Posts filed under “Foreclosures”
Original letter here:
Dear Secretary Geithner and members of the Financial Stability Oversight Council,
I’m writing concerning the foreclosure fraud crisis and the resulting potential need for a special capital buffer for large systemically significant institutions. I’m particularly worried about the title insurance market, and attempts to lay off title liability onto large banks without corresponding changes in capital requirements.
Recently, Bank of America struck a deal with Fidelity National Title Insurance to indemnify the title insurer should legal problems with foreclosures create unanticipated title liability. Title insurers are clearly worried that they may face higher legal and policy costs if foreclosures are reversed, or should legal ambiguity cloud titles they already have insured. Bank of America’s deal with Fidelity may be necessary to help keep the housing market functioning. Since title insurers have in some cases just refused to insure this market, someone must pay for the liability these insurers have refused to incur.
The extent of this liability is unclear. On October 8, Bank of America CEO Brian Moynihan told the public and investors that, despite the self-imposed foreclosure moratorium, his bank had not “found any foreclosure problems”. He said, explaining the foreclosure moratorium, that “[w]hat we’re trying to do is clear the air and say we’ll go back and check our work one more time.” The bank’s SEC Form 8-K reinforced these comments. Yet two weeks later, the Wall Street Journal just reported that Bank of America, in reviewing 102,000 cases of problematic foreclosures, found problems “in 10 to 25 out of the first several hundred foreclosures it examined.”
Both banks and regulators are claiming that the problems are simply process-oriented document errors that aren’t really causing harm to the public at large. I suspect that no one really knows the extent of the problem, or the potential liability. What we do know is that title insurers are demanding indemnification.
With that in mind, it would seem prudent to require additional capital buffers for systemically significant institutions until the extent of the foreclosure fraud crisis is understood, or until title insurers decide that they no longer need indemnification for increased risk. It may also be useful to conduct a new round of stress tests to determine the resilience of the financial system with respect to these serious problems.
Member of Congress
Be sure to see the overview of MERS legal cases in the Think Tank: “As the mortgage meltdown has spread and deepened nationwide, courts must grapple with challenges to efforts to recover on defaulted mortgages. The challenges involve a complex mix of legal concepts and principles. Everything from contract law, state statutory foreclosure law, negotiable…Read More
Sample Letter Sent to Public Companies on Accounting and Disclosure Issues Related to Potential Risks and Costs Associated with Mortgage and Foreclosure-Related Activities or Exposures In October 2010, the Division of Corporation Finance sent the following illustrative letter to certain public companies as a reminder of their disclosure obligations to consider in their upcoming Form…Read More
Please welcome Foreclosure Crisis Weekly, a new publication by Charles Hugh Smith, dedicated to documenting the often-amazing foreclosure crisis. Since we can expect the crisis to unfold for years to come, the Weekly will undoubtedly have a reliable source of material for quite some time. > > from Charles Hugh Smith
Keith Jurow , Ph.D., has been researching and writing about the housing market debacle around the U.S. with an eye for issues that are frequently overlooked or ignored by the media. This article was originally published on www.realestatechannel.com where his in-depth stories have been regularly featured since March 2010. Keith is a former senior economic writer…Read More
Yesterday morning, I had The Misinformation Hour on TV as I got dressed for work. One of the comments that was made – “No one was wrongly thrown out of their home” — was repeated or ignored by hosts and guests alike. This is patently demonstrably false, and yet no one challenged it. The banks…Read More
Yet another of our brutal mortgage linkfests: Investors are beginning to sue, there are protest over HAMP, and foreclosure probes are happening. Here’s our round up: • COP Hearing on TARP Foreclosure Mitigation Programs: On Wednesday, October 27 at 10:00 a.m., the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) held a hearing…Read More