Daily Archives: November 20, 2014

New allegations against Ocwen

WZZM 13 has brought the stories of many West Michigan residents who claim to be a victim of fraud by the company.

Check out this story on WZZM13.com: http://www.wzzm13.com/story/news/investigations/13-on-your-side/watchdog/2014/11/18/new-allegations-against-ocwen/19254769/

90-year-old sells Boynton home, bank continues foreclosure

A 90-year-old man is facing foreclosure on a Boynton Beach home he no longer owns after his lender gave him the wrong mortgage payoff amount.

According to court documents, Abraham Maisner, who owned a 3,200-square-foot home in Valencia Lakes, went into foreclosure in 2012 after failing to make payments since May 2010. He had bought the home with his wife, Barbara Maisner, who died in 2011 at 76 years old.

In August, a law firm representing Maisner asked for the payoff amount on the mortgage. A conditional payoff amount was given of $317,211, but it didn’t include $42,092 in interest that had been accruing for four years.

Maisner sold the home for $405,000 in September to Pennsylvania residents Lynne Gold Bikin and David Smith. A warranty deed was filed in official records reflecting the sale.

Maisner sent $317,211 to pay off the loan.

But no satisfaction of mortgage was ever filed on Maisner’s loan and the plaintiff in the case says Maisner’s attorney should have known the payoff amount didn’t include the $42,092 in interest.

The bank also says the law firm was supposed to get the payoff amount in writing, which it didn’t.

Read on.

Wells Fargo and Discover to offer student loan modifications

If you’re having a hard time paying off your private students loans, you could catch a break soon as two of the biggest private lenders are gearing up to relax repayment terms.

On Wednesday, Wells Fargo said it would lower interest rates for eligible borrowers starting this month and extend repayment periods starting in February. The bank, which has $11.9 billion worth of private student loans, anticipates the move will save borrowers thousands of dollars in interest payments over the course of the loan.

Another prominent lender, Discover Financial Services, is fleshing out the terms of its own modification program, with plans to launch early next year. The company, which holds $8.3 billion in private student loans, is considering lowering interest rates and forgiving some debt of borrowers in dire straits.

Read on.

Fired bankers at Goldman, NY Fed were pals: Lawyer

Bed buddies….

Rohit Bansal and Jason Gross had been friends for years, both having worked at the New York Federal Reserve. Now both find themselves out of jobs because of information Gross may have illegally shared with the Bansal.

“He and Mr. Bansal socialized together, they vacationed together,” said attorney Bruce Barket, a partner at Barket Marion Epstein & Kearon who is representing 30-year-old Gross.

Barket, a criminal defense lawyer, told CNBC that Gross left his job as a bank examiner at the New York Fed in early October. Barket said it was not clear to him if Gross was fired or if he left of his own volition.

Bansal, 29, was fired from Goldman Sachs on Sept. 26, after a senior Goldman executive flagged a report Bansal had prepared for the financial institutions group, a unit of the investment banking division.

According to an internal memo sent to employees and obtained by CNBC, in the report, Bansal, who had joined Goldman from the New York Fed in July, included information received from Gross that the senior executive recognized as being confidential to the bank’s supervisor—also the New York Fed.

Read on.

Here Are The Highlights From The Senate’s Finding That Banks Manipulate Physical Commodities

Full report can be found here (PDF)

Selected Excerpts (h/t Manal):

“One focus for the subcommittee is the management of Detroit-area metal warehouses run by Metro Trade Services International, the largest U.S. warehouse company certified to store aluminum warranted by the London Metal Exchange for use in settling trades.

Since Goldman bought Metro in 2010, Metro warehouses have accumulated up to 85 percent of the U.S. LME aluminum storage market…

Since Goldman took over the warehouses, the wait to withdraw LME-warranted metal has increased from about 40 days to more than 600 days, reducing aluminum availability and tripling the regional premium for storage and delivery costs…

The investigation revealed a number of previously unknown details about these deals: that Goldman’s warehouse company paid metal owners to engage in “merry-go-round” deals that shuttled metal from building to building without actually shipping aluminum out of Metro’s system; that the deals were approved by Metro’s board, which consisted entirely of Goldman employees; and that a Metro executive raised concerns internally about the appropriateness of such “queue management.”…

Goldman didn’t just store aluminum; it was involved in massive trades of aluminum at the same time its warehouse operations were affecting aluminum availability, storage costs, and prices.

After Goldman bought Metro, it accumulated massive aluminum holdings of its own, and in 2012, added about 300,000 metric tons of its own aluminum to the exit queue at its warehouses.”

“Between 2010 and 2013, Goldman built up its physical aluminum stockpile from less than $100 million in 2009, to more than $3 billion in aluminum in 2012. At one point in 2012, Goldman owned about 1.5 million metric tons of aluminum, worth $3.2 billion, more than 25% of annual North American aluminum consumption at the time…

The Metro system for transporting metal that was part of a merry-go-round deal produced some unusual metal movements.

For example, on October 2, 2013, several trucks were loaded with aluminum at a Metro warehouse on Lafayette Street in Mount Clemens, Michigan, destined for another Metro warehouse about twelve miles away. That same day, several trucks were loaded with aluminum at a third Metro warehouse in New Baltimore, Michigan, and shipped to the Lafayette Street warehouse. The next day, the Lafayette Street warehouse again shipped out several truckloads of aluminum only to be on the receiving end of metal shipments the day after that.

In short, over the space of two days, the Lafayette Street warehouse saw truckloads of virtually identical aluminum shipments depart, arrive, depart, and arrive again…

On another occasion, in November, 2013, Metro loaded aluminum out of one warehouse and moved it into another warehouse about 200 feet away across a parking lot.

Goldman told the Subcommittee that warehouse personnel didn’t know whether the metal was moved across the parking lot on the property to the second warehouse, or instead was driven around the block on public streets. In any event, multiple trucks trundled tons of aluminum from one warehouse location to the other just a few feet away…

On another three-day period in December 2013, pursuant to a merry-go-round deal, trucks carrying tons of aluminum transported that aluminum to and from the exact same warehouses in a circular pattern at odds with rational warehouse activity. The trucks loaded the aluminum from the first warehouse, unloaded it at the second, picked up different lots of aluminum from the second warehouse, and drove it to the first where it was unloaded.

Those trucks bearing similar loads of aluminum did not transport the metal for free, butimposed substantial costs on Metro to carry out the transactions.

Loan Servicer Busted for Backdating, But Foreclosure Victims Say Shenanigans Haven’t Stopped

On October 24, Ron Faris, CEO of Ocwen Financial, made an unusual move for the head of a $2 billion-a-year corporation: He apologized. Specifically, he sent out a mea culpa-filled open letter addressing the 2.7 million homeowners whose mortgages are serviced by Ocwen, apologizing for a glitch that backdated time-sensitive letters. “Letters were dated when the decision was made to create the letter versus when the letter was actually created,” Faris confessed. The missive came on the heels of well-publicized allegations by New York’s Dept of Financial Services (DFS) accusing the company of doing just that, and suggesting that the delayed loan modification letters may have resulted in foreclosures. At first, Faris claimed that only 283 New York homeowners had been impacted. However, he quickly retreated from that number after DFS said the number could be higher, way higher—perhaps in the “hundreds of thousands”—and not confined to New York.

The Faris letter was clearly damage control, an attempt to staunch the bleeding and send a message to the investment community following a Moody’s credit downgrade and a precipitous drop in Ocwen stock, which dropped to $19.04 on October 23 and fell again to $18.55 on October 27, the lowest price since June 2012.

This isn’t the first time that Ocwen has had to circle the wagons in response to jabs and uppercuts by New York DFS Superintendent Ben Lawsky, who’s developed a reputation as somewhat of a regulatory Popeye, taking on the servicing industry with a zeal matched only by Sen. Elizabeth Warren and a few other left-minded Congress members. Lawsky’s prime targets have been non-bank servicers like Ocwen—companies that saw a cash cow in the growing desire of mega-banks like Wells Fargo and Bank of America to shed their so-called “toxic” sub-prime mortgage portfolios in the wake of litigation and regulation from 2010’s “Foreclosuregate.” As Lawsky noted in an address earlier this year to the New York Bankers Association, these non-bank mortgage servicers have bought up a significant share of U.S. mortgages:

[In 2011, all of the ten largest mortgage servicers were traditional banks. Today, four of the top ten are non-banks. And those four non-bank firms alone service more than a trillion dollars of loans—10 percent of the residential mortgage market, and climbing.

Lawsky has held Ocwen’s feet to the fire over allegations of robo-signing and a failure to provide reviews of loan modification denials. In December 2012, DFS required Ocwen to install an independent monitor to ensure that the company adhered to promises to stop consumer-unfriendly practices. It’s questionable whether the monitoring is having the intended effect. Just this May, the New York Post reported that the company was trying to “gag” homeowners who wanted a loan modification approved, reportedly telling them not to complain to anyone—regulators or the press—or else. After DFS looked into the matter, Ocwen agreed not to enforce these gag orders.

Chris Wyatt, a mortgage servicing executive of 20 years turned homeowners’ advocate, says he’s seen many homeowners run ragged on Ocwen’s modification roller coaster. He’s heard complaints of all kinds: from inexplicable penalties and fees, to mortgage payments not applied by the due date, and hair-pulling accounts of time spent on the phone with customer service representatives trying to get anything resembling accurate information (I’ve covered some of this terrain in two previous In These Times pieces).

This spring, Wyatt shared his concerns about backdated communications with New York’s DFS and the federal Consumer Financial Protection Bureau (CFPB). It seems DFS took note, evidenced by its investigation. Samuel Gilford, a CFPB spokesperson, didn’t want to comment specifically on Wyatt’s communications, although there’s no doubt the bureau has an eye on Ocwen. In December 2013, after uncovering servicing shenanigans that included illegal foreclosures and unauthorized fees and penalties, the CFPB joined 49 state attorney generals and the District of Columbia in securing a consent order requiring Ocwen to provide homeowners with $2 billion in principal reductions and return $125 million to foreclosure victims. In a press release, CFPB said that Ocwen “took advantage of borrowers at every step of the process.”

Read on.

New York Fed chief Dudley defends bank supervision system

New York Federal Reserve President William Dudley defended the system for supervising major banks, saying it has been dramatically improved and made safer since the 2007-2009 financial crisis.

In testimony prepared for a Senate Banking Committee hearing on Friday but released on Thursday, Dudley said “it is undeniable that banking supervisors could have done better in their prudential oversight of the financial system” in advance of the financial crisis.

Read on.