Daily Archives: December 19, 2014

Pressed by nuns, J.P. Morgan releases ethics report

WASHINGTON (MarketWatch) — An organization of nuns has got J.P. Morgan Chase  to confess to its financial sins and work to repent.

The bank released a 96-page report promising a commitment at the behest of an organization of nuns that includes a promise to do better.

The report, entitled “How We Do Business,” was put together by the investment bank JPM, +0.05%   in response to the request of a group of investors led by the Sisters of Charity of Saint Elizabeth, an organization of nuns.

Among the actions the bank confesses to are mortgage foreclosure, its involvement with Libor fixing and the infamous London Whale incident, when it lost $6 billion due to complex trading system involving derivatives.

Read on.

p. 65:

Case study: Mortgage servicing improvements
As one of the United States’ largest mortgage lenders,
we must have robust policies, processes and procedures
relating to foreclosures. Unfortunately, like
many in our industry, our practices were not designed
to handle the unprecedented increase in volume that
occurred as a result of the financial crisis. Looking
back, we recognize there were a number of areas
that needed enhancement — from sworn document
execution (to prevent so-called robo-signing) to governance
processes and quality control.
Much of our work has focused on improving our
operating model in this area, training our employees,
improving our customer communications, enhancing
our technology platforms, ensuring sustainability of our
programs, and deepening our relationships with our
customers, third-party vendors and other key stakeholders.
Our goal is to deliver affordable, sustainable
and meaningful home preservation assistance by:
• Focusing on earlier intervention to help keep
customers in their homes
• Pursuing foreclosure prevention options that provide
significant and meaningful relief
• Emphasizing affordable and sustainable outcomes
• Delivering fair assistance across geographic regions
and income levels and among protected classes

Operating model changes
One of the most important changes we have made is
adopting a new operating model that assigns a single
point of contact — a Customer Assistance Specialist
— to each customer with the key benefit of staying
connected to customers when they are having difficulty
making their payments. In this way, we can help
customers pursue a loan modification program at an
early stage of delinquency to avoid foreclosure. Other
improvements include:
• Introducing an engagement team to support the
Customer Assistance Specialist so team members are
able to re-engage customers for faster resolution
• Assigning Customer Assistance Specialists who are
specifically focused on Servicemembers Civil Relief
Act and bankruptcy customers to provide the degree
of specialized knowledge necessary to best support
customers facing a financial hardship

p. 66:

Customer communications
We also have been enhancing our communications with
customers to provide better counseling and more clarity
for customers about their options. To improve communications
for customers considering ways to prevent
foreclosure, we have:
• Improved customer information and education by
letting customers know at the outset the options and
benefits that may be available to them
• Simplified a forms/documents checklist specific to
each customer
• Enhanced customer outreach until application
documents are completed
• Established early notification of missing or
incomplete documents and frequent status updates

As we have discussed throughout this report, one area
we are consistently focused on improving is technology.
That also is true in our Mortgage business. We have
invested more than 220,000 hours of our technology
employees’ time to improve our Mortgage business,
• Deploying a Customer Assistance Specialist model
• Enhancing our loan modification application
• Improving systems that track and manage customer
complaints and responses
• Implementing more than a dozen additional
technology enhancement projects ranging from
data quality, data management and automated
exception tracking
These enhancements directly support the new business
model, enabling customers to have direct contact with a
single point of contact and tailoring communications to
present only those foreclosure prevention options that
we can offer directly to a customer.

State senator’s house is in foreclosure

Sen. George Latimer’s house in Westchester County is in foreclosure proceedings, the Journal News reported today.

Latimer, a former assemblyman from Rye, said there was some confusion with the bank.

“There’s obviously some disagreement between the mortgage company’s records and my records and I intend to clear it up as soon as possible,” Latimer said.

Latimer earns $79,500 a year plus $11,000 as ranking member on the Senate Education Committee.

During the campaign, Democrats knocked Latimer’s Democratic opponent, Joe Dillon,for financial troubles. Dillon, too, was going through bankruptcy on his home.

Read on.

Break up Citigroup? Protesters demand answer in 2016

Chanting and clapping outside Citigroup Inc.’s Park Avenue headquarters, about 50 protesters tried to thrust the bank into the 2016 presidential race.

“As part of running for president, you have to answer ‘The Citigroup Question’ — where do you stand on breaking up Citigroup?” said Zephyr Teachout, who challenged Andrew Cuomo for this year’s Democratic nomination for New York governor. “Do you think Citigroup should be broken up, or do you think things are OK?”

Read on.

Wells Fargo faces payout after $54.8 mln loan fee verdict

Dec 19 (Reuters) – U.S. homeowners suing mortgage companies once owned by a bank Wells Fargo & Co later acquired won a $54.8 million verdict on Friday in a class action over excessive fees.

The verdict, by a federal jury in Manhattan, came in a long-running lawsuit by borrowers whose mortgages were owned or serviced by HomEq Serving or the lender whose loans it was established to manage, the now-defunct The Money Store.

Wells Fargo said afterward that it disagreed with the jury’s decision and would likely seek further court review.

A lawyer for the homeowners, Moshe Horn, said in a statement that he was “thrilled our clients finally had our day in court.”

Homeowners, who sued in 2001, had sought to recoup about $629 million for alleged overcharges and interest, according to an October court filing by a damages expert for the plaintiffs.

Read on.

A Second Bank of America Whistle-Blower Is Set to Get $56 Million

Robert Madsen, one of four whistle-blowers in the federal government’s $16.65 billion civil settlement with Bank of America, said keeping secret his cooperation with federal prosecutors for nearly four years had not been easy.

“It’s not a fun and pleasant experience,” said Mr. Madsen, 47, a former employee of LandSafe, a property appraisal company that is a subsidiary of Bank of America. “You are under a court ordered seal and you have all this stress.”

But for his efforts, Mr. Madsen is being rewarded.

Mr. Madsen said federal prosecutors would pay him $56 million, out of the $16.65 billion Bank of America agreed to pay in August to settle claims arising from the investigation into the bank’s mortgage lending and mortgage securitization business. The specific terms of Mr. Madsen’s settlement with the federal government remain sealed.

In an interview on Thursday, Mr. Madsen said he could not talk to many people about his behind-the-scenes cooperation with federal prosecutors, which involved turning over thousands of pages of documents and sitting for many interviews with an agent for the Federal Bureau of Investigation.

Read on.

BofA Fails to Shake FHFA’s MBS Suit

Bank of America is hosed…

Law360, New York (December 19, 2014, 3:27 PM ET) — A New York federal judge has shot down Bank of America Corp.’s latest bid to get rid of a Federal Housing Finance Agency suit over mortgage-backed securities, saying on Thursday that the fact that the sales transaction was hatched before a final prospectus was available is not a deal breaker.

Source: Law360

JPMorgan report says it’s learning from mistakes


JPMorgan Chase & Co on Friday outlined improved controls it has been enacting in the wake of recent missteps, including pay clawbacks and minimum share ownership requirements for leaders, in a report issued under shareholder pressure.

The document titled “How We Do Business” and posted on JPMorgan’s website is the latest mea culpa from the largest U.S. bank by assets, after a slew of problems and a record $13 billion settlement with regulators in 2013 over its mortgage operations leading up to the financial crisis.

“In some cases our controls fell short, and in others, we simply weren’t meeting the standards we had set for ourselves,” the report states.

“Every company makes mistakes (and we’ve made a number of them), but the hallmark of a great company is what it does in response,” Chief Executive Jamie Dimon wrote in the report’s cover letter.

The document summarizes a wide range of actions JPMorgan has taken to tighten processes in recent years, though many of the details have been previously known.

Read on.