Daily Archives: February 2, 2015

“Substantial Evidence” of “Forged” Endorsements: Wells Fargo Loses One



The money quote (pun very much intended) from Judge Robert Drain’s Memorandum of Decision, filed yesterday in a New York bankruptcy case regarding a Texas property in which attorney Linda Tirelli is representing the homeowner:

I conclude that the foregoing evidence cumulatively shifts the burden to Wells Fargo under Tex. Bus. & Com. Code §§ 3.308(a) and 1‐206(a) to show the authenticity of the blank ABN Amro indorsement to establish its status as a holder of the Note under Tex. Bus. & Com. Code §§ 3.301(i) and 3.201(a). It constitutes substantial evidence that Wells Fargo’s administrative group responsible for the documentary aspects of enforcing defaulted loan documents created new mortgage assignments and forged indorsements when it was determined by outside counsel that they were required to enforce loans. Given that evidence, Wells Fargo should have the burden to establish the bona fides of the blank ABN Amro indorsement…

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Wells Fargo tracks employees’ ‘happy-to-grumpy’ ratios

Wells Fargo uses a “happy to grumpy ratio” to keep tabs on employees’ workplace satisfaction, according to The Wall Street Journal’s Emily Glazer and Christina Rexrode.

Wall Street “culture” has become a buzzword for bank regulators, and the banks are taking heed. In particular, the Federal Reserve is looking to include more “qualitative components” in its annual stress tests, designed to gauge how well banks might handle upsets in the markets.

Banks are taking “qualitative components” to mean how confident employees are in the firms, how satisfied they are at work, or whether they frequent office happy hours.

Read more: http://www.businessinsider.com/wells-fargo-happy-to-grumpy-ratios-2015-2#ixzz3QcUJZ2q7


Thousands of struggling Michigan homeowners who got a break on their mortgage during the financial crisis will get a letter this year with a bit of bad news.

It’s a notice that their monthly mortgage payment is going up.

The five-year limit on many federal mortgage-assistance modifications is ending. Interest rates will inch up to more realistic rates. Mortgage payments will go up between $50 and $100 a month initially — and possibly creepup further in a few years. The jumps would vary based on the size of the mortgage and when the mortgage was modified.

After all the interest rate step-ups take place, the cumulative monthly payment increase would be about $200 for a typical loan, according to the Making Home Affordable data.

In Michigan, where about half of the more than 40,000 modified loans come from metro Detroit, the average increase will be $127 a month.

The big question: Has the economic recovery been strong enough to enable many people to afford higherpayments? Or could some be heading for trouble again?

Rest here…



Despite all the concern about forbearance reporting discrepancies over time, transparency remains an issue.

This is the year that should change.

Regulatory attention is supposed to be laser-focused on servicers right now, especially when it comes to how consistent they are in applying workouts. So regulators should be looking closely at whether loans have forbearance.

It’s getting a little easier to see forbearances in investor reporting, but not as easy as it should be given all the concern voiced about it by investors, regulators, researchers, reporters and ratings agencies like Fitch, Standard & Poor’s and Moody’s in recent years.

“The information has become more expanded and more transparent,” according to Natasha Aikins, a director at Fitch Ratings in New York.

But it’s still not always clear in reporting whether a loan includes forbearance, and that means all stakeholders have a lot more work to do.

Rest here…

The Causation Link Between Securitization and Fraud, Used Car Edition

Posted by Christine Hurt

When I practiced in the mid-1990s, I occasionally worked on projects we called “asset securitizations.”  We didn’t talk about it to our friends or families, because their eyes would glaze over and then they would pass out from boredom.  Because of our client base, our asset securitizations were generally either used car loans from the finance side of large auto companies or franchise loan securitizations from oil and gas companies.  Only when the financial crisis hit did everyone seem to become conversant in asset-backed securities, and the process of wide-spread securitization of mortgages seemed to be at the root of all the mortgage troubles.

The hypothesis is this, and it has some support:  If lenders held their loans, particularly their mortgages, then they would only make good loans.  By having a market to dump loans into, lenders loosen criteria to make more mortgages.  Ignorant bond holders can’t buy enough MBS, so lenders loosen criteria even more to meet demand.  Lenders may even engage in fraud or encourage borrowers to engage in fraud.  The Dodd-Frank Act tries to remedy these ills by having regulation at the lender end and the MBS end.  We’ll see if it works.

But the NYT this week tells us the securitization evil has spread to used car loans.  Because I’m pretty sure used car loans have been securitized since at least 1993, I don’t see this as news.  However, the article suggests that because of less fun in MBS, those investors now have poured their money into used car loan-backed securities (let’s say UCBS).  The article doesn’t state it’s hypothesis, but suggests this is bad because (1) car buyers are defaulting and losing their vehicles and (2) financial players who package UCBS are getting rich.  But, the article doesn’t go so far as to provide evidence that (1) car buyers are defaulting more than usual or (2) that the demand for UCBS has caused lenders to be more unscrupulous than they have been in the past.

Read on.

Top GMP officer cleared of mortgage fraud demands answers over ‘missing page’ of evidence backing his story

A senior police officer cleared of fraud has demanded answers after it emerged a key page of a prosecution witness statement vanished.

A jury took just 20 minutes to clear Chief Inspector John Buttress, 48, of a charge of mortgage fraud.

During the trial it emerged that a key page in the statement of a bank official had gone missing from the prosecution papers.

The page backed up the officer’s claim that his main residence was Overton Vale Farm in Wrexham, part of which he rented out to holiday-makers.

The court heard the officer himself realised the omission when he listened to a recording of the two-hour police interview and discovered the official’s opinion had not been included in her four-page statement.

It later emerged page three of her five-page original was missing.

When it was found on the eve of the trial, the prosecution dropped one of the two fraud charges the officer faced at the time.

The charge had alleged that the father-of-three had dishonestly failed to inform his mortgage provider that he didn’t live at the Wrexham farmhouse.

Read on.