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Bank Trouble Linkfest
Posted By Barry Ritholtz On October 19, 2010 @ 6:00 pm In Financial Press | Comments Disabled
Many crazy things in the hopper today:
• Task force probing whether banks broke federal laws during home seizures : Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people’s homes, according to people familiar with the matter. Now THATS what I am talking about
• FBI looking at foreclosure mess : A federal law enforcement official says the FBI is in the initial stages of trying to determine whether the financial industry may have broken criminal laws in the mortgage foreclosure crisis. The law enforcement official says the FBI is at the start of a lengthy sorting-out process in which agents will look into what caused the financial institutions to mishandle the flood of paperwork in the historic avalanche of foreclosures. The official says the question is whether financial institutions were acting with criminal intent or were simply overwhelmed by events in the wake of the housing market’s collapse.
• MERS Mortgage Registry Comes Under Fire in Foreclosure Crisis : The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles. A definitive ruling against MERS might slow any future bundling of mortgages into securities since the company played a role in that process.
“MERS is the central device by which the banks have tried to opt out of the legal system and the real-property record system,” U.S. Representative Alan Grayson of Florida said in an interview. “They have taken it upon themselves, with the supposed consent of the borrowers, to violate a system of property record-keeping that we’ve had going back centuries.”
• Bondholders Pick a Fight With Banks : As banks restart foreclosures they had suspended, bondholders are stepping up efforts to recoup losses on soured mortgage portfolios amid concern about sloppy mortgage servicing and underwriting practices. In a letter Monday, a group of institutional bond investors raised objections to the handling of 115 bond deals issued by affiliates of Countrywide Financial Corp., acquired by Bank of America Corp. in 2008. The investor actions, which seek to have certain loans be repurchased among other things, come as Bank of America on Monday took steps to defuse claims that its foreclosure troubles are deep-seated. The bank on Monday said it was restarting the foreclosure of more than 100,000 homes.
• Mortgages Were Pledged to Multiple Buyers at the Same Time  This is like the movie ‘The Producers’. Banks were selling the same loan over and over to multiple investors. It’s why property right protections are not just ‘paperwork’, they actually protect property rights. (naked capitalism)
• Top Bank Regulator Doesn’t Believe Consumers Harmed By Foreclosure Fraud Scandal  The nation’s top bank regulator doesn’t believe homeowners are being harmed directly by an ongoing foreclosure fraud scandal, despite multiple reports of banks mistakenly evicting homeowners who aren’t even in foreclosure. (HuffPo)
• Letter from Conyers, Kaptur, Grayson, Grijalva to Special Inspector General of TARP  Asking for Audit of GMAC, Fannie, Freddie SIGTARP is run by Neil Barofsky. Barofsky is a very serious investigator and public servant. His group has actually put multiple TARP recipients from smaller banks in jail for white collar crimes. As far as I know, his is the only law enforcement body in DC to do so.
• Six Democratic Senators Send Letter to Administration Over Foreclosure Errors  (Brown, Harkin, Boxer, Stabenow, White, Begich) – This situation has stirred up notice all over the place, including on the Senate Democratic side.
• BofA Will Fight Against Mortgage Buybacks  Bank of America has suspended its foreclosure moratorium, because everything’s apparently fine. The bank will also furiously respond to investors who are suing. (Bloomberg)
• ACLU Seeks Public Records To Determine Constitutionality Of Foreclosure Proceedings In Florida  This investigation is looking at the foreclosure fraud issue as a criminal matter, five days after Rep. Grayson sent a letter asking for this action.
• This is why you must verify documents! House, homeowner caught in a mortgage meltdown : Edwards’ predicament represents a confluence of the fraud, document forgery, and suspicious foreclosure practices that have plagued South Florida’s housing market from the housing boom after Hurricane Wilma in 2005, through the current “robo-signing” scandal. In the midst of a new national foreclosure crisis, Edwards’ story stands out as a case study of the housing and banking systems’ laundry list of problems. The 63-year-old retiree says her housing troubles began five years ago when her ex-husband, legally blind and illiterate, was duped into taking out a $102,000 mortgage on the house by his adult son and daughter-in-law. The couple forged Edwards’ signature on a document that stripped her possession of the home, and then made off with the money in January 2006, she said.
• Fed Is Monitoring Mortgage Foreclosure Process  The leader of the Federal Reserve Bank of New York addressed the ongoing saga of mortgage foreclosures, saying “the Federal Reserve actively encourages efforts to find viable alternatives to foreclosure, like loan modifications, or deeds in lieu.” But he added, “we also support due process and access to legal counsel for homeowners facing foreclosure, for instance through legal aid programs.”
• Democrats versus Republicans versus Administration Strategies on Foreclosure Mess  The administration, liberal Democrats, and Republicans in DC all have different approaches to the foreclosure fraud mess. (Politico)
Republican leaders have said little about the foreclosure problems, except for House GOP Whip Eric Cantor, who warned that a moratorium threatened to destabilize the housing recovery.
Behind the scenes, Republicans are consulting with the banks, which are hoping to reach a quick settlement with attorneys general from all 50 states who have announced a joint investigation into home foreclosures. The settlement would involve a sizable fine and some basic reforms to the foreclosure process.
• Judges asking for more evidence on foreclosures  Despite the suspension of the foreclosure moratoria, judges aren’t going to be as creditor friendly going forward.
• Polling Data  I don’t generally trust Rasmussen, but it is the only public polling data out there on this topic. I found this particularly striking since it shows that the deadbeat is at fault narrative has taken a big hit.
Fifty-two percent (52%) say Wall Street investors and mortgage companies are to blame for most of the problems in the lending industry, while 35% blame individuals who borrowed more than they could afford. Those numbers have changed drastically from July 2008, when slightly more voters blamed borrowers than Wall Street investors and mortgage companies .
What other related links have you found?
by Tom Toles 
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2010/10/banks-hit-back-linkfest/
URLs in this post:
 Task force probing whether banks broke federal laws during home seizures: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/19/AR2010101904845_pf.html
 FBI looking at foreclosure mess: http://www.miamiherald.com/2010/10/19/1880564/federal-agencies-probing-foreclosure.html
 MERS Mortgage Registry Comes Under Fire in Foreclosure Crisis: http://noir.bloomberg.com/apps/news?pid=20601109&sid=aEfZfA8ONLGE&
 Bondholders Pick a Fight With Banks: http://online.wsj.com/article/SB10001424052702303496104575560621544183834.html
 Mortgages Were Pledged to Multiple Buyers at the Same Time: http://www.nakedcapitalism.com/2010/10/guest-post-mortgages-were-pledged-to-multiple-buyers-at-the-same-time.html
 Top Bank Regulator Doesn’t Believe Consumers Harmed By Foreclosure Fraud Scandal: http://www.huffingtonpost.com/2010/10/15/top-bank-regulator-doesnt_n_764756.html
 Letter from Conyers, Kaptur, Grayson, Grijalva to Special Inspector General of TARP: http://conyers.house.gov/index.cfm?FuseAction=News.PressReleases&ContentRecord_id=B18AFB37-19B9-B4B1-12E4-9561D2736892
 Six Democratic Senators Send Letter to Administration Over Foreclosure Errors: http://brown.senate.gov/newsroom/press_releases/release/?id=2f0c8a60-466a-4f62-af9a-99ea998ea615
 BofA Will Fight Against Mortgage Buybacks: http://www.businessweek.com/news/2010-10-19/bofa-will-defend-shareholders-in-mortgage-buybacks.html
 ACLU Seeks Public Records To Determine Constitutionality Of Foreclosure Proceedings In Florida: http://www.aclu.org/racial-justice/aclu-seeks-public-records-determine-constitutionality-foreclosure-proceedings-florida
 House, homeowner caught in a mortgage meltdown: http://www.miamiherald.com/2010/10/18/v-print/1879950/house-homeowner-caught-in-a-mortgage.html
 Fed Is Monitoring Mortgage Foreclosure Process: http://blogs.wsj.com/economics/2010/10/19/fed-is-monitoring-mortgage-foreclosure-process/
 Democrats versus Republicans versus Administration Strategies on Foreclosure Mess: http://dyn.politico.com/printstory.cfm?uuid=C1B955A9-0F19-1212-BA03B81B5746B7F4
 Judges asking for more evidence on foreclosures: http://blogs.palmbeachpost.com/realtime/2010/10/18/judges-asking-for-more-evidence-on-foreclosures/
 Polling Data: http://www.rasmussenreports.com/public_content/business/housing/october_2010/americans_are_now_less_supportive_of_a_foreclosure_moratorium
 Wall Street investors and mortgage companies: http://www.rasmussenreports.com/public_content/business/housing/july_2008/only_21_support_federal_help_for_those_facing_foreclosure
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2010/10/monopoly.gif
 Tom Toles: http://voices.washingtonpost.com/tomtoles/
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