Daily Archives: September 8, 2015

Woman arrested after renting out abandoned house on Craigslist

Michelle Copeland, 39, was arrested after renting out a vacant home to a family in Wheat Ridge, Colorado, leaving the family without a home, an article in 9 News Denver reported.

According to the article, Francie Neilsen, her two children and mother moved into the home after searching for a place on Craigslist

“We’ve been looking for a house for quite some time,” Neilsen said, “We’ve been off-and-on homeless for over 3 years.”

Neilsen thought she found an offer that was too good to be true: A four-bedroom home for around $1,800. She met the advertiser in person and paid nearly all of first month’s rent in cash. In return, she was handed two keys and a lease.

Turns out it was. The article explained that not even one day after moving in, Wheat Ridge Police showed up to the home that had been abandoned for years because neighbors called about a possible break in.

Judge granted some of Flagstar Bank’s motions to dismiss a class action accusing it of failing to report mortgage interest payments to IRS

Courthouse News:

SAN JOSE, Calif. – A federal judge granted some, but not all, of Flagstar Bank’s motions to dismiss a class action accusing it of failing to report mortgage interest payments to the Internal Revenue Service.

Here is court document. Click here.

Judge Frees Kentucky Clerk Opposed to Gay Marriage From Jail

(CN) – Satisfied that Rowan County, Ky., is fulfilling its duty to issue marriage licenses to gay couples, a federal judge ordered the release of court clerk Kim Davis from jail Tuesday.
Davis was jailed on Thursday after U.S. District Judge David Bunning held her in contempt of court for refusing to marriage licenses, based on her belief that enabling gay couples to marry violates her religion.
Bunning said at last week’s contempt hearing that “the idea of natural law superseding this court’s authority would be a dangerous precedent indeed.”
The judge’s two-page ruling ordering Davis release Tuesday stipulates that Davis cannot interference with her deputy clerks issuing marriage licenses “to all legally eligible couples.”
“If defendant Davis should interfere in any way with their issuance, that will be considered a violation of this order and appropriate sanctions will be considered,” Bunning wrote.
With the five deputy clerks who work under Davis pledging to issue marriage licenses to couples, gay or straight, Bunning ordered these workers to file reports with his court every two weeks to ensure compliance, “unless otherwise excused by the court.”
Bunning decided to release Davis from custody after status reports indicted that marriage licenses were being properly issued in her county.

Read on.

And here is Judge Bunning’s two page ruling. Click here.

Liar Loans Redux: They’re Back and Sneaking Into AAA Rated Bonds

  • Homebuyers are taking on debt again without much paperwork
  • Wall Street spreads legal risks through new bond deals

The pitch arrived with an iconic image of the American Dream: a neat house with a white picket fence.

But behind that picture of a $2.95 million home in Manhattan Beach, California, were hints of something darker: liar loans, those toxic mortgages of the subprime era.

Years after the great American housing bust, mortgages akin to the so-called liar loans — which were made without verifying people’s finances — are creeping back into the market. And, like last time, they’re spreading risks far and wide via Wall Street.

Today’s versions bear only passing resemblance to the ones that proliferated in the mid-2000s, and they’re by no means as widespread. Still, they reflect how the business isstarting to join in the frenzy that’s been creating booms in everything from subprime car loans to junk-rated company bonds.

The Manhattan Beach story — how the mortgage on that house was made and subsequently packaged into securities with top-flight credit ratings — recalls a time when borrowers, lenders and investors all misjudged the potential danger.

Read on.

“Desperate” Chicago Schools Need Half Billion To Avoid Mass Layoffs, Partial Shutdown

Very sad…

Here’s WSJ with the story:

Chicago Public Schools—with 394,000 students and nearly 21,000 teachers—has closed more than half of a projected $1.1 billion shortfall through cuts, borrowing and other means, but is looking to the state to come up with the rest. The school board warns of deep cuts later this year if Illinois, which faces its own fiscal crisis, doesn’t deliver an additional $480 million in the coming months, representing roughly 8% of annual district spending.

“It is like the board is a desperate gambler at the end of their run,” said Jesse Sharkey, vice president of the Chicago Teachers Union, in a recent speech.

“We are really now at a point where further cuts would reach deep into the classroom,” said Forrest Claypool, who was named chief executive of the city schools in July.

Since 2011, the school board has made nearly $1 billion in cuts—including $200 million this year that involved eliminating 1,400 positions, mostly through layoffs. Enrollment declines, due to shifting demographics and Chicago’s shrinking population, have led to school closings, including nearly 50 elementary schools in 2013 alone.

Mayor Rahm Emanuel has clashed with the teachers union, which went on strike three years ago and is currently without a contract. Another strike isn’t out of the question as the two sides are wrestling over the district’s effort to get teachers to pay more of their pension costs.

A group of parents, educators and activists with the support of union leaders launched a hunger strike Aug. 17 in a push to reopen a closed high school in a historically black neighborhood on the city’s South Side. The group argues the board concentrates money in Chicago’s wealthy, predominantly white neighborhoods. Hispanic and black students make up a vast majority of enrollment in city schools, and more than 85% of students are considered economically disadvantaged.

SEC Fines Bankrate $15M, Sues Execs For Accounting Fraud

Law360, New York (September 8, 2015, 1:56 PM ET) — The U.S. Securities and Exchange Commission said Monday it has fined Bankrate Inc. $15 million to settle accounting fraud charges, and that it is suing two former executives over an alleged scheme to puff up quarterly earnings for the personal finance information company.

According to the SEC, former Bankrate Chief Financial Officer Edward DiMaria and ex-accounting director Matthew Gamsey invented revenue and avoided recording certain expenses in a bid to help the company overstate net income for the second quarter of 2012. A third former executive,…

Source: Law360

Nomura, RBS agree to pay $839M over mortgage bonds

Nomura Holdings (NMR) and The Royal Bank of Scotland(RBS) have agreed to a settlement in federal court to pay $839 million over the sale of mortgage-backed securities.

Both banks were found guilty in May by U.S. District Judge Denise Cote in Manhattan after a non-jury trial and were directed to pay $806 million including $26.6 million toFannie Mae and $779.4 million to Freddie Mac.

“The offering documents did not correctly describe the mortgage loans,” the judge said in his lengthy, 361-page decision. “The magnitude of falsity, conservatively measured, is enormous.”

Nomura and RBS denied the FHFA’s allegations at the time of the verdict.

Read on.

Judge dumps MBS class action against Goldman Sachs

U.S. District Judge Victor Marrero dismissed a five-year class action lawsuit against Goldman Sachs (GS) over the sale of highly leveraged, subprime mortgage bonds that hedge fund Dodona I LLC said Goldman planned to bet against.

The federal judge granted summary judgment to Goldman, saying the hedge fund had not shown evidence Goldman could have known the bonds would fail.

The lawsuit, filed in September 2010, was filed against Goldman on behalf of investors in a $2 billion offering of two collateralized debt obligations, Hudson 1 and Hudson 2.

The hedge fund claimed that Goldman Sachs “recklessly or intentionally” sold the Hudson Mezzanine Funding CDOs to offload subprime risk on unsuspecting investors.

Read on.

Judge tosses two shareholder lawsuits against Ocwen Financial

Ocwen Financial Corp. (OCN) on Friday won the dismissal of two securities class actions that arose from alleged compliance issues related to servicer agreeing to a $150 million settlement in 2014 with the New York’s Department of Financial Services last December.

U.S. Judge William Dimitrouleas dismissed a lawsuit filed in a federal Southern Florida district court by shareholders seeking to recover losses suffered from alleged false statements the company made about its business practices and regulatory compliance leading up to that settlement.

The shareholders in the lawsuit charged that Ocwen made false statements about its business practices and regulatory compliance.

Read on.

Federal Judge Dismisses Two Fraud Lawsuits Against Ocwen

A federal judge in Florida has dismissed two class action lawsuits against non-bank mortgage servicerOcwen Financial, according to court filings.

U.S. District Judge William Dimitrouleas in the U.S. District Court, Southern District of Florida, dismissed lawsuits filed by Ocwen Financial shareholders andAltisource Portfolio Solutions shareholders accusing the Atlanta-based servicer of fraud.

“We are pleased that the Court has dismissed these two separate actions against the Company,” Ocwen spokesman Jon Lovallo said in an email to DS News. “We agree with the Court’s rulings, and will continue to vigorously defend ourselves as necessary.”

Read on.