The mortgage mess gets more complicated every day. Here are a sampling of stories that shows how.
Bank of America, JPMorgan Get Texas Subpoenas on Foreclosures
Bloomberg reports Bank of America, JPMorgan Get Texas Subpoenas on Foreclosures
Bank of America Corp., JPMorgan Chase & Co. and seven other banks or loan servicers were subpoenaed by Texas Attorney General Greg Abbott for information about their foreclosure practices, a spokesman said.
“The state is subpoenaing information and documents,” Jerry Strickland, the spokesman, said yesterday in an interview. He didn’t elaborate. The state also subpoenaed Ally Financial Inc., CitiMortgage Inc. and Wells Fargo & Co
The Texas subpoenas followed letters sent by Abbott’s office to 30 loan servicers on Oct. 4, asking them to halt foreclosures in the state pending a review of their practices.
Abbott asked banks then to identify employees who filed faulty affidavits or other documents in the state and identify foreclosures that used such documents. He also asked lenders and servicers to halt all sales of properties previously foreclosed upon and stop all evictions.
Twenty-six of those companies responded to the letters, according to a spreadsheet of answers sent yesterday by Strickland.
Class Action Filed Against Bank of America For Foreclosure Fraud
Bank of America has been hit with a class action on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules.
The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of “an undisciplined rush to seize homes” through “pervasive and willful disregard of knowledge, facts and statutes.”
Bank of America has filed foreclosure proceedings on many mortgages in New Jersey without holding the necessary rights as the mortgagee or assignee at the time of foreclosure, the suit says.
“Many thousands of foreclosures are plainly void under statute and settled New Jersey case law. Many borrowers never obtain statutorily required notices, and many foreclosure suits are filed entirely based in inaccurate recitations concerning ownership of the mortgage, the note, or the assignment,” the suit says.
The suit was brought by Lawrence Friscia, head of a Newark firm that counsels distressed homeowners, and his associate, Jonathan Minkove, who say they’ve found that Bank of America regularly negotiates binding agreements to modify mortgage terms and then fails to honor the terms.
Fed’s ‘Pit Bull’ Takes on Bank of America in BuyBack Battle
Bloomberg reports Fed’s ‘Pit Bull’ Takes on Bank of America in BuyBack Battle
Kathy D. Patrick is a Houston lawyer who spends her Sundays teaching children about God. The rest of the week, according to one attorney who knows her, she can be “as frightening as a pit bull on steroids.”
Her law firm, Gibbs & Bruns LLP, is a 30-lawyer outfit that says it specializes in “bet the company” litigation. This month, it reached a settlement with JPMorgan Chase & Co. and Bank of Montreal stemming from an alleged fraud at a Canadian gold company. Earlier this year, Goldman Sachs Group Inc. and UBS AG settled with the firm over the sale of $550 million in mortgage-backed securities. Patrick reached that settlement on behalf of her clients just two months after filing suit.
Patrick, 50, is “fearless and tenacious,” said Dan Cogdell, a Houston criminal-defense lawyer who said she is capable of pit bull-like aggressiveness “if the need be.” If she succeeds in getting Bank of America to settle, it may trigger more calls for buybacks in the $1.4 trillion market for so-called non-agency mortgage securities, which lack government backing.
Bank costs from repurchasing mortgages in such securities may total as much as $179.2 billion, including expenses related to suits against bond underwriters, Chris Gamaitoni, a Compass Point Research and Trading LLC analyst, estimated in August.
Bair Says Regulators Will Uncover More Flaws in Foreclosures
The understatement of the month award goes to Sheila Bair at the FDIC who says Regulators Will Uncover More Flaws in Foreclosures
Regulators are likely to discover more problems related to loan servicing by some of the biggest banks as they probe claims that documents were mishandled, Federal Deposit Insurance Corp. Chairman Sheila Bair said.
“We are going to get into more and more problems with the issues that are surfacing now on servicing,” Bair said today at a housing conference in Arlington, Virginia. Resulting litigation could “ultimately be very damaging to our housing markets if it ends up prolonging those foreclosures that are necessary and justified,” she said. Bair didn’t provide details on what other problems she thought might arise.
“Ultimately this problem will require some type of global solution,” she said. “In developing that solution, I would suggest that all interested parties consider some type of triage on foreclosures” such as safe harbor relief for vacant properties or interest-rate reductions for borrowers.
Bair said she doesn’t think congressional legislation will be needed to address the issue.
If you get the idea foreclosure fraud is going to trigger a tangled mess of lawsuits and countersuits, you have the right idea.
This can easily drag on for years unless (and perhaps even if) Congress gets involved.
Mike “Mish” Shedlock