Daily Archives: October 21, 2014

Fannie Mae Lowers Mandatory Waiting Period After Bankruptcy, Short Sale, & Pre-Foreclosure

The Mortgage Reports:

NEW FANNIE MAE RULES FOR BANKRUPTCY, PRE-FORECLOSURE, & SHORT SALES

Recently, Fannie Mae changed its mortgage rules for borrowers with a recent bankruptcy, pre-foreclosure, or short sale. The group has reduced its mandatory waiting period after such an event from four years to 2 years.

The change nearly mirrors a similar update from the FHA as part of that group’s Back to Work program. Via FHA Back to Work, certain mortgage borrowers are eligible to apply for a loan just 12 months after a significant derogatory event.

“Significant derogatory event” is defined as any one of the following which may appear on a person’s mortgage credit report:

  1. A pre-foreclosure
  2. A short sale
  3. A deed-in-lieu of foreclosure
  4. A bankruptcy
  5. A mortgage loan charge-off

Senior Regulator Says Bank CEOs Meant Well. Documents Say Otherwise

Regulators continue to fluff the bank CEOs’ pillows. From Crooks and Liars:

The head of one of Wall Street’s most important regulatory agencies argued recently that big-bank CEOs never intended to break the law or engage in foreclosure fraud. Instead, Thomas Curry of the Office of Comptroller of the Currency tells us they weren’t cautious enough.Internal documents obtained from a bank-backed venture several years ago seem to directly contradict this claim. These documents, which include training materials, PowerPoint presentations and videos, suggest that the industry made a conscious attempt to bypass local jurisdictions and automate processes – in what can best be described as a fraud-friendly way.

As Comptroller of the Currency, Curry runs one of the agencies charged with keeping our banking system safe, ethical and crime-free. It’s not an enviable task, but it’s critical to the safety of our economy. So it should have received more attention when Curry wrote in an industry publication that Wall Street suffered, not from a shortage of ethics, but from an inadequate “risk culture.”

Curry’s perspective differs markedly from those of leading figures like William Dudley, President of the Federal Reserve Bank of New York, who said last year that ”there is evidence of deep-seated cultural and ethical failures at many large financial institutions.”

Wrote Curry:

“The problems that have come to light in the years since the financial crisis may not have been the result of conscious decisions on the part of senior management. I doubt, for example, that any large bank chief executive officer called together his senior executives and said, ‘Foreclosure paperwork is too time-consuming. Let’s start robo-signing the documents.’”

Unfortunately, that statement appears to be incorrect. Documents obtained from an industry-wide venture reveal that the nation’s leading mortgage lenders colluded to create a false-front company, driven by a back-end database, specifically for the purpose of bypassing local jurisdictions’ taxes and filing requirements. These banks were later to hire low-paid temp workers specifically to process foreclosures. (JPMorgan Chase called them the “Burger King kids.”)

The banking industry’s epidemic of mortgage-related fraud might not have been possible without the existence of the legal entity known as “MERS.” MERS – Mortgage Electronic Registration Systems – made it possible to bypass local processes for recording changes in title and loan ownership by pretending that these mortgages were held by this artificial legal creation.

The difference between wrong vs. right in crime (cartoon)

wrong vs right criminals

EU fines JPMorgan, UBS, Credit Suisse for taking part in cartels

JPMorgan, UBS and Credit Suisse were fined a total of 94 million euros (74.14 million pounds) by the European Commission for taking part in cartels in the financial sector.

The Commission handed JPMorgan a 61.7-million-euro fine for rigging the Swiss franc Libor benchmark interest rate between March 2008 and July 2009. It was also fined 10.5 million euros for participating in a cartel on Swiss franc interest rate derivatives.

UBS’ penalty in the derivatives cartel came to 12.7 million euros and that of Credit Suisse was 9.2 million euros. Royal Bank of Scotland alerted the Commission about both cartels and escaped total fines of 115 million euros.

Read on.

New York Fed spotted JPMorgan ‘Whale’ risks years before scandal: inspector

The Federal Reserve’s New York branch knew about risks JPMorgan Chase & Co was taking with its massive “London Whale” derivatives bets four years before they imploded, but it failed to act properly to head them off, the U.S. central bank’s inspector general said.

The Fed’s Office of Inspector General said on Tuesday one of the key flaws it uncovered in its probe of the 2008 transaction at the Wall Street bank was the New York Fed’s over-reliance on certain personnel who left the supervisory team in 2011. That created a “significant loss of institutional knowledge” within the team assigned to inspect JPMorgan, the report said.

In what amounts to another recent black eye for the New York Fed’s bank supervision unit, the report also noted that competing supervisory priorities and limited resources contributed to a failure to conduct key follow-up examinations.

Read on.

DFS Superintendent Lawsky accuses Ocwen of backdating borrower letters

Ocwen is certainly bad news…Keep your eye on Ocwen and other non-banks, Mr. Lawsky…

[Update: Ocwen statement added at 12:24 p.m. ET.]

New York Department of Financial ServicesSuperintendent Benjamin Lawsky alleges that Ocwen Financial (OCN) has been backdating potentially hundreds of thousands of letters to borrowers “likely causing them significant harm.”

Ocwen has been in Lawsky’s crosshairs since February, when it put a $2.7 billion mortgage servicing rights deal between Ocwen and Wells Fargo (WFC) on an indefinite hold.

“In the course of the Department’s review of Ocwen’s mortgage servicing practices, we have uncovered serious issues with Ocwen’s systems and processes, including Ocwen’s backdating of potentially hundreds of thousands of letters to borrowers, likely causing them significant harm,” Lawsky says in the open letter to Ocwen general counsel Timothy Hayes, a copy of which was sent to HousingWire.

Ocwen issued the following statement to HousingWire.

“We deeply regret the inconvenience to borrowers who received improperly dated letters as a result of errors in our correspondence systems,” a spokesperson for Ocwen said. “As always, our goal is to avoid foreclosure. In the case of the 283 borrowers in New York who received letters with incorrect dates, 281 are currently borrowers with us.  We are continuing to review the rest of the cases.”

A full copy of the Lawsky letter can be read here.

“In many cases, borrowers received a letter denying a mortgage loan modification, and the letter was dated more than 30 days prior to the date that Ocwen mailed the letter,” Lawsky writes. “These borrowers were given 30 days from the date of the denial letter to appeal that denial, but those 30 days had already elapsed by the time they received the backdated letter.

“In other cases, Ocwen’s systems show that borrowers facing foreclosure received letters with a date by which to cure their default and avoid foreclosure – and the cure date was months prior to receipt of the letter. The existence and pervasiveness of these issues raise critical questions about Ocwen’s ability to perform its core function of servicing loans.”

Read on.

Ex-UBS Clients Describe Tax Schemes In Raoul Weil Trial

Law360, Miami (October 20, 2014, 10:07 PM ET) — UBS AG bankers encouraged and helped clients hide their assets from the Internal Revenue Service in foreign accounts, according to two former clients who testified Monday in the case against ex-wealth management head Raoul Weil for conspiring to conceal $20 billion in Americans’ assets.

Prosecutors called Juergen Homann, a German businessman who pled guilty in 2010 in a high-profile tax evasion case, to the stand to illustrate to jurors the creative maneuvers done by bankers in the Swiss banking giant’s cross-border division to keep their clients…

Source: Law360