Daily Archives: December 8, 2014

Investors Unite hosts teleconference on AIG and GSE shareholder lawsuits

Investors Unite Executive Director Tim Pagliara will host a teleconference to examine the current litigation surrounding the AIG and Fannie/Freddie bailouts on Dec. 10. at 11 a.m. ET.

The special guest will be Richard Epstein, professor of law at the New York University School of Law.

Epstein will discuss his recent article, “A Tale of Two Bailouts: AIG, Fannie and Freddie and Beyond.”

With a decision in the AIG lawsuit expected as early as this month, Epstein will examine current GSE shareholder litigation in light of argumentation introduced in the AIG legal proceedings.

Red on.

Homeowners, Wells Fargo head to trial over mortgage fees

Wells Fargo, the largest U.S. mortgage lender, is set to go to trial on Monday as homeowners seek to recoup about $629 million for alleged overcharges by a company once owned by Wachovia.

Jury selection is scheduled to begin in federal court in Manhattan in a long-running class-action lawsuit concerning HomEq Servicing, a subprime mortgage servicer.

The lawsuit was filed in 2001 on behalf of borrowers whose mortgages were owned or serviced by HomEq or the lender whose loans it was established to manage, Money Store.

Wachovia in 2006 sold HomEq to Barclays, which in turn in 2010 sold the mortgage servicing business to Ocwen Financial.

Wells Fargo bought Wachovia at the end of 2008 and thus never owned HomEq, but a spokesman confirmed it remained liable for some claims raised in the lawsuit. Ocwen in a statement said it did not have similar liability. Barclays declined to comment.

The lawsuit filed by Joseph Mazzei, a California resident, contends that HomEq kept charging borrowers monthly late fees even after their mortgages went into default, making the full amounts owed immediately due.

It also said HomEq violated its contracts by charging attorneys’ fees in foreclosure and bankruptcy and splitting them with a nonlawyer, specifically a unit of Fidelity National Information Services. Sharing fees in this manner is illegal throughout the country, the lawsuit said.

Read on.

Disabled Veteran Sues Bank Of America Over Erroneous Form 1099-C

Freddie S. Raley is my new hero.  He was featured recently in a decision by the United States District Court for the Northern District of Alabama Southern Division.  Mr. Raley is an 83 year old disabled veteran.  He is suing Bank of America.  Bank of America has numerous ATMs scattered just about anywhere I go, which I really appreciate, since I hate paying a buck or two to get at my own money.  Bank of America also has a goodly percentage of my net worth in its coffers.  Sorry Bank of America, I have a rule that I will always root for a disabled veteran, so Mr. Raley has me rooting for him in this case.  I would probably root for him anyway, since it looks like BOA really dropped the ball when they sent Mr. Raley a 1099-C for $7,454.07 .

What is Form 1099-C?

Generally if you owe money and it is determined that you don’t have to pay it back, you are considered to have taxable income, referred to variously as income from the discharge of indebtedness or cancellation of debt income (COD). If you think about it you can see that not taxing COD would be a hole in the Internal Revenue Code that you could drive a fleet of trucks through.  Nonetheless, the concept disturbs me a bit. It seems like kicking somebody when they are down. (There are ways to excluded COD income if you are in bankruptcy or insolvent)  At any rate, it is the duty of certain types of creditors to send out Form 1099-C when they decide to stop chasing somebody.  The amount of the discharge is indicated in Box 2 of the form.  The instructions indicate that if you disagree with the amount in Box 2, you should contact the creditor.  Good luck with that.

But Mr. Raley Never Owed Anythingi

Mr. Raley’s troubled relationship with BOA did not start with the 1099-C.  It started with BOA hounding him to make payments on a credit card.  Mr. Raley told them that he never had no stinking BOA credit card and he didn’t want to hear from them anymore.  If BOA wanted to contact him, they could do so through his lawyer.  That didn’t work.  He still kept hearing from them.  Then in January 2014, he received the 1099-C showing $7,454.07. When Raley’s attorney contacted the bank, he was told that if he believed there was fraud associated with the account, he should contact the fraud department.  Nobody had mentioned the fraud department when collection efforts were being made, although to be fair to BOA, it’s not that hard to find.

Read on.

Banks urge big customers to take cash elsewhere or face fees

Get off my lawn — or pay a fee, some banks say.

Banks are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits.

The banks, including J.P. Morgan Chase & Co. JPM, -0.02%  , Citigroup Inc. C, +0.01% , HSBC Holdings PLC HSBC, -0.52%  , Deutsche Bank AG DB, -0.03%  and Bank of America Corp. BAC, -0.06%  , have spoken privately with clients in recent months to tell them that the new regulations are making some deposits less profitable, according to people familiar with the conversations.

In some cases, the banks have told clients, which range from large companies to hedge funds, insurers and smaller banks, that they will begin charging fees on accounts that have been free for big customers, the people said. Bank officials are also working with these firms to find alternatives for some of their deposits, they said.

The change upends one of the cornerstones of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding, said more than a dozen corporate officials, consultants and bank executives interviewed by The Wall Street Journal.

Read on.

US sues Deutsche Bank over unpaid taxes, seeks over $190M

The U.S. government filed a lawsuit on Monday accusing Deutsche Bank of tax fraud for engaging in a series of transactions designed to evade federal income taxes.

The lawsuit seeks more than $190 million in taxes, penalties and interest, according to U.S. Attorney Preet Bharara in Manhattan. Several other defendants were also named, including Wells Fargo.

Deutsche Bank said in a statement that it plans to vigorously defend itself against the lawsuit.

Read on.

Wall Street recruiters had boozy naked romps: complaint

Wall Street’s “boys club” extends to one of its top recruiting firms, an explosive complaint alleges.

CTPartners is a den of discrimination where women are stripped of profitable accounts, held to a higher standard than their male colleagues and subjected to lewd behavior, including a booze-fueled naked romp held by a top partner, according to a confidential complaint, The Post has learned.

Brian Sullivan, the chairman at CTPartners Executive Search, ripped off his clothes along with other partners during a drunken party at his Florida home in May 2012, female employees allege in discrimination charges filed with the Equal Employment Opportunity Committee.

Sullivan and at least three other top executives shed their clothes, formed a rugby-like scrum and ran into the ocean, according to the complaint.

The debauched night, which was corroborated by former workers who claim to be witnesses, is just one instance of alleged sexual impropriety at the global recruitment giant.

CTPartners, which was named a top 25 recruitment firm by Crain’s New York Business, helps banks, hedge funds and other firms find talent.

Read on.

Homeowner fights double foreclosure smackdown

The lurking debt left after a foreclosure is hitting Florida residents hard this year as a private firm files to collect on so-called “deficiency judgments”, which are often worth tens of thousands of dollars.

But one homeowner is fighting back in a federal lawsuit seeking class action status on behalf of borrowers whose wages can be garnished and assets seized to pay off the leftover mortgage debt.

In Palm Beach County, about 240 deficiency judgment lawsuits have been filed by the Texas-based firm Dyck O’Neal. The suits often come as a surprise to homeowners who thought their foreclosure battle ended when they saw their home sold at auction.

Read on.