Daily Archives: July 22, 2015

Judge orders massive release of Fannie, Freddie conservatorship docs

Judge Margaret Sweeney in the Federal Claims Court in Washington yesterday granted a motion that will force theU.S. Treasury to release all discovery document materials in its possession that pertain to the decision to take Fannie Mae and Freddie Mac into conservatorship.

The request, made by Fairholme Funds, is a big win for them in the battle to review federally sealed documents in its case against the United States government. Fairholme is one of several former investors in the government-sponsored enterprises who say their ownership stake was illegally taken from them by the federal government during conservatorship. They are fighting, in court, to get that stake returned.

Read on.


To: All persons or entities who purchased or otherwise acquired securities of Nationstar Mortgage Holdings Inc. (“Nationstar”) (NYSE:NSM) between February 27, 2014 and May 4, 2015.

You are hereby notified that a securities class action lawsuit has been commenced in the United States District Court for the Southern District of Florida. If you purchased or otherwise acquired Nationstar shares between February 27, 2014 and May 4, 2015, your rights may be affected by this action. To get more informationgo to:


Read on.

Sixth Circuit rejects borrowers’ foreclosure challenges under Michigan statute, alleged HAMP violations

The U.S. Court of Appeals for the Sixth Circuit recently affirmed a district court’s dismissal of borrowers’ state law negligence and constitutional due process allegations arising from the foreclosure and sale of their home under Michigan’s foreclosure-by-advertisement statute.

A copy of the opinion is available at: Link to Opinion.

The plaintiff borrowers obtained a mortgage loan in 2008. The mortgage named Mortgage Electronic Registration Systems, Inc. (MERS) as the lender’s nominee and the mortgagee. The note was endorsed in blank to the original lender and was later transferred to a loan servicer. The assignment of mortgage to the loan servicer was recorded in 2011.

The borrowers defaulted and the holder of the note foreclosed the mortgage under Michigan’s foreclosure-by-advertisement statute. The borrowers failed to redeem the property within the six-month statutory redemption period allowed, and the loan owner purchased the property at the foreclosure sale.

The loan owner sued to evict the borrowers in state court and they answered and counterclaimed, challenging the foreclosure and eviction. The case was removed to federal court by the loan owner.  The district court entered judgment on the pleadings in favor of the loan owner defendants, and the borrowers appealed.

On appeal, the Sixth Circuit began by pointing out that under Michigan’s foreclosure-by-advertisement statute, the failure to redeem the property by paying the amount owed within an allowed six-month period results in the vesting of all right, title and interest of the mortgagor in the purchaser at the sheriff’s sale.

Read on.

NJ Foreclosure Firm, Nearing Bankruptcy, Furloughs Staff

New Jersey foreclosure firm Zucker, Goldberg & Ackerman, as it prepares to file for bankruptcy and ultimately close its doors in late August, has already turned away more than one-third of its employees and suspended benefits.
According to internal documents and the firm’s outside counsel, the Mountainside-based firm on July 17 told 115 employees that they had been indefinitely furloughed—suspended without pay for budgetary reasons. Health benefits for those employees are likely to terminate at the end of the month, and payouts for unused vacation time also are in jeopardy.
Zucker Goldberg, through its bankruptcy counsel, attributed the move to more of the same issues the firm has been experiencing for years now: mortgage-servicer clients refusing to pay.
“We had done projections based on normal rates of payment,” said Daniel Stolz of Wasserman, Jurista & Stolz in Basking Ridge. “That allowed us to get through the Aug. 24 [projected closing] date.”

Read more: http://www.njlawjournal.com/id=1202732716892/NJ-Foreclosure-Firm-Nearing-Bankruptcy-Furloughs-Staff#ixzz3geMT4GXe

Citigroup : to Close Banamex USA

Citigroup Inc. on Wednesday confirmed that it will close Banamex USA, a small unit doing business on the U.S.-Mexico border, and agreed to pay $140 million to regulators who accused the unit of shoddy anti-money-laundering controls.

The settlement is with the Federal Deposit Insurance Corp. and the California Department of Business Oversight, which had previously accused Banamex USA of poor oversight of its systems meant to prevent money laundering.

The Wall Street Journal previously reported that Citigroup was expected to shut the unit. In a statement, the bank said that Banamex USA hadn’t generated consistent earnings and that winding it down was part of the bank’s overall mission of becoming smaller and simpler.

Read on.

Federal Court of Appeals finds for MERS, again

Just days after the United States Sixth Circuit Court of Appeals handed a legal victory to MERSCORP Holdings, which saw its mortgage assignment authority challenged in Kentucky, MERS secured another win from the same court.

MERS, parent of the electronic mortgage registry with the same name, announced Monday that the United States Sixth Circuit Court of Appeals issued a ruling that upheld a dismissal by the United States District Court for the Western District of Michigan.

The ruling affirmed MERS’ authority to assign a mortgage.

In Margelis v. IndyMac FSB, the plaintiff challenged the assignment of her mortgage by MERS and the subsequent foreclosure.

Read on.

Elizabeth Warren nails Primerica exec’s testimony against new regulation designed to protect retirement savings from dodgy investment managers.

Go Elizabeth!


WASHINGTON — When a financial executive refuses to answer basic questions about personal finance, you know he’s in trouble.

 Sen. Elizabeth Warren (D-Mass.) on Tuesday embarrassed Primerica President Peter Schneider, who Senate Republicans had invited to testify against a new regulation designed to protect retirement savings from dodgy investment managers. The Obama administration estimates that Americans lose $17 billion a year from investment professionals who manage retirement accounts by prioritizing their own financial interests over those of their clients. It has proposed a simple solution: making that illegal.

Congressional Republicans loathe the rule, but Warren’s neat vivisection of Schneider underscores their difficulties in arguing against it. The GOP can usually rely on a nearly united financial industry front against Democratic regulatory proposals. This time, however, some big-name investment professionals actually support the rule, recognizing that it will purge the industry of bad actors and create business opportunities for those who don’t rip off their own clients.

Schneider portrayed his company as a defender of the working class — clients who make as little as $30,000 a year, from homes “all too often … headed by a single mother.” 

“We all agree that we must act in a client’s best interests,” Schneider said, before arguing that the Obama rule requiring managers to do just that would ultimately force Primerica to abandon its single-mother clientele.

Warren presented Schneider with a Huffington Post article detailing lawsuits against the company filed by Florida workers. According to the complaints, Primerica encouraged workers nearing retirement to trade in their government-guaranteed pensions for much riskier assets — a move that would jeopardize their savings while giving Primerica the opportunity to profit from managing their funds in the future. Had they stayed in their pensions, retirees would have simply received regular payments, leaving no fees for Primerica reps. 

The lawsuits describe exactly the kind of activity that the Obama rule is designed to prevent, and suggest that Primerica hasn’t always acted in its clients’ best interests. Primerica set aside $15.4 million in 2014 to settle lawsuits from 238 such workers.

 “Mr. Schneider, I just want to understand your company’s advice in these cases,” Warren began. “Do you believe that people like these firefighters from Florida who are near retirement and have secure pensions with guaranteed monthly payments should move their money into riskier assets with no guarantees, just before they retire?”

 Almost no one who understands personal finance would give such advice in good faith. And Schneider never really answered the question, after being pressed by Warren three separate times. He said that regulators had signed off on the activity, that “each situation is very different,” and that it could make sense for someone on the verge of death.

 “I’m sorry, are you suggesting that these 238 people were weeks away from dying, and that’s why they all got this advice?” Warren asked.

Read on.

Here is the video:

Wall Street Prepares To Reap Billions From Another Main Street Wipe Out


Here’s WSJ with more on how Wall Street is preparing to profit from an unwind in Main Street’s ETF and mutual fund portfolios:

Wall Street is preparing for panic on Main Street.

Hedge funds are lining up to profit from potential trouble at some “alternative” mutual funds and bond exchange-traded funds that have boomed in popularity among retirees and other individual investors.

Financial advisers have pushed ordinary investors into those funds in search of higher returns, a strategy that has come into favor as Federal Reserve benchmark interest rates remain near zero. But many on Wall Street worry the junk bonds, bank loans and esoteric investments held by some of those funds will be extremely hard to sell if the market turns, leaving prices pummeled in a rush for the exits.

Concerns about such scenarios have been escalating for some time. Now, investment firms such as Leon Black’s Apollo Global Management LLC and Oaktree Capital Management LP are laying the groundwork to cash in if they come to pass.

Apollo has been raising money from wealthy investors and portfolio managers for a hedge fund that snaps up insurance-like contracts called credit-default swaps that benefit if the junk bonds fall. In marketing materials reviewed by The Wall Street Journal, Apollo predicted: “ETFs and similar vehicles increase ease of access to the high yield market, leading to the potential for a quick ‘hot money’ exit.”

Guided by a similar outlook, Reef Road Capital Management LLC, led by former J.P. Morgan Chase & Co. proprietary trader Eric Rosen, has been betting against, or shorting, exchange-traded funds that hold junk bonds and buying options that will pay off if the value of these high-yield securities falls.

The hedge funds are taking aim at what is regarded by many on Wall Street as a weak spot in the markets. “Liquid-alternative”” funds have emerged as one of the hottest products in finance, fueled by a promise to deliver hedge-fund-style investing to the masses. They use many of the same strategies as hedge funds, with wagers both on and against markets, but are open to less-wealthy investors with fees closer to mutual-fund standards.

OCC Approves OneWest Bank, N.A. – CIT Bank Merger; Terminates Foreclosure-Related Consent Order

NR 2015-105
Contact: William Grassano
(202) 649-6870

OCC Approves OneWest Bank, N.A. – CIT Bank Merger; Terminates Foreclosure-Related Consent Order

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today announced that it granted conditional approval to merge CIT Bank, Salt Lake City, Utah, into OneWest Bank, N.A., Pasadena, Calif. (OneWest). The combined bank will change its name to CIT Bank, N.A.

The approval follows consideration of numerous public comments submitted in writing and expressed during a public meeting conducted on February 26, 2015.

The OCC also determined that OneWest has satisfied the terms of the 2011 foreclosure-related consent order and the OCC has terminated that order. OneWest completed the independent foreclosure review in accordance with the requirements included in the original 2011 order and did not enter into a payment agreement with the OCC.

Related Links

# # #
Source: OCC.gov

Wayne, Oakland counties in Michigan sued over “unconstitutional” foreclosures

Michigan’s two largest counties areillegally foreclosing on thousands of properties for delinquent taxes,according to class-action lawsuits filed this month.

Wayne and Oakland counties have both foreclosed on thousands of properties for unpaid taxes in recent years.

But in doing so they’ve denied property owners their due process rights, according to the lawsuits filed in circuit courts for both counties.

Aaron Cox, an attorney for the plaintiffs, says the counties are simply not equipped with the proper infrastructure to deal with the soaring number of tax foreclosures in recent years, and comply with the 1999 state law that lays out how to deal with them.

Read on.