Thursday, October 20, 2011

Mortgage Modification Mess

Please keep this in mind as you sift through the Globe paperwork:

"Most of the big banks reported third quarter gains. You may have heard that Bank of America reported a $6.2 billion profit, despite handing over its spot as the number one bank in America to Chase, which had an overall quarterly gain of $4.26 billion. Citigroup had a quarterly gain of $4.8 billion, and Wells Fargo gained $4.1 billion. Even though these aren't big enough numbers to have investors jumping for joy, there are certainly worse problems to have.... " 

 Then nothing will please the scum.

And yet still....

"Abuses alleged in retooled loans; Despite deals, threats of foreclosure reported" October 17, 2011|By Jenifer B. McKim, Globe Staff

Property owners in Massachusetts and across the United States say they are being threatened with foreclosure and assessed unfair fees by lenders even after signing agreements with those companies to make lower mortgage payments and stay in their homes.

Gee, I just can't wait to see who they are.

Eight Bank of America borrowers - including two from Massachusetts - have filed a lawsuit against the nation’s largest bank, alleging it violated loan modification contracts, wrongly attempted to collect money from them, damaged their credit, and initiated wrongful foreclosure actions. They expect others to join the suit and are seeking class-action status.   

Why am I not surprised? A lot less attention on this legal action than the disgusting child murders or patsy terror plots, 'eh?

Borrowers and housing advocates say the problem is a further indication of the mortgage industry’s ongoing woes.

Bank of America declined to comment.

Loan problems typically occur when one department at a lending company approves a modification - permanently lowering a homeowner’s mortgage obligation through interest rate or principal reductions - but does not accurately update the borrower’s records, housing advocates say. As a result, other departments may continue to classify the customer’s account as delinquent.  

Yeah, the banks are SOOOO DISORGANIZED!! Makes you wonder -- well, not really -- how they make billions in profits each month.  What a lame-ass excuse for illegally seizing property -- even homes that had no mortgages and were fully paid for.

The frequency of such errors is a matter of some disagreement. Faith Schwartz, executive director of the nonprofit Hope Now Alliance, which represents businesses and housing counselors in the mortgage industry, said she was not aware of any serious issues with completed loan modifications.

“That is not something that has come up often,’’ Schwartz said.

But Kathleen Day, spokeswoman for the nonprofit Center for Responsible Lending, based in North Carolina, said the problem is widespread.

“It is all too common for banks to enter a loan mod and then try to foreclose on people and try to harangue them for money,’’ Day said. “All the evidence shows that servicing procedures and record keeping are just a mess. It ranges from disarray to out-and-out fraud.’’  

That's what it looks like to me.

Officials from the Treasury Department, which oversees the government-sponsored Home Affordable Modification Program, said homeowners should not experience difficulties with lenders after signing permanent modification contracts.

“If any instances arise that show that servicers have not been following guidelines, they are required to remedy their process and assess if any borrowers have been potentially impacted,’’ said Andrea Risotto, a Treasury spokeswoman.  

I'll bet the banks are shaking in their loot-filled boots.

Shennan Kavanagh, a lawyer with the Boston law firm Roddy Klein & Ryan - which filed the suit - said it is especially traumatic for homeowners who have gone through the stressful monthslong modification process to find they could still be at risk of losing their properties. 

Or having them STOLEN BY THE BANK! Notice how the corporate paper is obfuscating and minimizing the criminal conduct of the banks?

“There is complete and utter chaos in the servicing industry,’’ Kavanagh said. “These are supposed to be the lucky folks.’’  

Or a deliberate plan to f*** people out of their homes.

The complaints come as a group of state attorneys general negotiate with major US lenders following a yearlong investigation into allegations of sloppy and fraudulent foreclosures.

Massachusetts Attorney General Martha Coakley, who is participating in the talks, said this month that she is no longer confident they will be fruitful. Coakley said she is considering legal action against some lenders based on claims that they submitted fraudulent foreclosure paperwork or unlawfully attempted to seize homes. She did not specify which companies are being investigated....   

What has been taking so long?

--more--"

Maybe the court can clean it up:

"SJC puts foreclosure sales in doubt" October 19, 2011|By Erin Ailworth, Globe Staff

The state’s highest court added further turmoil to the housing market yesterday when it ruled that buyers of some foreclosed homes may not be the legal owners of those properties.

The decision leaves in limbo hundreds, if not thousands, of people who bought homes seized by lenders under questionable circumstances. They are left with no easy recourse; among their options are to sue the lender behind the botched foreclosure or “reforeclose’’ on the prior owner.

“It leaves us nowhere,’’ said Edward M. Bloom, president of the Real Estate Bar Association for Massachusetts. “The residential housing market is never going to stabilize and grow until all of these properties that are in foreclosure are organized and cleaned out.’’  

Thanks, banks.

This is the second ruling in less than a year in which the Massachusetts Supreme Judicial Court has tried to sort out the mess created by the rapid-fire foreclosure of thousands of properties after the housing market’s collapse. During that time, some lenders seized and then resold homes before establishing a clear record of ownership. Last winter, the high court upheld a contentious ruling from the Massachusetts Land Court that challenged how banks had traditionally seized properties without having all the necessary paperwork.

In-f***ing-credible.

Related: Slow Saturday Special: Massachusetts Court Rejects Foreclosure Fraud

In that case the high court overturned foreclosures of two properties in Springfield by U.S. Bancorp and Wells Fargo after the banks could not prove they owned the mortgages they foreclosed on.

Yesterday’s decision was a follow-up to that ruling. The case was brought by developer Francis J. Bevilacqua, who in 2006 bought a building in Haverhill from a trust for which U.S. Bank National Association, a unit of U.S. Bancorp, is trustee. Earlier in 2006 the trust had prematurely seized the property from the prior owner, acting about one month before the mortgage lender appointed it to do so.

With that cloud hanging over the foreclosure, Bevilacqua sought to clear any doubt that he was the legal owner by bringing a case against the former holder of the property. The high court ruled the earlier improper transfer of the property left him with no standing as an owner.

U.S. Bank had no comment, noting that, as trustee, it was not a party to the case.

The court’s decision could have major repercussions because it raises the specter that anyone else who purchased foreclosed homes with questionable paperwork may not actually own those properties. The court did not address who does own the Haverhill property, if not Bevilacqua.

“If a bank unlawfully forecloses on a home, its resulting foreclosure deed is void and it can’t sell that home,’’ said Max Weinstein, an attorney and instructor on predatory lending issues at Harvard Law School’s WilmerHale Legal Services Center. Weinstein, who filed a friend-of-the-court brief on behalf of the man whose foreclosed home was bought by Bevilacqua, said yesterday’s ruling extends the court’s protections for homeowners who were forced from their homes under questionable circumstances.

“Fundamentally, this decision is about holding the banks accountable for unlawful foreclosures,’’ Weinstein said. “It should be the banks who pay for their unlawful conduct, not the original homeowners.’’

Attorney General Martha Coakley, who acts as an advocate for consumers and also filed a friend-of-the court brief in Bevilacqua’s case, appeared to agree.

“In the rush to foreclose, the banks’ reckless origination and foreclosure practices have created a domino effect that has harmed Massachusetts homeowners as well as third-party purchasers who purchased properties after foreclosure,’’ Coakley said in a statement. “This is yet another clear demonstration that the only way we are going to restore a healthy economy is to address the foreclosure crisis and hold the banks accountable for their actions.’’

Already the court’s ruling implicates others beyond Bevilacqua, as he subsequently built and sold four condos on the property, so that it would appear the buyers of those condos likely do not own their homes.

Bevilacqua’s attorney, Jeffrey Loeb, said he and his client haven’t decided what their next step will be. Loeb said, however, he took some solace from a portion of the SJC’s ruling that appears to provide his client with a “road map’’ to try to reforeclose on the property. “It’s going to be a longer and more expensive process for third-party buyers, but there’s a method out there to cure the problem,’’ Loeb said. “It’s not necessarily the fix that my client and I were hoping for. But it is a fix, which is - bottom line - what everybody needed.’’

Some in the Massachusetts real estate community had been hoping the court would use the Bevilacqua case to answer questions raised by its earlier decision, known as the Ibanez case - specifically what the third-party buyers of these tainted properties can do to clarify their ownership.

“Ibanez created a lot of problems,’’ said Bloom, the Real Estate Bar Association president. “The hope was that the court might solve the title problems created by Ibanez for people who bought at foreclosure sales,’’ he said, but “the Bevilacqua case leaves all those people in limbo.’’

--more--"

Related: BEVILACQUA BOMBSHELL - Massachusetts Supreme Court Rules That MOST Foreclosure Sales From Previous 5 Years Are NULL & VOID

"Citigroup, SEC in $285m deal" by Daniel Wagner and Marcy Gordon Associated Press / October 20, 2011

Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of a complex mortgage investment just as the housing market was starting to collapse. The Securities and Exchange Commission said Wednesday that the big Wall Street bank bet against the investment in 2007 and made $160 million in fees and profits. Investors lost millions.

For more from BostonGlobe.com, sign up or log in below

To continue, please sign up or log in to BostonGlobe.com

Access the full articles and quality reporting of The Boston Globe at BostonGlobe.com

Sign up

Unlimited Access to BostonGlobe.com for 4 weeks for only 99¢.

Are you a Boston Globe home delivery subscriber?

Get FREE access as part of your print subscription.

BostonGlobe.com subscriber

Click to continue reading this article or to log in to BostonGlobe.com.

--no more--"

Yes, dear readers, the relationship with the Boston Globe is ending. They have shut us off. Oh, how I will miss them!

"Citigroup Paying $285M to Settle SEC Fraud Charges" by DANIEL WAGNER and MARCY GORDON AP Business Writers

Citigroup has agreed to pay $285 million to settle civil fraud charges that it misled buyers of a complex mortgage investment just as the housing market was starting to collapse.

That is such chump change considering that these firms cost the taxpayers trillions and destroyed both the American and European economies.

The Securities and Exchange Commission said Wednesday that the big Wall Street bank bet against the investment in 2007 and made $160 million in fees and profits. Investors lost millions.

Citigroup neither admitted nor denied the SEC's allegations in the settlement.

"We are pleased to put this matter behind us and are focused on contributing to the economic recovery, serving our clients and growing responsibly," Citigroup said in a statement. 

As they count the 4.8 billion in profits from the last quarter.

The penalty is the biggest involving a Wall Street firm accused of misleading investors before the financial crisis since Goldman Sachs & Co. paid $550 million to settle similar charges last year. JPMorgan Chase & Co. resolved similar charges in June and paid $153.6 million. 

Chump change for banks that made billions on the frauds and passed out billions in bonuses.

Related: Goldman Sachs' Rigged Gambling Game

It all smells criminal to me.

All the cases have involved complex investments called collateralized debt obligations. Those are securities that are backed by pools of other assets, such as mortgages. 

I suggest you watch Inside Job for the best explanation of what happened.

Citigroup's payment includes the fees and profit it earned, plus $30 million in interest and a $95 million penalty. The money will be returned to the investors, the SEC said.

In the July-September quarter, Citigroup earned $3.8 billion.  

I was told 4, but why quibble over a mere billion? Could be a typo, right? 

CEO Vikram Pandit this year was awarded a multi-year bonus package that could be worth nearly $23.4 million if performance goals are met.  

Or meager millions?

At the height of the financial crisis in 2008, regulators worried that Citigroup was on the brink of failure.  

Yeah, sure it was.

It received $45 billion as part of the $700 billion government bailout.

In the civil lawsuit filed Wednesday, the SEC said Citigroup traders discussed in late 2006 the possibility of buying financial instruments to essentially bet on the failure of the mortgage assets being assembled in the deal.  

I believe those were called credit default swaps.

Rating agencies downgraded most of the investments that Citigroup had bundled together just as many troubled homeowners stopped paying their mortgages in late 2007.  

Did they?

That pushed the investment into default and cost its buyers' — hedge funds and investment managers — several hundred million dollars in losses. 

Did it?

Among the biggest losers were Ambac, a bond insurer, and BNP Paribas, a European bank. Ambac had sold Citigroup protection against losses on the investment, allowing Citigroup to bet against it.

Hedge funds had asked Citigroup to sell them investments that would decline if the housing market crashed. Citigroup did so, and wanted to get in on the action, the SEC said.

Citigroup bet that the investments would fail, but never told investors it had done so, SEC enforcement chief Robert Khuzami said in a conference call.

"Key facts regarding how the structure was put together were not made available to (investors), and they suffered losses as a result," he said.... 

That's where the printed Globe ended the piece.

Even though Citigroup designed the investment to fail, it told investors it had been designed by an independent manager, the SEC said. Citigroup's marketing materials said the investments were picked by Credit Suisse. In an email about the deal, one Citigroup banker asked another not to tell Credit Suisse that it was designed for Citigroup to profit....

Citigroup sounds like a bunch of crooks.

--more--"