Daily Archives: February 17, 2015

Compliance with California Foreclosure Recording Law: What Level of “Defect” in Foreclosure Recordings “Void” a Foreclosure Sale?

In the wake of the California foreclosure crisis, one of several arguments relied on by borrowers facing foreclosure (and their attorneys) in “wrongful foreclosure” suits has been that some aspect of the statutory foreclosure recording requirement process[1] was not “strictly complied” with, making the sale “void” and invalid, as opposed to “voidable.”

Although California courts have generally pored over the issue of whether specified “defects” in foreclosure initiating recordings (i.e., notices of default (“NOD”)) should go so far as to invalidate a sale,[2] last week the California First District Court of Appeal examined a related issue of apparent first impression.[3]  The specific issue was whether a foreclosing initiating instrument was void (and the resulting sale invalidated)  where the entity that recorded the NOD claimed to be the authorized “trustee” for recording, but its role as trustee was not recorded for months after it recorded the NOD.

In June 2011, OneWest Bank (“OneWest”), the beneficiary under a deed of trust, proceeded with a non-judicial foreclosure pursuant to California Civil Code section 2924 et seq.  The initiating NOD was executed and recorded by Aztec Foreclosure Corporation (“Aztec”), “as trustee.”  Aztec was designated in the NOD as OneWest’s point of contact regarding the NOD.  OneWest, however, did not execute a substitution of trustee (“SOT”) naming Aztec as the new trustee for weeks after the NOD was recorded.  Moreover, the SOT was not publically recorded for over two months after its execution.

In a suit post-foreclosure, the borrowers claimed “that the foreclosure sale was void because Aztec had not been substituted as trustee at the time it recorded the [NOD] and therefore it lacked the authority to initiate the foreclosure proceedings.”[4]  The Court, examining the prior case law examining the prejudicial nature of various defects in foreclosure initiating documents, proceeded to examine the facts (and realities) of the foreclosure process applied to the borrower’s property:

  • The process was not flawed:

Several statutory provisions contemplate that an entity may be substituted as trustee even where substitution is not ‘recorded’ or ‘effected’ until after the [NOD] is recorded, so long as notice is given to the trustor/borrowers.”[5] This substitution was “effected” after the NOD, with notice to the borrower.  And alternative grounds supporting the validity of the foreclosure were noted.

Read on.

Couple says Bank of America stalling instead of paying out on land deal

SUMMERVILLE, S.C. (WCIV) — A Summerville couple is still waiting to receive money compensating them for the widening project of Bacons Bridge road which cost them their beautiful front yard. It’s been a struggle between them and their bank.

Jerry Gosnell has watched his front yard transition from pine trees and azaleas to a construction zone. ABC News 4 first talked to him in October when the road expansion was already underway. So was his fight to get the compensation he deserved.

“Originally we were told by the county that they would be willing to write two checks, one to the bank for the land and one to us for the extra compensation money that they agreed to give us,” said Gosnell. “Now they are refusing to do that. They said the bank has to sign off on everything and Bank of America refuses to come and talk to us about it and try to reach an agreement.”

The issue is still unsettled, but Dorchester county has made a few improvements.

“They have come and put up the wall as you see the railing,” said Gosnell. “They have put steps up from the bottom up to the top.”

Another part of the county settlement is money for a privacy fence which will eventually run from the end of a brick wall around their property.

But until all these steps are complete, small tasks like walking out to the mailbox are a challenge.

Read on.

DOJ May Go After Individual Bankers For Role In Financial Crisis

WASHINGTON, Feb 17 (Reuters) – U.S. Attorney General Eric Holder said on Tuesday that he has given U.S. Attorneys a 90-day deadline to evaluate whether they can bring cases against any individuals for their role in the 2008 financial crisis.

Federal prosecutors who previously brought charges against institutions for inappropriately marketing residential mortgage-backed securities will investigate individual employees for potential criminal or civil charges, Holder said in a public appearance at the National Press Club on Tuesday.

Read on.

Telegraph’s Political Commentator Quits Over HSBC Coverage, Accuses Paper Of “Fraud On Readers”

HSBC telefinal

Ex-chief political commentator launches blistering attack on paper, saying it put bank’s interests before readers to save ad contract

Peter Oborne, the Daily Telegraph’s chief political commentator, has resigned from the paper, accusing it of a “fraud on its readers” over its coverage of HSBC.

In a blistering attack on the paper’s management and owners, Sir David and Sir Frederick Barclay, Oborne claimed the paper deliberately suppressed stories about the banking group in order to keep its valuable advertising account.

He said it was a “most sinister development” at the paper, where he claimed the traditional distinction between the advertising and editorial department had collapsed.

Oborne said he had told Murdoch MacLennan, chief executive of the paper’s parent company the Telegraph Media Group, that he was resigning last December.

He said he had intended to leave quietly but had a “duty to make all this public” following the Telegraph’s coverage of last week’s revelations about HSBC’s Swiss banking arm, which helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities.

Oborne said readers “needed a microscope to find” the paper’s reporting of the HSBC scandal, which received many pages of coverage in other UK national titles including the Guardian, Financial Times, Daily Mail and Times.

“The Telegraph’s recent coverage of HSBC amounts to a form of fraud on its readers,” Oborne said in an article on the Open Democracy website, published on Tuesday.

“It has been placing what it perceives to be the interests of a major international bank above its duty to bring the news to Telegraph readers. There is only one word to describe this situation: terrible.

“If major newspapers allow corporations to influence their content for fear of losing advertising revenue, democracy itself is in peril.”

Read on.

More from Mr. Osborne on Our Kingdom:

Urgent questions to answer

Last week I made another discovery. Three years ago the Telegraphinvestigations team—the same lot who carried out the superb MPs’ expenses investigation—received a tip off about accounts held with HSBC in Jersey. Essentially this investigation was similar to the Panorama investigation into the Swiss banking arm of HSBC. After three months research the Telegraphresolved to publish. Six articles on this subject can now be found online, between 8 and 15 November 2012, although three are not available to view.

Thereafter no fresh reports appeared. Reporters were ordered to destroy all emails, reports and documents related to the HSBC investigation. I have now learnt, in a remarkable departure from normal practice, that at this stage lawyers for the Barclay brothers became closely involved. When I asked theTelegraph why the Barclay brothers were involved, it declined to comment.

This was the pivotal moment. From the start of 2013 onwards stories critical of HSBC were discouraged. HSBC suspended its advertising with the Telegraph. Its account, I have been told by an extremely well informed insider, was extremely valuable. HSBC, as one former Telegraph executive told me, is “the advertiser you literally cannot afford to offend”. HSBC today refused to comment when I asked whether the bank’s decision to stop advertising with theTelegraph was connected in any way with the paper’s investigation into the Jersey accounts.

Winning back the HSBC advertising account became an urgent priority. It was eventually restored after approximately 12 months. Executives say that Murdoch MacLennan was determined not to allow any criticism of the international bank. “He would express concern about headlines even on minor stories,” says one former Telegraph journalist. “Anything that mentioned money-laundering was just banned, even though the bank was on a final warning from the US authorities. This interference was happening on an industrial scale.

“An editorial operation that is clearly influenced by advertising is classic appeasement. Once a very powerful body know they can exert influence they know they can come back and threaten you. It totally changes the relationship you have with them. You know that even if you are robust you won’t be supported and will be undermined.”

When I sent detailed questions to the Telegraph this afternoon about its connections with advertisers, the paper gave the following response. “Your questions are full of inaccuracies, and we do not therefore intend to respond to them. More generally, like any other business, we never comment on individual commercial relationships, but our policy is absolutely clear. We aim to provide all our commercial partners with a range of advertising solutions, but the distinction between advertising and our award-winning editorial operation has always been fundamental to our business. We utterly refute any allegation to the contrary.”

The evidence suggests otherwise, and the consequences of the Telegraph’srecent soft coverage of HSBC may have been profound. Would Her Majesty’s Revenue and Customs have been much more energetic in its own recent investigations into wide-scale tax avoidance, had the Telegraph continued to hold HSBC to account after its 2012 investigation? There are great issues here. They go to the heart of our democracy, and can no longer be ignored.

JPMorgan tops list of risky banks – U.S. government study

JPMorgan Chase & Co (>> JPMorgan Chase & Co.) bears the highest potential hazard to the financial system, a study by a U.S. government research agency showed, launching its first ranking of U.S. banks with a numerical risk score.

The bank had a “systemic risk score” of 5.05 percent for 2013 in a group of 33 large U.S. banks, the Treasury Department’s Office of Financial Research said in the study.

The number was based on metrics such as size, interconnectedness, complexity and cross-border activities, OFR said. (Study: http://bit.ly/1E5MBc8) It said the study reflected the views of the authors, not of the office or the Treasury Department.

Read on.

Low down-payment mortgage options return

New programs are starting to allow first-time homeowners back into the housing market, except this time, new regulation will help prevent the same type of lending that spurred the financial crisis. Per CNNMoney:

“It’s one of the things that’s inhibiting first-time homebuyers,” said Rob Chrane, president of Down Payment Resource. “There are a lot more people who can qualify for a home that don’t realize that they can.”

Two big factors that are playing in to the recent ease is theFederal Housing Finance Agency’s new down payment programs and the Federal Housing Administration’sreduction in mortgage insurance premiums.

In October, Fannie Mae and Freddie Mac announced97% loan-to-value offerings.

At the beginning of the year, the Obama Administration directed, via executive action, the FHA to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.

FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.

“We’re starting to get back to what’s reasonable,” said Hsieh. “The crisis has shaken the market so much that there is no doubt there was an overreaction.”

However, the article did caution that while a shift toward loans with lower down payments has drawn criticism from some politicians, the new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market.

Source: CNNMoney

New York doubling down in fight against zombie foreclosures

The State of New York doubling down in its efforts to fight back against the rising tide of zombie properties, which are homes that are vacant or abandoned during the foreclosure process.

New York Attorney General Eric Schneiderman announced on Monday that he plans to resubmit an expanded version of a bill he first introduced in 2014 to the state legislature. Schneiderman’s bill, called the Abandoned Property Neighborhood Relief Act, is designed to reduce the number of zombie homes by informing homeowners of their right to stay in their home until a court orders them to leave.

According to Schneiderman’s office, the bill will also require mortgage lenders and servicers to identify, secure and maintain vacant and abandoned properties shortly after they are abandoned. Under current state law, lenders and servicers aren’t required to secure and maintain vacant properties until the end of the foreclosure process.

The bill would also create a statewide registry of zombie properties, designed to help local governments with the enforcement of property maintenance laws.

Additionally, if Schneiderman’s bill becomes law, any fines levied against banks, lenders or servicers for violations of the state’s abandoned property laws would be directed into a fund, which would be used by local governments to hire additional code enforcement officers.

Read on.

Elimination of ‘public option’ threw consumers to the insurance wolves

By Wendell Potter

Commentary: big firms and their campaign cash found a friend in Joe Lieberman

I always favored public option to be included in the Affordable Care Act. And now I know why the public option was gutted from the bill.

Center of Public Integrity:

When he was running for president, Obama regularly talked about the need for a public option. That was one reason why many health care reform advocates supported him instead of Hillary Clinton.

He kept insisting on a public option for months after he was elected. He said on July 18, 2009, “Any plan I sign must include an insurance exchange—a one-stop-shopping marketplace where you can compare the benefits, costs and track records of a variety of plans, including a public option to increase competition and keep insurance companies honest…”

Soon after that, though, he began to waffle. It became clear to me as well as public option supporters in Congress that industry lobbyists had gotten to him. In an effort to keep the public option idea alive, House Speaker Nancy Pelosi invited me to testify during a Sept. 16, 2009, meeting of the Democratic Steering and Policy Committee Forum on Health Insurance Reform.

Knowing the industry as I did, I told the committee that if Congress failed to create a public option to compete with private insurers, “the bill it sends to the President might as well be called “The Insurance Industry Profit Protection and Enhancement Act.”  Pelosi insisted that Congress had no intention of doing that.

While Pelosi was able to get a bill through the House with a public option provision, she couldn’t control what was happening in the Senate. Although a majority of Senate Democrats supported the public option, the industry knew it only needed one senator who caucused with the Dems to change his mind and kill it.

A senator from Connecticut, the insurance capital of the world, became the industry’s go-to guy. Insurers had spent years investing in Sen. Joe Lieberman, a former Democrat-turned-Independent. During the reform debate, the watchdog group Public Campaign Action Fund, (now called EveryVoice), called Lieberman an “insurance puppet,” noting that insurers had contributed nearly half a million dollars to his campaigns over the years.

The Democrats needed Lieberman’s vote to get reform passed, and insurers knew it. Shortly before the Senate was set to vote on the bill, Lieberman said he would vote for the bill only if the public option was stripped out.

Lieberman accused public option supporters of having an ulterior motive.

“A public option plan is unnecessary,” he told Fox News. “It has been put forward, I’m convinced, by people who really want the government to take over all of health insurance.”

In retrospect, the half a million dollars in campaign contributions might have been the best money the industry ever spent. That’s because the Affordable Care Act, for all the good it has done to expand access to health care, has, as I predicted, protected and enhanced the profits of health insurance companies.  As I pointed out last month, health insurers have seen their stock prices double, and in many cases triple, since Obama signed the ACA into law five years ago.

And how trustworthy have those companies been? Not very, in many cases.

JPMorgan whistleblower: Justice still hasn’t been done



Alayne Fleischman, who worked as a securities lawyer at JPMorgan between 2006 and 2008, turned over information on the bank’s dealings in shoddy mortgage-backed bonds during the run-up to the financial crisis. Attorney General Eric Holder was noted at the time saying the bank’s conduct, “helped sow the seeds of the mortgage meltdown.”

Rolling Stone revealed her identity as a whistleblower last November.

In a recent interview with Financial News, Fleischman said justice hasn’t been served yet to JPMorgan and other major financial systems that caused the recession. “I’m still hopeful that, with enough public pressure, criminal cases will be brought against the individuals responsible, not just at JPMorgan but also at the other banks that sold fraudulent securities,” she told the media outlet.

She added banks are using their “lawyers, lobbyists and PR groups to protect individuals who should clearly be charged and tried in a court of law.”

“As long as these individuals are shielded from accountability for the damage that they’ve done, then their victims — in many cases the retirement funds of ordinary, hard-working Americans — will be left without justice,” she added.

Deutsche Bank Sued by Japan School on Derivative Losses

(Bloomberg) — Deutsche Bank AG’s Japan units were sued by a Japanese school operator for 9 billion yen ($76 million) in compensation for losses on derivative transactions.

Nanzan School Corp. filed the lawsuits in the Tokyo District Court, the Nagoya-based company said on its website on Friday, arguing that the German firm’s banking and brokerage units in Japan failed to explain risks of the transactions.

UBS Group AG and Nomura Holdings Inc. were also sued by the school operator last year for a total of 8.8 billion yen in compensation. Nanzan is among Japanese companies that lost money from investing in structured products during the global financial crisis in 2008.

Read on.