Daily Archives: May 6, 2015

Home foreclosures fueled racial segregation in U.S.

Some 9 million American families lost their homes to foreclosure during the late 2000s housing bust, driving many to economic ruin and in search of new residences.

Hardest hit were black, Latino and racially integrated neighborhoods, according to a new Cornell analysis of the crisis, widening divides between white and minority communities in U.S. cities. Led by demographer Matthew Hall, researchers estimate racial segregation grew between Latinos and whites by nearly 50 percent and between blacks and whites by about 20 percent as whites abandoned and minorities moved into areas most heavily distressed by foreclosures.

Forthcoming in the June issue of American Sociological Review and published online April 22, the paper, “Neighborhood Foreclosures, Racial/Ethnic Transitions, and Residential Segregation,” noted that the crisis spurred one of the largest migrations in U.S. history, changes that could alter the complexion of American cities for a generation or more.

“Among its many impacts, the foreclosure crisis has partly derailed progress in achieving racial integration in American cities,” said Hall, assistant professor of policy analysis and management in the College of Human Ecology.

Read on.

JPMorgan Chase under investigation by French regulators

Bank of America Paid $315 Million to Settle With Banks Over Ocala Losses

Bank of America Corp. paid $315 million to settle a pair of financial crisis-era lawsuits filed by Deutsche Bank AG and BNP Paribas SA over who should be responsible for losses tied to the multibillion-dollar fraud at disgraced mortgage lender Taylor Bean & Whitaker Mortgage Corp.

Deutsche Bank’s and BNP Paribas’s mortgage units were investors in notes issued by Taylor Bean’s Ocala Funding unit, a mortgage conduit. The two banks sued Bank of America, which acted as middleman between the investors and Ocala, for $1.75 billion in 2009 over their losses on the notes.

“Resolving these claims is a substantial achievement in our efforts to recover losses suffered on Ocala,” said Deutsche Bank spokeswoman Renee Calabro. Bank of America and BNP Paribas declined to comment.

Bank of America said in a regulatory filing that the $315 million settlement was fully accrued as of Dec. 31, 2014. Earlier this year, the bank had said in a filing that it settled with BNP Paribas for an “amount not material to the corporation’s results of operations.”

Read on.

WV Woman Who Fell Behind On House Payments Now Faces Up To Five Years For Creating & Submitting Phony Documents In Court In Attempt To Save Home From Foreclosure

From the Office of the U.S. Attorney (Martinsburg, West Virginia):

  • Amanda Bishop, 35, of Martinsburg, was convicted [] in federal court after she submitted fraudulent mortgage documents during court proceedings, United States Attorney William J. Ihlenfeld, II, announced.An investigation by the Federal Bureau of Investigation revealed that Bishop fell behind on her mortgage payments and subsequently created and submitted to the court fake bank statements purporting to show that she had made mortgage payments in the amount of $1,848.00 on Nov. 17, 2010 and Dec. 15, 2010.

    Bishop pled guilty [] to one count of “False Declaration Before Court,” for which she faces up to five years in prison and a fine of up to $250,000.00.(1) Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.

Lawsuits: ‘Trash out’ company empties homes illegally

LACEY, Wash. — Jerod Fiscus had the American dream in his grasp, and then watched it all slip away.

“Those memories are in my head. That’s all I got,” he said. “I lost my job. I was on unemployment.”

He lost his livelihood, his marriage and like so many others during the economic downturn, his home in Lacey. His voice wavers and he nearly wipes away a tear. Even with his emotions in check, Fiscus takes the blame.

“That’s all my fault. That’s nobody else’s fault but mine,” he said.

Fiscus says there is another loss he believes is illegal, painful, and just plain wrong.

Attorney Chelsea Hicks with the Northwest Justice Project represents Fiscus and other clients in the same situation. She says Washington state law gives homeowners exactly twenty days to vacate a house with the clock starting the day of the foreclosure sale.

“Most people rely on that and they have to pack up their belongings and move out,” Hicks said.

The suit claims the Fiscus house was sold on March 8th, 2013 but was essentially gutted just ten days later by a company called Safeguard Properties.

“Gone. Cleaned out. Everything,” Fiscus said.

Fiscus and Hicks showed pictures from inside his house of piles of clothes, mementos, the birth video of his daughter, that had all been bagged up and moved to the lawn to be tossed away.

Read on.

Wells Fargo Plays Its Clients for Sales, LA Says

LOS ANGELES (CN) – Wells Fargo creates a high-pressure sales environment that drives employees to open unauthorized accounts and credits cards under customer names, according to Los Angeles prosecutors.
Prosecutor Mike Feuer filed the lawsuit against Wells Fargo & Company and Wells Fargo Bank, N.A., in state court on Monday, alleging that the bank targeted customers by “using pernicious and often illegal sales tactics.”
Naming the People of the State of California as plaintiff, the lawsuit seeks civil penalties for unfair competition for gaming, and for failure to provide notice of a data breach. The City Attorney’s complex and special litigation section of its criminal branch is prosecuting the complaint.
According to Feuer, Wells Fargo sets unrealistic sales targets for its bankers, driving them to open a high number of banking products to meet “unreachable” goals.
“Wells Fargo has known about and encouraged these practices for years. It has done little, if anything, to discourage its employees’ behavior and protect its customers,” the 19-page civil complaint states.
In a practice known as “gaming,” Feuer says bankers have taken money out of customers’ accounts to pay for fees in accounts they did not authorize. The bank placed customers in collections and posted “derogatory information” in their credit reports when the unauthorized fees were not paid, Feuer says.
“Wells Fargo further victimized its customers by failing to inform them of the breaches, refund fees they were owed, or otherwise remedy the injuries that Wells Fargo and its bankers have caused. The result is that Wells Fargo has engineered a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profits,” the court filing states.

Read on.

SEC Commissioner Furious At Deutsche Bank’s “Decade Of Lying, Cheating, And Stealing”

Last week we commented on the latest travesty in the legal system when Deutsche Bank paid $2.5 billion to settle charges that it had manipulated LIBOR, EURIBOR and various other -BORs. As usual in situations such as this one, not a single banker went to prison, but there was some hope that Deutsche Bank’s gross criminal conduct would at least land it on the SEC’s “bad actors” list, which is like the Dodd-Frank equivalent of ‘time out’ and restricts the offender from participating in exempt securities offerings.

Not to worry: as we reported as part of its settlement, Deutsche Bank, as well as every other criminal financial institution, had – deep in the fine print – inserted language that exempted the offender from such stigma. As the WSJ noted, “the language allows the banks to avoid asking the SEC for a waiver—a process that has become fraught with uncertainty amid commissioner disagreements over whether to allow financial firms to avoid a “bad actor” ban…”

We concluded that “It’s good to be TBTF” because clearly no matter how many laws are violated and how much money is stolen (LIBOR was the reference security for nearly $1 quadrillion in global rate-sensitive derivatives), i) nobody ever goes to prison, ii) there are absolutely no negative consequences, and iii) the cost of running a criminal organization is tiny – the settlement usually amounts to far less than 1% of the gains reaped from years of illegal activities.

Frankly, at this point one should just sit back and watch in amusement, because until the revolution and/or war predicted by Paul Tudor Jones arrives and the guillotines start working overtime, nobody in a position of wealth or power will be held accountable.

That same message was, in rough terms, what prompted SEC commissioner Kara Stein, a Democrat, to write her “dissenting statement” regarding granting Deutsche Bank the waiver for ineligible issuer status.

Here are the choice excerpts:

I respectfully dissent from the Commission’s Order (“Order”), approved on May 1, 2015, by a majority of the Commission. The Order grants Deutsche Bank AG a waiver from ineligible issuer status triggered by a criminal conviction of its subsidiary, DB Group Services (UK) Ltd. (collectively with Deutsche Bank AG, “Deutsche Bank”), for manipulating the London Interbank Offered Rate (“LIBOR”), a global financial benchmark. This waiver will allow Deutsche Bank to maintain its well-known seasoned issuer (“WKSI”) status, which would have been automatically revoked as a result of its criminal misconduct absent a Commission waiver.

With these WKSI advantages comes a modicum of responsibility. WKSIs must meet the very low hurdle of not being ineligible. This means that, among other things, they have not been convicted of certain felonies or misdemeanors within the past three years.In granting this waiver, the Commission continues to erode even this lowest of hurdles for large companies, while small and mid-sized businesses appear to face different treatment.

This criminal scheme involving LIBOR manipulation was designed to inflate profits, and it was effective. It created the impression that Deutsche Bank was more creditworthy and profitable than it actually was. Accordingly, the conduct affected its financial results and disclosures. Because LIBOR plays such an important role in the worldwide economy, manipulation of it goes to the heart of many aspects of Deutsche Bank’s disclosures. Interest rates represented to clients and the public also were clearly false. Based on this conduct, I do not find any basis to support the assertion that Deutsche Bank’s culture of compliance is dependable, or that its future disclosures will be accurate and reliable.

Read on.