Daily Archives: August 8, 2014

Insurers find Dodd-Frank law loophole

According to an article in The Wall Street Journal, a slight quirk in the text of Dodd-Frank may make life easier for some of the biggest U.S. insurers.

They argue the Federal Reserve should look to state-insurance rules to craft capital requirements for insurers designated as systemically important financial institutions. That task is complicated by the fact that state rules rely heavily on third-party credit ratings, while the Dodd-Frank Act ordered all federal regulators to strip ratings from their rules.

In this case, the devil is very much in the Dodd-Frank details. The language of the financial-overhaul law doesn’t actually contain a prohibition on rules relying on credit ratings. Rather, one section, 939A, instructed federal agencies to do three things.

Source: WSJ

$128 Billion In Bank Fines, In 1 Chart

And not one bank executive gone to jail..

Bank of America’s reported $17 billion settlement over bad mortgages would be the biggest in a string of increasingly expensive bank punishments. But don’t cry for the banks — they seem more than capable of handling it.

Since 2009, big banks in the U.S. and Europe have paid at least $128 billion to regulators, according to data compiled by the Wall Street Journal, Reuters, and The Huffington Post, for issues tied to the housing collapse and other financial misdeeds, including aiding and abetting money laundering and tax evasion.

Read on.

Tampa “foreclosure mill” once under state investigation now suing for unpaid mortgage debt

Fannie Mae going after years-old unpaid mortgage debt

The fight for their home ended long ago with the fall of a foreclosure court gavel — or so they thought.

This summer, hundreds of South Florida residents are facing new foreclosure ramifications as banks pursue the unpaid mortgage debt for homes that were sold at the auction block up to five years before.

In a month-long period beginning June 1, about 110 lawsuits were filed in Palm Beach County against former homeowners by a Texas-based debt collection company named Dyck O’Neal. The same firm filed more than 300 cases in Broward County and nearly 200 in Miami-Dade County.

The lawsuits seek to collect deficiency judgments — the balance left on borrowers’ unpaid mortgages after deducting for what was recouped at a home’s foreclosure sale.

Homeowner attorneys interviewed by The Palm Beach Post were surprised to learn that Dyck O’Neal is filing on behalf of federal mortgage backer Fannie Mae, which has stepped up its efforts to collect back mortgage debt.

Until now, deficiency judgments were so rarely sought that many homeowners gambled the banks would never come after them — walking away from homes they could afford but that were so underwater the investment no longer made sense.

Others had no idea what lurked years down the road, thinking that losing the house was the worst that could happen.

“The whole thing was devastating,” said Palm Beach County resident Rose Weinstein, who had an Orlando condominium foreclosed on in 2010 and a deficiency lawsuit filed against her June 29. “I had lost my job, I lost the condo and now here I am being sued by some bozo company bottom-feeder.”

A change in Florida law that went into effect July 1, 2013 reduced the timeline that banks and mortgage companies have to file for a deficiency judgment from five years to one year after a foreclosure is final, which is when the home is sold at auction. That meant cases that weren’t already timed out had just one more year to file.

The law change, however, did not alter the 20 years that debt collectors are allowed to collect on the debt once the claim has been filed by garnishing wages, placing liens on investment properties or drawing from other assets.

While tens of thousands of South Florida borrowers whose foreclosures were finalized within the five years leading up to July 1 have now escaped the threat of a deficiency judgment, many of those who didn’t have been stunned.

“People are getting served with these deficiency suits and are absolutely shocked,” said Paul Baltrun, director of corporate development for the Law Office of Paul A. Krasker in West Palm Beach.

Read on.