FedUpUSA

Archive for the ‘BAC’ Category

This is so predictable, it’s ridiculous, and apparently, the market is not fooled this time round.  It was announced on the major media networks that Warren Buffet was ‘investing’ $5 Billion in Bank of America.

Such was the claim on CNBS just a few minutes ago.

From CNN Money:

Taxpayer-owned Fannie Mae just bought the servicing rights to a bunch of bad loans from the struggling Bank of America. Where does it end?

By Abigail Field, contributor

FORTUNE — Taxpayers may not realize it, but they just bailed out Bank of America again, this time to the tune of more than a half billion dollars.

The Charlotte, NC-based bank was one of the biggest recipients of bailout funds during the financial crisis. But Bank of America (BAC) continues to face deep problems related to its troubled mortgage portfolio and investors have battered the stock, which has plunged over 40% so far this year. That’s escalated concerns that the bank may need to raise more capital. Yves Smith at Naked Capitalism has even started a BofA death watch.

But apparently the federal government is determined to resurrect BofA: the Wall Street Journal reports the feds have just used Fannie Mae, which is controlled by the U.S. government, to infuse BofA with $500 million and ease one of the bank’s biggest headaches.

Yesterday afternoon on CNBC, Bank of America CEO Brian Moynihan mentioned that five of BofA’s six businesses were making money. The one black spot was its massive portfolio of problematic mortgages and the liabilities flowing from it. Moynihan also mentioned that BofA had just sold some “mortgage servicing rights” as part of its balance sheet strengthening efforts, but he didn’t elaborate.

According to the WSJ, Fannie Mae spent $500 million to buy the servicing rights to a big chunk of the “seven million loans still causing the most problems.” Although the $500 million is a paper loss to BofA, in that the rights were “originally worth more,” it looks like BofA is still getting a good deal because the portfolio’s “value is expected to deteriorate further.”

In fact, the deal is worth much more than $500 million to BofA, because getting rid of those servicing rights lifts a huge cost burden off BofA’s shoulders. And if securitized loans are involved, which they most likely are, the sale also limits the BofA’s potential liability to investors for its current servicing violations. Finally, the $500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to “deteriorate further,” the goal of the intervention can only be to fix Bank of America’s capital structure, which is easier for the government to do if it overpays for the rights.

In short, purchasing these servicing rights was another Troubled Asset Relief Program.

Read the rest.

I’m sure this has nothing to do with their stock chart looking like this…and that they might be having capital raising issues.

Do you know where YOUR deposits are?

Just so all of you are clear:  Bank of America just got over $500 Million in taxpayer money, but in just a few days, the “Supercommittee” of Congress is going to convene so it can raise your taxes and cut inconsequential things like Social Security, Medicare and Unemployment benefits.  No, no.  We can’t afford those.  We can only afford to keep giving money to the insolvent banking institutions so they can also keep handing out money to bankroll political campaigns.  YOU ARE MEANINGLESS!

ARE YOU GETTING THE PICTURE YET?  Now maybe you can understand what has been going on in London.

OK, how much is this one going to cost us all?

Bank of America Corp., the biggest U.S. lender by assets, paid $2.8 billion to Freddie Mac and Fannie Mae after the U.S.-owned firms demanded the company buy back mortgages they said were based on faulty data. The bank rose as much as 5.6 percent in New York trading.

So BAC pays out $2.8 billion.  What was and is the loss that was potentially going to be shoved up their tails on this deal?

This, incidentally, does not cover servicing problems, which means it’s arguable that if transfers weren’t made it won’t cover that either.  This remains an unknown.

AGAIN: How much money is the taxpayer on the hook for as a consequence of this arguably unlawful allocation of Federal (that is, tax) money from the government to BAC on a “present value” or even “reasonably-foreseeable loss” basis – without a bill originating in The House?

Listen up people….if you borrowed money from Countrywide Financial Corporation (CFC) between the years of 2003 and 2007,  you MUST read this.  While this lawsuit is in California, the fact of the matter is Countrywide (now part of Bank of America) did not confine their fraud to merely that state.  Countrywide made home loans in every state in this country.  They are, according to this Complaint, one of the primary reasons we had the huge housing bubble.  They purposely drove up prices of homes, as you will see in the excerpts from this Complaint, specifically targeting people who COULD NOT PAY.  This means the prices of homes in your neighborhood falsely went up, increasing the cost of borrowing for EVERYONE and putting homes further and further out of reach of the average American until many had no other choice but to borrow using one of these ‘creative mortgages’ – (pick-a-pay, no-doc, low-doc, etc.), which Countrywide then underwrote and re-sold in bulk for pennies on the dollar, thereby making money off of you while you went broke.  If you’re facing foreclosure or even if you aren’t, this is something you MUST read.  Time to stand up and stop the raping of the American public.  This time, the little guy CAN beat the bank.

Karl Denninger from Market-Ticker has summarized as follows:

This is an extremely-important case folks.  The pleadings here, like the case in Kentucky, lay the table in terms of the games that were played during the “Rah-Rah” years.

I am going to provide some excerpts via screenshots, and a link to the file containing the entire conformed copy in PDF format.  Due to the PDF being protected against changes, SCRIBD will not allow me to upload it – I have asked for a copy without the protection and if I get it, will update this Ticker accordingly.

Let’s start with the “meat” of the alleged violations:

And the first “meaty” part of the complaint….

In other words, Countrywide is alleged to not only have made bad loans, but also to have intentionally inflated appraisals.

Oh, that’s rich.  So not only (it is alleged) did Countrywide bamboozle borrowers, they also bamboozled investors.

There’s the base of it all….

Of course there’s the famous “let’s hide Waldo” game once the gig is pretty much up.  After all, if we have to produce the documents, well, our goose might be cooked – and that would be bad.

So what else is presented in here?  Oh, all sorts of good stuff.  Here’s a sampling:

That sounds like a problem to me……

Ding ding ding ding ding ding! 

One of the keys to this mess is that the lenders knew full well that the borrowers could not pay “as agreed”, yet made the loans anyway.

 

You mean basically everything important about the loans, their quality, who they were going to be sold to, why and how was all bogus?  And in addition, the price to be sought from investors exceeded the income stream that could be achieved even if nobody defaulted at all?

Heh, that’s a good gig if you can get it – and if you can find a way to do it legally.

Are there some facts behind this?  Oh it appears there are…

Oh my.  2004 eh?  I seem to remember tAngelo on CNBS making multiple appearances talking about how his company was going to take market share from all these subprime lenders that collapsed, and this was going to be great for his company.  Indeed, I remember chortling at the time that I believed he was a lying SOB, and of course the so-called “Fantastic Mainstream Media” lapped it up – and helped support his stock price.

It appears that the intrepid attorneys who filed this action remember that too…. and the pages surrounding 100 in the complaint document a whole bunch of them, including statements in 10Ks and 10Qs that, it is alleged, were flatly false.

And, of course, there’s this one, which I have referred to many times over the last three and a half years:

I distinctly remember the cheesy suits and ties, not to mention the sprayed-on-looking tan.

As I have repeatedly pointed out, the entire intent of these loans was not to be a mortgage at all.  It was, I allege, more akin to an asset-stripping scheme where the borrower would be effectively forced to come back to the lender after a couple of years when the teaser expired or the inevitable reset or recast occurred and effectively hand over his accumulated “appreciation” in price through yet more fees to be paid to the “lender.”

I believe that for all intents and purposes, from the lender’s point of view, this was nothing more than renting the house, as passing of a clear title to the buyer was never part of what was contemplated by the lender – but of course the borrower wasn’t told this in advance – or at all.

There’s much more in the complaint, but this will do for a start.

Incidentally, the banks tried to get this removed to Federal Court and kill it, and were rebuffed, so it appears that it’s headed to trial.  Plaintiff’s Bar 1, Banksters 0 thus far – I will be providing updates on this case as I become aware of them.

To contact the attorneys involved (if you believe you might have an issue related to this) view the PDF – contact information is found right on the top, including email addresses – use them.

Link to PDF

Bank of America Forecloses On House That Couple Had Paid Cash For

By Tony Marrero, Times Staff Writer

SPRING HILL — Charlie and Maria Cardoso are among the millions of Americans who have experienced the misery and embarrassment that come with home foreclosure.

Just one problem: The Massachusetts couple paid for their future retirement home in Spring Hill with cash in 2005, five years before agents for Bank of America seized the house, removed belongings and changed the locks on the doors, according to a lawsuit the couple have filed in federal court.

Early last month, Charlie Cardoso had to drive to Florida to get his home back, the complaint filed in Massachusetts on Jan. 20 states.

The bank had an incorrect address on foreclosure documents — the house it meant to seize is across the street and about 10 doors down — but the Cardosos and a Realtor employed by Bank of America were unable to convince the company that it had the wrong house, the suit states.

“Their own real estate agent told them, and nevertheless Bank of America steamrolled right ahead,” said Joseph deMello, an attorney in Taunton, Mass., who is representing the couple. “This is a nightmare for anyone, and it affected my hard-working clients a lot.”

The Cardosos are seeking unspecified damages from Bank of America. The company showed negligence, trespassed and caused the couple emotional distress and financial hardship, especially because a tenant renting the home at the time got worried and left, according to the complaint. It’s still unclear if the couple’s credit rating has been affected, deMello said.

The suit names other defendants listed as “John Doe” who could include “employees, agents, contractors or other persons, ordered, hired, or told by BOA to trespass on the plaintiffs’ property and to dispose of the plaintiff’s personal possessions.”

The suit also charges the company with defamation and libel. DeMello said the Cardosos are part of a Portuguese community in the area, and the foreclosure tarnished their reputation.

Charlie Cardoso is an unemployed construction worker, and his wife is disabled. They paid $139,000 for the three-bedroom pool home in the tidy neighborhood a few blocks south of Spring Hill Drive, records show. It was Charlie’s life savings, the complaint says.

“We have a lot of friends there, and all the time we’ve been telling them the house has been paid (for),” a tearful Maria Cardoso said in an interview with WCBV-TV in Boston last month.

The couple, reached at home in New Bedford, Mass., referred a St. Petersburg Times reporter to deMello.

According to the complaint, here is what happened:

Last July, the couple’s tenant called the Cardosos in a panic. The single mother of two teenagers accused the couple of lying when they told her she could rent the house as long she wanted. Three men were there to clean out the house and change the locks, she told them.

Charlie Cardoso talked to a real estate agent for Bank of America, who said he would inform the company that it had the wrong house. The couple thought that was the end of the ordeal.

It wasn’t. A landscaper Bank of America hired in August to mow the grass on the property broke a fence to bring in his equipment. The tenant got spooked and moved out just before Christmas.

On Jan. 5, a friend of the Cardosos who was helping the tenant pick up belongings found men putting a lock box on the front door. The workers said the house belonged to Bank of America. The friend called the Cardosos.

When Charlie Cardoso called the bank, a representative told him there was a mistake, the problem would be fixed, and he would get a return call. The call never came. The lock box remained.

Four days later, Cardoso and his son drove to Florida, missing the homecoming of another son who was returning from Iraq for a two-week leave.

Cardoso had to prove to police that he owned the house. The next day he broke in through a back door and used bolt cutters to remove the lock box. The water and electricity had been turned off, and pipes had frozen.

The couple filed suit 10 days later.

Possessions the couple had stored at the home, including photos, clothes, tools and small appliances, had been removed and are presumably lost, the complaint states.

In September, three months after Bank of America started foreclosure on the Cardosos, it also foreclosed on the nearby home, records show.

The bank declined to comment to the Times beyond an e-mailed statement.

“We have reached out to the Cardosos’ representatives and hope to have the opportunity to work with them to properly assess and address their allegations,” the statement said. “We are reviewing the allegations in the lawsuit, the actual events that led to them and the causes of those events, and will consider any hardship that resulted.”

Beyond financial damages, the Cardosos want something else.

“Bank of America or somebody should apologize,” Charlie Cardoso said during last month’s television interview.

At least one bank has acknowledged the record number of foreclosures from the mortgage meltdown has increased the likelihood of such mistakes.

Citi-Residential started the foreclosure process on a home in Kissimmee in 2008 — changing the locks and emptying the pool — even though the owner, who lives in London, didn’t have a mortgage with the company, according to a report by Orlando TV station WFTV. Company officials said the high number of foreclosures they were dealing with in Central Florida contributed to the error.

DeMello said he has been fielding calls from other homeowners throughout the country with similar complaints.

As for the Cardosos, they still want to retire in Florida.

“They just don’t know if they’re going to be able to be in that neighborhood because of the uncomfortable feeling they have right now,” deMello said. “Hopefully that will change.”

Times researcher Shirl Kennedy contributed to this report. Tony Marrero can be reached at tmarrero@sptimes.com or (352) 848-1431.