Daily Archives: June 20, 2014

Link

What will Ocwen do with its big pile of cash?

What will Ocwen do with its big pile of cash?

Ocwen to potentially venture outside of mortgage servicing

Ocwen Financial Services (OCN) is sitting on nearly $8 million in total assets, leaving the nonbank with a lot of spending power.

After recent meetings with William Erbey, chairman of Ocwen, and the newly appointed CFO, Michael Bourque,Compass Point Trading & Research said, “Ocwen has often mentioned it would consider expanding its business outside of distressed mortgage servicing and into businesses where it believes it can sustain a ‘sustainable competitive advantage.’”

“We believe the company is close to announcing it will be expanding into another area beyond mortgage servicing, such as title insurance or other consumer servicing. How it takes shape remains to be seen, but we would expect the new initiatives to be announced by 2Q14 earnings,” Compass Point added.   

BNY Mellon re-enters reverse mortgage business

Bank of New York Mellon is re-entering the reverse mortgage business after having exited it back it 2007. The bank is attempting to attract more business for the global custody bank’s asset management arm. Per Forbes:

The unit will purchase, securitize and service reverse mortgages and will also advise brokers, financial advisors, and asset managers on how to integrate reverse mortgages into retirement plans. This will in turn allow the bank to provide retirees with more options as a part of their retirement planning.

The U.S. retirement market forms an important part of BNY Mellon’s asset management business, with the bank ranking among the top 10 asset managers in this market. The bank’s decision to launch Home Equity Retirement Solutions will make it the only major bank to offer reverse mortgages to clients – a move clearly aimed at attracting more business in the near term. 

Source: Forbes
Link

After Failing to Renew Unemployment Insurance, Congress Is a Culprit in Foreclosure Crisis | Commentary

After Failing to Renew Unemployment Insurance, Congress Is a Culprit in Foreclosure Crisis | Commentary

 
 

In the immediate aftermath of the nation’s 2008 foreclosure crisis, Congress played a constructive role in keeping Americans in their homes. Lawmakers supported loan modification programs and sweeping financial reforms, and — while many rightfully demanded more action — these efforts eased the effects of the crisis.

Today, the lingering effects of predatory lending and the Great Recession mean that foreclosures remain a serious problem in communities around the country. But, in the national fight to stop foreclosures, one crucial fact has changed: Congress is now a culprit.

By failing to extend emergency unemployment insurance benefits, House GOP leaders have unnecessarily thrust millions of Americans into financial hardship and many, in turn, into foreclosure.

Congress must again be part of the solution.

Lawmakers should immediately extend emergency UI benefits. But, if House GOP leaders continue their obstruction, the absolute least lawmakers can do is pass a measure to direct the Federal Housing Finance Agency to impose a six month moratorium on foreclosures for individuals who have lost UI due to congressional inaction.

Because of the GOP’s termination of the federal emergency UI program, more than 2.2 million Americans, including more than 200,000 veterans, have lost access to an essential lifeline that’s rightfully theirs. Unemployment insurance is not a hand-out. Americans who lost their jobs in one of the toughest job markets in memory have largely paid into the emergency compensation program through payroll taxes.

There’s simply no valid economic argument for failing to renew UI. The Census Bureau estimates that these benefits enabled 2.5 million people to get out of poverty in 2012 and enabled more than 11 million to do so since 2008. According to the nonpartisan Congressional Budget Office, restoring benefits would result in 200,000 additional jobs this year by increasing consumer demand. The logic is simple: When unemployed Americans receive income, they spend it. When they can go out and purchase their necessities, they boost the economy and promote job-creation. All this boosts tax revenue and reduces deficits.

When you factor in the foreclosures that result from people unexpectedly losing their basic UI income, the social and economic impacts are immeasurably greater. Foreclosure and evictions are not only responsible for massive anxiety and suffering but also downward spirals in property values and tax revenue.

Restoring UI is not just a matter of sound policy making. It’s a matter of basic decency.

Citigroup’s Dark Pools: Here’s Why the Public Doesn’t Trust Wall Street

In 2008, the sprawling global bank, Citigroup, created under the controversial repeal of the Glass-Steagall Act, blew itself up with toxic debt hidden in the dark in the Cayman Islands in an exotic framework called Structured Investment Vehicles or SIVs. The unwilling taxpayer was forced into servitude to bail out this hubris that had occurred at the hands of captured regulators, infusing $45 billion in equity, over $300 billion in asset guarantees, and $2.5 trillion in below-market loans.

At the time of its implosion, Citigroup had over 2,000 subsidiaries, affiliates or joint ventures, many of which operated in the dark in foreign locales.

Flash forward to today: in March, the Federal Reserve said Citigroup had flunked its stress test and the Fed prevented it from boosting its dividend. (The so-called stress test is how the Fed measures a mega bank’s ability to withstand a major economic upheaval.) In rejecting Citigroup’s capital plan for 2014, the Fed said that Citigroup

“reflected a number of deficiencies in its capital planning practices, including in some areas that had been previously identified by supervisors as requiring attention, but for which there was not sufficient improvement. Practices with specific deficiencies included Citigroup’s ability to project revenue and losses under a stressful scenario for material parts of the firm’s global operations.”

Most Americans, and, sadly, members of Congress, believe that Citigroup is the parent of all those branch banks holding FDIC-insured deposits across America and bearing that angelic red halo over the word “Citi.” But Citigroup is far more than that.

A recent record search by Wall Street On Parade suggests that Citigroup may be operating one of Wall Street’s largest collections of dark pools, trading stocks 24/7 around the globe in de facto unregulated stock exchanges which it operates under a dizzying array of different names.

Read complete article

Link Link

Whistleblower Says Citi Continues Reckless Mortgage Lending

Whistleblower Says Citi Continues Reckless Mortgage Lending

Case Title

ABC v. DEF

Case Number

1:13-cv-00377

Court

New York Southern

Law360, New York (June 19, 2014, 7:31 PM ET) — A vice president at Citigroup Inc.’s mortgage unit says it continues to engage in reckless lending and underwriting practices and make false claims about loan quality when applying for government insurance two years after paying over $158 million to settle similar claims, according to a whistleblower complaint unsealed last week.

Current CitiMortgage senior vice president and lending consultant Fengbo Zhang filed the qui tam complaint in New York federal court in January, alleging that the global bank’s loan officers routinely violate underwriting guidelines established by Fannie…

 

Link

WELLS FARGO BANK, N.A. V. SCANTLING | AT ISSUE WAS WHETHER DEBTOR CAN “STRIP OFF” A WHOLLY UNSECURED JUNIOR MORTGAGE IN A CHAPTER 20 CASE. . . . COURT’S DETERMINATION THAT DEBTOR COULD STRIP OFF WELLS FARGO’S SECOND AND THIRD LIENS ON THE RESIDENCE BECAUSE THEY WERE WHOLLY UNSECURED.

WELLS FARGO BANK, N.A. V. SCANTLING | AT ISSUE WAS WHETHER DEBTOR CAN “STRIP OFF” A WHOLLY UNSECURED JUNIOR MORTGAGE IN A CHAPTER 20 CASE. . . . COURT’S DETERMINATION THAT DEBTOR COULD STRIP OFF WELLS FARGO’S SECOND AND THIRD LIENS ON THE RESIDENCE BECAUSE THEY WERE WHOLLY UNSECURED.

Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code, seeking to determine the secured status of the second and third mortgages held by Wells Fargo on debtor’s principal residence. At issue was whether debtor can strip off a wholly unsecured junior mortgage in a Chapter 20 case. The court concluded that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) did not prohibit this result. Accordingly, the court affirmed the Bankruptcy Court’s determination that debtor could strip off Wells Fargo’s second and third liens on the residence because they were wholly unsecured.