Thursday, August 14, 2014

Memory Hole: Bank of America Now Countrywide

"Countrywide loan probe ended by House panel with no action taken:" December 29, 2012

WASHINGTON — A House panel has ended a probe of alleged preferential lending by Countrywide Financial Corp. to lawmakers and aides without taking action, saying the ‘‘serious matters’’ submitted for review fall outside its jurisdiction.

Allegations surrounding mortgage loans to House members and staffers through Countrywide Chief Executive Officer Angelo Mozilo’s ‘‘Friends of Angelo’’ initiative or other so-called VIP programs are either too old or involve people no longer employed in the House, the Ethics Committee’s Republican chairman and ranking Democrat said in a statement Thursday.

Lame. It's a Christmas cover-up.

‘‘While these allegations concern serious matters, almost all of the allegations concerned actions taken outside, or well outside, the jurisdiction of this committee,’’ Ethics Committee Chairman Jo Bonner of Alabama and Representative Linda Sanchez of California said in their statement. House rules preclude sanctions for violations that occur more than three Congresses — or six years — before the current one, they said.

The investigation was sought by Representative Darrell Issa, the California Republican who leads the House Oversight and Government Reform Committee. Issa said in a July report that Countrywide gave discount loans to lawmakers and Fannie Mae executives from 1996 to 2008 as the government-sponsored mortgage-finance company lobbied to block legislation that would have diminished its sale of subprime loans.

Bonner and Sanchez said the Ethics Committee conducted its own review of the role of Countrywide’s VIP unit, finding that while it offered quicker, more efficient processing and some discounts, the loans met basic underwriting standards and didn’t offer the best deals available in the marketplace.

‘‘Participation in the VIP or F.O.A. programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders,’’ they said in the statement. ‘‘Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing members, officers, or employees of the House of Representatives.’’

The Senate Ethics Committee completed an investigation in 2009 saying lawmakers including former Banking Committee chairman Christopher Dodd of Connecticut and Senator Kent Conrad, Democrat of North Dakota, didn’t violate rules when they refinanced loans with Countrywide.

Fannie Mae, which bought billions of dollars in mortgages from Countrywide under an exclusive agreement, has been under US conservatorship since September 2008, when it was seized along with Freddie Mac amid losses that pushed them to the brink of bankruptcy. Countrywide had been acquired two months earlier by Bank of America Corp., which has spent more than $40 billion to clean up mortgages inherited in the deal.

Mozilo, 74, agreed to a record $67.5 million regulatory settlement in 2010 to resolve claims that he reaped about $140 million by selling Countrywide stock while misleading investors about the quality of the company’s loans.

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"Bank of America still paying for Countrywide" by Steven Syre  |  Globe Columnist, July 24, 2012

Countrywide Financial Corp. is the gift that just keeps on taking.

It’s been four years since Bank of America bought the mortgage banking money pit in one of the worst business deals of all time. The Wall Street Journal recently estimated that the $4.5 billion transaction has actually cost Bank of America more than $40 billion, thanks to business losses and endless legal claims.

Last week, Bank of America posted a $2.5 billion quarterly profit — good news to be sure. But the company also warned that more investors were demanding it repurchase soured mortgages — a $22 billion pile of trouble that had grown 40 percent in just three months. Blame Countrywide and its subprime mortgage business.

Bank of America’s former chief, Ken Lewis, could have only had one idea in mind when he bought this bag of rocks four years ago. His bank would be the nation’s dominant mortgage player when the market eventually recovered.

But Bank of America decided to head in the opposite direction two years later. The bank needed to shrink and its mortgage business was getting clobbered from every direction.

Bank of America decided it would continue to sell home loans to its banking customers but stopped buying mortgages from brokers or smaller lenders.

Now the mortgage market indeed shows signs of recovering and a handful of other banks are profiting smartly....

Related: The Rent-Backed Securities Swindle

The big winner in this transition has been Wells Fargo & Co., now the 800-pound gorilla of the mortgage industry....

Related:

"Wells Fargo & Co., the nation’s biggest mortgage lender, said Friday that first-quarter profit surged 23 percent. Net income rose to $4.93 billion.... Third-quarter profit for Wells Fargo & Co., the biggest US mortgage lender, jumped 13 percent as a decline in revenue from mortgage lending was offset by reduced expenses and fewer soured loans. Net income increased to $5.6 billion in the July-September period from $4.9 billion a year earlier.... San Francisco’s Wells Fargo, the nation’s largest home lender, posted a 19 percent increase in second-quarter profit as it overcame an easing in the mortgage market on its way to record earnings of $5.5 billion.... Wells Fargo has been a darling of bank investors since the financial crisis. The lender easily passed the Federal Reserve’s recent stress test and its stock has soared over the past year. On Friday, Wells Fargo reported profit of $5.9 billion."

What could ever go wrong, huh?

That shift has created a profit windfall for Wells Fargo. It recently reported $2.9 billion of income from mortgage banking during the second quarter....

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"Bank of America nears $17 billion settlement over mortgages" by Ben Protess and Michael Corkery | New York Times   August 07, 2014

NEW YORK — Bank of America and the Justice Department have reached a tentative deal that would cost the bank nearly $17 billion to settle an investigation into its sale of toxic mortgage securities in the runup to the financial crisis, according to people briefed on the matter. It is the latest eye-popping rebuke of a giant bank.

Anyone going to jail?

The agreement, which is not final and could still fall apart, would represent a record for the government. It would be the largest sum the Justice Department has ever extracted from a single company.

What was their kickback?

The bank has agreed to pay a roughly $9 billion cash penalty to the US Treasury — last month, Citigroup agreed to pay a $4 billion penalty — while providing the remaining money in the form of relief to struggling homeowners, the people briefed on the matter said. Just a few weeks ago, the bank was offering only $3 billion in cash, a figure that temporarily caused talks to break down.

It is at this point you realize the government and bankers collaborated on the whole scheme. They let the banks steal the homes, avoid prison for misconduct, and now are getting their cut. The financial firms of Wall Street control the domestic policy of this nation; Israel controls its foreign policy.

A breakthrough came last week on a phone call between Attorney General Eric Holder and the bank’s chief executive, Brian T. Moynihan, one of the people said. Earlier in discussions, when the two sides were far apart, the Justice Department turned down a request for Moynihan to meet with Holder.

Critics contend that the government crackdown has amounted to little more than a slap on the wrist. No bank employee will face charges, and the case against the bank is civil, rather than criminal. 

I don't find anything civil about lying to then looting people.

The settlement ends months of on-again, off-again negotiations between the Justice Department and Bank of America, which has already paid more than $50 billion to settle lawsuits by private investors and regulators largely related to its Countrywide Financial and Merrill Lynch units.

During the talks, the bank had argued with federal prosecutors that it should not be penalized for mortgages that Countrywide and Merrill had sold before it agreed to buy those firms in 2008.

But that argument was significantly weakened last Wednesday when Judge Jed S. Rakoff, of the US District Court in Manhattan, ordered Bank of America to pay $1.3 billion for the sale of defective Countrywide mortgages, calling the scheme a “brazen fraud.”

The Wall Street Journal earlier reported the news of the tentative deal.

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"Bank of America hit with suit over Countrywide lending; US accuses lender of ‘brazen’ practices" by Christina Rexrode  |  Associated Press, October 25, 2012

NEW YORK — The latest federal lawsuit over alleged mortgage fraud paints an unflattering picture of a doomed lender: Executives at Countrywide Financial urged workers to churn out loans, accepted fudged applications, and tried to hide ballooning defaults.

The suit, filed Wednesday by the top federal prosecutor in Manhattan, also underscored how Bank of America’s purchase of Countrywide in July 2008, just before the financial crisis, backfired severely.

The prosecutor, Preet Bharara, said he was seeking more than $1 billion, but the suit could ultimately recover much more in damages.

‘‘This lawsuit should send another clear message that reckless lending practices will not be tolerated,’’ Bharara said in a statement. He described Countrywide’s practices as ‘‘spectacularly brazen in scope.’’

He also charged that Bank of America has resisted buying back soured mortgages from Fannie Mae and Freddie Mac, which bought loans from Countrywide.

Bank of America spokesman Lawrence Grayson said the bank ‘‘has stepped up and acted responsibly to resolve legacy mortgage matters.’’ He called the allegation that the bank has failed to buy back loans ‘‘simply false.’’

‘‘At some point,’’ Grayson said, ‘‘Bank of America can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.’’

Countrywide was a giant in mortgage lending, but was also known for approving exotic, even risky, loans.

Not if you were a big-wig and friend of Angelo's.

By 2007, as the market for subprime mortgages collapsed, Countrywide was anxious for revenue.

The lawsuit alleged that the company loosened its standards for making loans while telling Fannie Mae and Freddie Mac, which were buying loans from Countrywide, that standards were getting tighter.

Fannie and Freddie, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses.

To churn out more mortgage loans, Bharara said, Countrywide introduced a program called the ‘‘Hustle,’’ shorthand for ‘‘High-Speed Swim Lane.’’ It operated under the motto, ‘‘Loans Move Forward, Never Backward.’’

The program eliminated checks meant to ensure that mortgages were being made to borrowers who could afford them, according to the lawsuit.

For example, loan processors no longer had to complete worksheets that helped them assess whether income levels that borrowers entered on their loan applications were reasonable.

If processors entered a borrower’s information into a computerized underwriting program and the program raised flags, employees had incentives to change the numbers, the suit said.

It also said that bonuses were awarded based solely on the number of loans that an employee could generate, not on their quality.

The process led to ‘‘widespread falsification’’ of mortgage data, Bharara charged. And when Countrywide executives became aware of the dangerously high number of borrowers defaulting, it hid the problem, according to the lawsuit.

In early 2008, for example, Countrywide offered bonuses for employees who could ‘‘rebut’’ the high rate of defaults. The standards were low, according to the lawsuit: If a review found that the income a borrower listed on his application seemed unreasonable, an employee could rebut the finding ‘‘simply by arguing that the stated income was reasonable.’’

The lawsuit accused Countrywide, and later Bank of America, of selling thousands of Hustle loans to Fannie and Freddie. The lawsuit says that that the Hustle program continued through 2009.

According to the lawsuit, Fannie and Freddie don’t review loans before they purchased them. Instead, they relied on banks’ statements that the loans met certain qualifications.

Gee, that was a mistake.

Bharara said the lawsuit was the first civil fraud suit brought by the Justice Department concerning loans later sold to Fannie and Freddie.

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RelatedBank of America gets low customer ratings in survey

Paying more for it, too. 

They are just as bad as Sovereign, but I guess that is their way of saying the love you.

Bank of America CEO made $7.4 million in 2012

He's scrambling now, though, because they had to pay $772m for a credit card scam in which it "misled" customers. He's liable for dropping you because you just are no longer worth it

If you want to talk about settling things, well, we are operating at a loss now. Gotta come up with some scheme to make loot quick or they will fail the test. Need to make some big bucks fast or it will be time to close branches and cut jobs, cut jobs, cut jobs.

Bank of America reported profit of $2.3 billion

Aaaaaah!