Daily Archives: May 1, 2015

“Welcome to Freddie and Fannie’s Mortgage Shell Game”: Still As True As The Day It Was First Published

LIBERTY ROAD MEDIA

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Due to some recent concerns from well-respected foreclosure fighters concerning this fantastic article from the great Shawn Newman possibly being disappeared from the Internet, we present “Welcome to Freddie and Fannie’s Mortgage Shell Game,” still as true today as it was when it was first published almost four years ago.

Welcome to Freddie and Fannie’s Mortgage Shell Game

By Shawn Timothy Newman, J.D.

Adjunct Professor

Saint Martin’s University

In common parlance, a mortgage (or Deed of Trust) includes the underlying loan (promissory note) and the security on that loan (mortgage or Deed of Trust). This ignores the fact that the note and mortgage (or DOT) are two separate contracts governed by some different laws and legal principals.

As noted in Powell on Real Property, sec. 37.27 [2] (Michael Allan Wolf ed., LexisNexis Matthew Bender 2010)

It must be remembered that the mortgagee has two interests: (1) the debt or obligation…

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Ocwen, Assurant to pay $140 million to settle force-placed insurance suit

Ocwen Financial (OCN) and Assurant (AIZ) have agreed to pay $140 million to settle a massive class-action lawsuit, which accused Ocwen of artificially inflating the cost of force-placed insurance in exchange for kickbacks from Assurant.

The settlement agreement, which is awaiting final approval from federal court in Florida, resolves claims of 399,843 homeowners who took part in the class-action suit.

Under the terms of the settlement, Ocwen and Assurant will pay more than $140 million in monetary relief, which constitutes 50% to 100% of the “best-case scenario damages recoverable by the class had the parties proceeded to trial,” according to court documents obtained by HousingWire.

Read on.

Lawsuit accuses Wells Fargo of profiting from foreclosure relief program

(Reuters) – A new class action lawsuit filed on behalf of a Poughkeepsie, New York homeowner accuses Wells Fargo of feigning compliance with a federal program meant to help borrowers avoid foreclosure while the bank was profiting from federal bailout funds.

Filed last Thursday by Sultzer Law Group, the lawsuit said Wells intentionally dragged out modifying loans so it could collect more fees, penalties and interest from struggling homeowners trying to stay in their homes.

Read on.

BofA Will Pay $180M To Settle Forex Class Action

Law360, Los Angeles (April 29, 2015, 8:27 PM ET) — Bank of America Corp. will pay $180 million to settle claims in an antitrust class action alleging it was part of a conspiracy to rig the approximately $5 trillion-per-day foreign exchange market, according to a Wednesday securities filing.

The Charlotte, North Carolina-based bank said in a 10-Q form that it would use its existing reserves to cover the cost of settling the suit and that the deal is subject to court approval. Bank of America announced the settlement on Apr. 16 but didn’t disclose the amount…

Source: Law360

Leaked Treasury memo on Fannie, Freddie fuels fire for sweep critics

A leaked Treasury memo obtained by InsideSources may raise new questions about the government’s compliance in turning over documents to a U.S. District Court prior to a ruling made last fall in a case brought by shareholders of Fannie Mae and Freddie Mac.

In September, U.S. District Judge Royce Lamberth dismissed a suit against the US Treasury over its seizure of all profits from the two Government-Sponsored Enterprises (GSEs).  Lamberth’s decision is currently being appealed.

But during that case, Treasury was required to turn over all relevant materials to the court for review. The memo obtained byInsideSources, dated January 4, 2011, was never disclosed to the court as part of the Administrative Record.

The memo was authored by Jeffrey Goldstein, the Undersecretary for Domestic Finance. While another memo by Goldstein from two weeks prior had been given to the court, the failure of Treasury to turn over a highly-relevant planning memo may raise doubts over whether Lamberth was given all of the relevant information prior to his decision.

Besides its exclusion from the Administrative Record in the first place, the memo could create legal issues for Treasury, as it seems to argue against following the federal statute (HERA) that governs the conservatorship.

Additionally, the memo raises other questions over Treasury’s favored reform—to “end the GSEs.” Efforts to wind down the GSEs are described as promoting a “bank-centric model” that “benefits larger institutions” and could exacerbate concerns over mortgage lenders being too big to fail. Borrowers at smaller institutions could expect higher costs. Treasury foresees reduced use of 30-year fixed rate mortgages, and the memo states, “markets would be subject to greater swings in spreads and liquidity and credit pricing would be more pro-cyclical.”

The memo also contrasts public statements made by Treasury that the GSEs would need 10 percent capital ratios.  Privately, it states that Treasury believes the number to be closer to between 3-4 percent.

The legal implications in the disclosure of this memo are unclear.  However, its exposure will probably raise questions about the existence of other undisclosed documents. Treasury simultaneously faces more than a dozen other lawsuits related to the profit sweep.

Read on.