Daily Archives: July 29, 2015

Congressman known as mortgage relief pioneer indicted on federal corruption charges

A U.S. Congressman who was once at the forefront of the government’s post-crisis mortgage relief efforts is now facing federal corruption charges for allegedly misappropriating hundreds of thousands of dollars of federal, charitable and campaign funds.

Rep. Chaka Fattah, D-Pa., who championed the U.S.Department of Housing and Urban Development’sEmergency Homeowner Loan Program, and four of his associates were indicted Wednesday on 29 counts of racketeering and other crimes, including bribery; conspiracy to commit mail, wire and honest services fraud; and multiple counts of mail fraud, falsification of records, bank fraud, making false statements to a financial institution and money laundering.

Read on.

#BankLivesMatter: Banks Squirm As Congress Moves To Cut The 6% Dividend Paid To Them By The Fed

Now this is interesting..

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

On December 23 of this year, the Federal Reserve will be 99 years old.  And throughout that 99 years, regardless of boom, bust, recession or Great Depression, the biggest Wall Street banks have been enjoying a 6 percent, risk-free return on the capital they hold at the Fed in the form of dividends.

Have you looked at your checking or money market bank statement lately from JPMorgan Chase or Citibank? How about the statement showing the interest you’re earning on your mortgage escrow account with the big banks? While the country suffers through the lingering effects of the Great Recession caused by the biggest Wall Street banks, the public typically receives less than 1 percent on their deposits at the big banks, while the government has legislated a permanent, risk-free 6 percent guarantee to the Wall Street banks for their capital on deposit at the Fed.  Now that’s an entitlement program that needs to die!

This corporate welfare program gets even better: if the shares of stock were acquired prior to March 28, 1942, the 6 percent risk-free dividend is tax exempt and the bank doesn’t have to pay corporate taxes on it.

– From the excellent 2012 Wall Street on Parade article: Kill This Entitlement Program: The 6% Risk-Free Dividend the Fed Has Been Paying Wall Street Banks For Almost a Century

And it gets better. From Zerohedge:

It appears that some members of Congress are now targeting the estimated $17 billion per year paid out by the Fed to its member banks via the highway-funding bill. The Hill reports that:

The banking industry is scrambling to kill a provision in the Senate highway-funding bill that would reap billions of dollars in revenue by cutting a century-old system that has reaped annual awards for banks.

Industry lobbyists say they were blindsided by the inclusion of the provision, which would help policymakers cover the bill’s cost by cutting the regular dividend the Federal Reserve pays to its member banks.

One lobbyist went so far as to reread the Federal Reserve Act of 1913 after getting wind of the proposal to determine what was at stake.

In a Congress where lawmakers are always hunting for politically palatable ways to raise revenue or cut costs to cover the expenses of additional legislation, the Fed provision was a novel, and rich, one. The proposal is estimated to raise $17 billion over the next decade, and is by far the richest “pay for” included in the bill.

Lobbyists said they were not aware of any previous time when lawmakers had attached the language to a piece of legislation, which would scrap a perk banks have come to expect for over a century.

When banks join the Federal Reserve system, they are required to buy stock in the central bank equal to 6 percent of their assets. However, that stock does not gain value and cannot be traded or sold, so to entice banks to participate, the Fed pays out a 6 percent dividend payment.

The Senate proposal says it would slash that “overly generous” payout to 1.5 percent for all banks with more than $1 billion in assets. While the summary language outlining the proposal said that change would only impact “large banks,” industry advocates argued that banks most would identify as small community shops could easily have assets in excess of that amount.

SIGTARP report: More than 7 out of 10 (70%) homeowners were turned down for HAMP from their servicer

SIGTARP report to Congress:

JP MORGAN CHASE AND BANK OF AMERICA, HISTORICALLY THE TWO LARGEST HAMP SERVICERS, AND CITI EACH TURNED DOWN 80% OR MORE OF HOMEOWNERS WHO APPLIED FOR HAMP; OCWEN, THE CURRENT LARGEST HAMP SERVICER, TURNED DOWN MORE THAN 70% OF HOMEOWNERS WHO APPLIED FOR HAMP

Effective December 1, 2009, Treasury made the decision to require that HAMP servicers report to Treasury’s official HAMP database on every person denied for HAMP and the reason why the servicer denied the homeowner admittance into the program. Under HAMP, a homeowner’s mortgage servicer reviews the homeowner’s application and supporting documents and determines whether the person gets into HAMP or not. Requiring reporting on HAMP application denials is one way that Treasury gathers information to conduct oversight over HAMP servicers. Based on Treasury’s data through April 30, 2015, CitiMortgage, Inc. (“Citi”) has denied 340,439 out of 391,418 (87%) applications it received, roughly 9 out of every 10 homeowners that applied.16 Through 2012, the mortgage servicers that had the highest numbers of HAMP participating homeowners were JPMorgan Chase and Bank of America. Overall, JP Morgan Chase has denied 84% of homeowners who applied for HAMP through April 30, 2015, denying almost a million homeowners (952,413). Only 16% of homeowners who applied through JPMorgan Chase got into HAMP trial modifications. Bank of America denied 80% of homeowners who applied for HAMP, denying 685,364 homeowners. Only 20% of homeowners who applied through Bank of America got into HAMP trial modifications.17 Beginning in 2013, Ocwen became the largest HAMP servicer.18 Ocwen has denied 70% of all homeowners applying for HAMP, denying 748,414 homeowners and approving fewer than one-third of homeowners who applied.19 Figure 3.4 shows the number of homeowners who were denied a HAMP trial modification, and the number who actually started a HAMP trial, by the seven top HAMP servicers Treasury currently reports on in its quarterly MHA Program Performance Report.

TABLE 3.1 HAMP APPLICATION VOLUME, OUTCOMES, AND DENIAL RATES BY STATE, AS OF APRIL 2015 State Applications Received Applications Denied Trials Started Denial Rate Alabama 51,803 38,321 13,482 74% Alaska 3,240 2,391 849 74% Arizona 172,103 117,534 54,569 68% Arkansas 21,911 16,708 5,203 76% California 1,106,642 757,296 349,346 68% Colorado 82,351 59,928 22,423 73% Connecticut 79,125 55,119 24,006 70% Delaware 19,276 13,145 6,131 68% District of Columbia 10,966 7,974 2,992 73% Florida 673,382 471,178 202,204 70% Georgia 219,318 149,963 69,355 68% Hawaii 20,516 14,578 5,938 71% Idaho 22,660 16,539 6,121 73% Illinois 280,507 191,774 88,733 68% Indiana 81,013 60,115 20,898 74% Iowa 22,260 17,005 5,255 76% Kansas 21,237 15,965 5,272 75% Kentucky 33,056 24,675 8,381 75% Louisiana 51,982 38,925 13,057 75% Maine 17,607 12,498 5,109 71% Maryland 165,185 109,465 55,720 66% Massachusetts 115,318 77,152 38,166 67% Michigan 181,705 133,888 47,817 74% Minnesota 75,415 52,379 23,036 69% Mississippi 29,660 21,508 8,152 73% Missouri 74,439 54,180 20,259 73% Montana 7,202 5,261 1,941 73% Nebraska 11,917 8,975 2,942 75% Nevada 109,447 74,532 34,915 68% New Hampshire 23,390 16,302 7,088 70% New Jersey 206,920 144,976 61,944 70% New Mexico 22,890 16,410 6,480 72% New York 304,696 212,895 91,801 70% North Carolina 130,402 92,203 38,199 71% North Dakota 1,634 1,318 316 81% Continued on next page

HAMP APPLICATION VOLUME, OUTCOMES, AND DENIAL RATES BY STATE, AS OF APRIL 2015 (CONTINUED) State Applications Received Applications Denied Trials Started Denial Rate Ohio 154,428 113,160 41,268 73% Oklahoma 26,938 20,736 6,202 77% Oregon 65,359 47,152 18,207 72% Pennsylvania 163,897 118,211 45,686 72% Rhode Island 22,635 14,607 8,028 65% South Carolina 72,480 53,624 18,856 74% South Dakota 3,193 2,480 713 78% Tennessee 79,742 56,736 23,006 71% Texas 273,517 204,074 69,443 75% Utah 43,939 30,062 13,877 68% Vermont 5,936 4,410 1,526 74% Virginia 126,838 88,234 38,604 70% Washington 123,723 88,779 34,944 72% West Virginia 11,064 8,520 2,544 77% Wisconsin 60,533 43,343 17,190 72% Wyoming 3,536 2,668 868 75% Total 5,696,808 (applications received) 4,002,886 (applications denied) 1,693,923  (HAMP trials started) 70% (denial rate)

Note: Totals include applications received from Puerto Rico, Guam, and the Virgin Islands, as well as 27 applications for which Treasury’s data is incomplete.

Sources: Treasury, “HAMP 1MP: Trial Fallout and Denials – Trial Denials by State,” April 2015, accessed 6/5/2015; Treasury HAMP data.

SIGTARP report reveals massive failure of HAMP

(Source: SIGTARP)

Housingwire:
As of Dec. 1, 2009, Treasury began requiring servicers to report information on homeowners who submitted a HAMP application but were denied participation in the program.

Since that time, approximately 1.7 million homeowners were approved to start HAMP trial modifications, while nearly 4 million homeowners were denied HAMP assistance.

“According to Treasury’s data, 70% of homeowners who applied to lower their mortgage payment through HAMP have been denied assistance by their servicer—more than 80 percent denied by some of the largest servicers; that’s roughly four million homeowners, or, in fact, the number of families that Treasury initially estimated would be helped under HAMP,” Special Inspector General Christy Romero said.

House Votes To End All Major New Rules, Again

Critics say the measure is a giveaway to special interests

Huffington Post:

WASHINGTON — A bill that critics say would make any significant new regulation all but impossible easily passed the House Tuesday.
The measure, known as the REINS Act, for Regulations from the Executive In Need of Scrutiny, would require the Obama administration to first weigh the potential costs of any new significant regulation — not just public health or other benefits — and then give Congress the power to squash any new rule with large economic impacts, set at $100 million or more.
Under the legislation, if Congress failed to act on a new regulation within 70 legislative days, the regulation would effectively be blocked, regardless of whatever harm it was meant to address.

Feds charge convict with running Philly real-estate scam from Kentucky prison

Not even a stint in a Kentucky prison cell could stop serial counterfeiter and forger Kenneth Hampton from engaging in one of Philadelphia’s oldest real estate scams, federal prosecutors said.

In an indictment unsealed Tuesday, Hampton, 54, was charged with recruiting three family members in a scheme to steal two West Philadelphia rowhouses by filing fraudulent deeds with the city’s Department of Records.

All told, investigators say, Hampton caused $87,000 in losses and kept potential property buyers tied up in court for months.

From his prison cell, Hampton directed his family on how to forge deeds of transfer and helped select apparently abandoned properties whose registered owners had recently died, prosecutors said.
At the time, he was serving a seven-year sentence for a scheme to bleach $5 bills in hopes of turning them into counterfeit $100s, a strategy he cooked up while on probation at a federal halfway house.
Read more at http://www.philly.com/philly/news/20150723_Feds_charge_convict_with_running_Philly_real-estate_scam_from_a_Kentucky_prison.html#ZMbIDxRpj3G5xPfc.99

For the U.S. Attorney (Philadelphia) press release, see Federal Inmate Charged With Relatives In Theft Scheme.

NY AG Schneiderman eyes ‘dark pool’ settlement with Credit Suisse

New York Attorney General Eric Schneiderman is prepping a September civil settlement with Credit Suisse over its dark pool trading platform, The Post has learned.

This would be Schneiderman’s second action against banks’ private trading platforms since a Barclays suit in 2014.

Schneiderman’s office has been locked in a battle with Wall Street’s biggest banks since last June over their lightly regulated dark pools, which act like exchanges but allow investors to trade anonymously. The probe has looked at least four banks, including Barclays, Deutsche Bank and UBS.

hRead on.