firm job, Michele Stephens wondered if she was doing something unethical. By the time she quit, nearly a year later, she no longer had any doubt about it. “I was told to lie again and again,” she said.

Stephens claims she took part in what consumer groups and federal regulators say is an especially ruinous scam, directed by lawyers, meant to defraud desperate and broke homeowners.

Reading from a six-page script, Stephens told hundreds of clients solicited by The Hoffman Law Group of Palm Beach, Florida, that the firm was suing banks on their behalf, seeking compensation for mortgage abuses. This aggressive litigation was all made possible, she would say, by the fees homeowners paid to support the cases – $6,000 up front, plus $495 a month.


Former Sallie Mae Unit Up For Lucrative Education Department Contract

Former Sallie Mae Unit Up For Lucrative Education Department Contract

The U.S. Department of Education is seriously considering granting a potentially billion-dollar, decade-long contract to a former unit of Sallie Mae, the student loan company the Justice Department last month accused of cheating U.S. soldiers.

In a previously unreported move, the department said May 30 that Navient Corp., the nation’s largest student loan company, was one of four finalists for a new contract to run its system for originating and disbursing new federal student loans and grants and keeping track of existing ones. The current contract, held by Accenture LLP, was valued at $880 million as of May 19, according to the Education Department.

If Navient wins the contract, it would have a role in originating new federal loans for borrowers, keeping track of their debts, collecting monthly payments on their loans, and chasing them if they default. In other words, a borrower’s entire interaction with the Education Department — from the moment she takes out a loan to the day she pays it off — could solely be through Navient.


Senator Warren on illegal foreclosures (video)


China billionaire eyes US market after snatching up taxpayer-backed Fisker

China billionaire eyes US market after snatching up taxpayer-backed Fisker

Fisker Automotive — the U.S. electric car company that failed to repay roughly $139 million in federal loans before going bankrupt — is now owned by a Chinese company eager to unleash its cut-rate acquisition on the American auto industry.

The company’s assets were acquired earlier this year by China’s biggest auto parts supplier, Wanxiang Group, for $149.2 million in a U.S. bankruptcy auction.

The company reportedly could start selling Fisker’s ill-fated Karma plug-in car later this year in the United States and Europe.

Billionaire company founder and Chairman Lu Guanqiu has aspired to get into the auto industry since the 1980s and the electric-car business for roughly the past 15 years.

And the acquisition of Fisker and its battery supplier, A123 Systems, which each came with key patents, should make Guanqiu’s company well positioned to compete.

Wanxiang acquired A123 Systems in a 2012 bankruptcy sale, after the company failed to repay millions to the same federal loan program that helped Fisker.


L.A. Loses Millions To JPMorgan’s Discriminatory Loans (JPM)

L.A. Loses Millions To JPMorgan’s Discriminatory Loans (JPM)


  • The City of Los Angeles recently sued JPM for discriminatory mortgage lending, saying JPM’s practices were directly responsible for increasing foreclosure rates for minority borrowers.
  • As a result of foreclosures, the city lost $481 million in property taxes.
  • Given JPM’s poor results YTD, along with this latest shameful incident, we reiterate that JPM shareholders take profits.

Appeals Court Ruling in Citi Case Is a Gift to Big Banks

Appeals Court Ruling in Citi Case Is a Gift to Big Banks

Anyone still waiting for justice with respect to the role that large banks played in the financial crisis had to be disappointed in a New York appeals court’s ruling in a case involving a settlement agreement between Citigroup Global Markets and the Securities and Exchange Commission.

To recap, in late 2011, Jed Saul Rakoff, a United States District Judge for the Southern District of New York, rejected a $285 million dollar settlement reached by the SEC and Citi in a case involving the fraudulent sale of mortgage securities in the period before the financial crisis. Rakoff rejected the ruling because he felt it let Citi off hook with what he saw as a slap-on-the-wrist fine and without having to admit wrongdoing. The SEC and Citi appealed the ruling and on Wednesday, the 2nd Circuit Court of Appeals ruled that Rakoff did not have the authority to reject the settlement.

In doing so, the Appeals Court has effectively shackled the only institution left that might be able to act to restore the rule of law in the financial services marketplace. Its ruling means that the lower court has to accept settlements set forth by the SEC — even if the court views the settlements as inadequate.


Deeds Transferring Title to Fidelity Land Trust Company, LLC Are Rescinded, Deemed Null and Void

Deeds Transferring Title to Fidelity Land Trust Company, LLC Are Rescinded, Deemed Null and Void

The Fidelity Land Trust Company, LLC (unrelated to Fidelity National Title Insurance Company) that obtained certain titles to homeowners’ residences may be clouded and deemed null and void based on a ruling from a Broward County, Florida, Circuit Court.

A Final Judgment has been issued against Fidelity Land Trust in the case ofOffice of the Attorney General v. Edward Cherry, et al, Case No. 12-269807(12)(17th Jud. Cir.), a case which involves a scheme that resulted in the execution and/or recording of a large number of quitclaim deeds or warranty deeds that have since been declared null and void.

The ruling of Office of the Attorney General v. Edward Cherry, et al may affect real property deeds recorded in many of the Clerk’s Offices in Florida, and therefore a copy of the Final Judgment has been recorded in each of Florida’s 67 County Clerk’s Offices.

Cherry and others were principals in Fidelity Land Trust. Fidelity Land Trustsolicited Florida homeowners to enter a program it offered that would allegedly allow the homeowners to cancel their current mortgage in return for the payment of thousands of dollars in upfront fees. Once in Fidelity Land Trust’s program, the homeowner was required to deed his or her home to Fidelity Land Trust, which would then file a quiet title lawsuit that claimed that the existing mortgage was not valid. Many of these quiet title actions have since been held to be frivolous and without merit in numerous state and federal court decisions, and homeowners who deeded their properties to Fidelity Land Trust are finding that they have a cloud on the title.