Bank Trouble Linkfest

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

Category: Financial Press

PIMCO, NY Fed Notifies Countrywide of Failures

As discussed previously, this is no longer about deadbeat borrowers: Mortgage giant PIMCO has just issued a giant F$%@ You to Bof A’s Countrywide division. Participating in the FU is the NY Fed. And in case you forgot, PIMCO is an advisor to Uncle Sam. There are two issues (Reps & Warranties) that could be…Read More

Category: Legal

Do Underwater Homeowners Have Zero Cost Option on Home Prices?

Do underwater homeowners have a zero cost option on future movement of home prices? That seems to be the conclusion of the SF Fed, who note that for the upside-down borrower, there is merit in staying put. “Given the importance of falling house prices as a factor in defaults, it is natural to ask how…Read More

Category: Credit, Options, Real Estate

Foreclosure Fraud for Dummies, Part II

Be sure to see the second part of Mike Konczal’s series explaining the basics of the current foreclosure fraud crisis Foreclosure Fraud For Dummies, 2: What is a Note, and Why is it So Important? This is Part Two;  you should also read Part One . . .

Category: Credit

(This is a series giving a basic explanation of the current foreclosure fraud crisis from Mike Konczal; This is Part Two; you should also see Part One ) The SEIU has a campaign: Where’s the Note? Demand to see your mortgage note. It’s worth checking out. But first, what is this note? And why would…Read More

Category: Foreclosures, Legal, Think Tank

“This Is Criminal”: Foreclosure Process “Rife with Fraud”

“This Is Criminal”: Foreclosure Process “Rife with Fraud”
Aaron Task
Yahoo Tech Ticker, Oct 18, 2010 11:29am”this-is-criminal”-foreclosure-process-”rife-with-fraud”-barry-ritholtz-says-535513.html

Category: Media, Video

How BofA Can Prove No Foreclosures Were Invalid

Want to eliminate uncertainty from the REO / foreclosure market and legal system? One simple SarbOX affidavit filed with the SEC will do it: I hereby affirm that my staff (and I) have reviewed the current, pending and recently completed foreclosures. In no instances did we find any substantive errors, including: The wrong house being…Read More

Category: Corporate Management, Credit, Foreclosures, Legal, Real Estate, Regulation

The Foreclosure Mess-a Follow-up

The Foreclosure Mess-a Follow-up October 18, 2010 David Kotok > Wow, there were many, many emails in response to the recent piece entitled “Foreclosure Mess.” Here are some of those observations. Some folks missed the opening disclaimer and attributed the piece to me; that was their error. I did not write it [BR: The original…Read More

Category: Think Tank

China finally takes out the hammer

Following a variety of steps over the past year to cool their property market, most which had only a temporary influence, China finally used the hammer, a rise in official lending rates by 25 bps to 5.56%. This follows a report yesterday that prices of land for residential construction rose 11.7% y/o/y and last week’s…Read More

Category: MacroNotes

Dumb Bankers Are Everywhere

In the car on the way home from the studio last night, I had a conversation with a long experienced retail manager at a big shop/bank. He was frustrated with banking half of his bulge bracket shop. The conversation was astonishing to me, in that it did not reveal any systemic fraud or illegalities, but…Read More

Category: Corporate Management, Credit, Real Estate