Daily Archives: November 6, 2014

Lawsuit targets Ocwen over fees, seeks class action

(Reuters) – Mortgage servicer Ocwen Financial Corp faced a lawsuit this week over accusations it committed fraud by overcharging borrowers in order to drive up its own profits, according to a court filing.

The case, filed on Wednesday in a California federal court, was brought by a borrower who said Ocwen charged him fees for an escrow account he never authorized. It alleges several claims, including civil racketeering, as well as unspecified damages and seeks class action status.

Read on.

$750,000 in total restitution awarded for 36 mortgage foreclosure victims in Michigan

Three-dozen Michigan residents who fell victim to a mortgage modification scam will receive a slice of nearly $750,000 in restitution, Michigan Attorney General Bill Schuette’s office announced today.

The payouts stem from a scheme by Nationwide Consulting LLC, which specifically targeted families that largely lacked proficiency in English, Schuette’s office previously said. Individual reimbursements will range from $250 to as much as $208,000. Schuette said his office will send a letter to each victim to inform them of the reimbursements.

“While we can never bring back a home lost to foreclosure, what we can do is secure restitution to help victimized citizens rebuild their lives,” said Schuette of a Michigan fund established to fund restitution in such scams, in a statement. “This fund is a good first step, and it will directly benefit the citizens who need it most.”

Read on.

Will Walter Investment go the way of Ocwen?

Company reveals new investigations into servicing practices

Buried deep within its third quarter earnings statement,Walter Investment Management (WAC) revealed that the company is now the focus of several investigations into the business and servicing practices of Walter’s subsidiary, Green Tree Servicing.

On page 44 of the company’s earnings filing with theSecurities and Exchange Commission, the company disclosed that during the second quarter, it met with a working group representing the attorneys general and regulators of several states as well as representatives of the Office of the United States Trustee to “discuss the business practices of Green Tree Servicing.”

During that meeting, Walter said that is was informed of concerns about the company’s loan servicing practices, including “certain bankruptcy-related matters.”

The company goes on to say that several states in the group have subsequently initiated investigations into Green Tree’s servicing practices.

“The company received a list of questions and a request for documents from the working group on October 16, 2014, and an investigative subpoena and investigative interrogatories from the California Attorney General, a participant in the group, on September 11, 2014,” Walter said in the SEC filing.

“The outcome of all of the company’s legal proceedings is uncertain, and it is possible that adverse results in such proceedings (which could include penalties, punitive damages and injunctive relief affecting the company’s business practices) and the terms of any settlements of such proceedings could have a material adverse effect on the company’s reputation, business, prospects, results of operations, liquidity or financial condition.

Read on.

Shine Bright, Jamie Dimon

Former IMF Head’s Hedge Fund Goes Bankrupt After Partner Suicide, Fraud


The WSJ reported:

According to letters sent by Swiss hedge-fund firm Insch Capital Management SA to Luxembourg and Swiss financial regulators earlier this year and seen by The Wall Street Journal, an LSK unit had used money in Insch’s bank account to buy shares in a small Swiss insurance company without Insch’s knowledge. According to emails reviewed by The Wall Street Journal, employees of LSK said Insch instructed them to buy shares in the Swiss insurance firm.

The Swiss insurance company in question, Firstcaution SA, is thinly traded and majority-owned by LSK. The accusation of unauthorized trading comes as LSK regroups following Mr. Leyne’s death. A person familiar with the matter said Wednesday that Mr. Strauss-Kahn has left his role as chairman of the firm, while tradin

An LSK spokesman didn’t respond to requests for comment. A spokeswoman for Mr. Strauss-Kahn didn’t respond to a request for comment. On Tuesday, Assya Asset Management Luxembourg SA, the fund-management arm of LSK, filed an application for suspension of payments to creditors with the Luxembourg district court, according to a filing on the website of the Luxembourg financial regulator. Most of LSK’s website, including details of its operations and employees, had been removed by this past Tuesday.

* * *

According to a letter from Insch to the Luxembourg regulator, dated March 28 of this year and reviewed by the Journal, Assya had made “totally unauthorized purchases” of shares in Firstcaution and made a “false market for the FC shares.”

According to data from Euronext, on most of the days when trades occurred in 2011, only 10 shares of the little-trafficked firm typically changed hands per day, while there were no trades at all in 2012 or the first two months of 2013.

But volumes then spiked last year, with hundreds of thousands of shares changing hands on single days over the course of 2013, amounting to €6.6 million worth for the year.

A spokesman for Firstcaution said Wednesday that the firm is “currently putting together a group of investors (management & Swiss investors close to the company) to buy out the stake currently held by LSK Partners.” Firstcaution declined to comment about the trading patterns in its shares. In his letter to the Luxembourg regulator, Insch CEO Chris Cruden said Assya had tried to persuade Insch to buy shares in Firstcaution in September last year, but Insch declined.

Bottom line, there was at least one case of fraud involved at the fund, fraud which may well have been the reason for Leyne’s suicide:

Although the two firms already had an agreement in place that allowed Assya to buy and sell shares in Insch’s account, LSK employees say in emails reviewed by the Journal that Insch specifically instructed them to buy the Firstcaution shares. Insch disagrees in the emails and says the firm repeatedly didn’t act on its instructions to reverse the trade.

Fast forward to first the still unexplained suicide of Leyne in late October, and now this:

Leyne, Strauss-Kahn & Partners, the financial-services firm that was headed by former International Monetary Fund chief Dominique Strauss-Kahn and late financier Thierry Leyne, said on Wednesday that it is insolvent.

The Luxembourg-based firm said in a short statement that, after the “tragic death” of Mr. Leyne, the board had discovered “additional commitments within the group of which it was unaware and which aggravate the delicate financial situation.” It added: “Consequently [the board] has decided to declare insolvency.”

Insurer Bâloise Luxembourg, part of the Swiss insurance group Bâloise Holding AG , also filed a complaint in the Luxembourg court against LSK over the failure to return a €2 million portfolio that had been invested by an LSK unit, a spokesman said.

Supreme Court holds oral argument in Jesinoski v. Countrywide Home Loan

The Supreme Court held oral argument yesterday in Jesinoski v. Countrywide Home Loan, a case potentially important to consumers and their advocates. The question presented is

Does a borrower exercise his right to rescind a transaction in satisfaction of the requirements of Section 1635 [of the Truth in Lending Act] by “notifying the creditor” in writing within three years of the consummation of the transaction, as the Third, Fourth, and Eleventh Circuits have held, or must a borrower file a lawsuit within three years of the consummation of the transaction, as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held?

Go here to read the oral argument transcript, and note that on page 50 Justice Sotomayor talks about how issues in the case might have worked out with respect to her own loans.

Source: Public Citizen

The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare

This is a must read…

Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'”

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IJllRkbQ