FedUpUSA

Archive for the ‘Mortgage Industry’ Category

Interesting presentation with slides and video can be viewed here…

Related educational information:

1. Robosigners and Other Servicing Failures: Protecting the Rights of RMBS Investors
2. Association of Mortgage Investors Letter To JPMorgan Trust Administration RE: Notification of and Request to Address Pervasive Issues in RMBS Trusts
3. Ocwen Scoops Up Saxon Servicing Rights
4. Invitation: County Sheriffs’ Role in Protecting Individual Liberties
5. Live Webcast Wed May 4th 9AM EDT | Presentation to Michigan House of Rep on Mortgage Fraud by Bill Bullard and Curtis Hertel, Jr.

Oh my watch the rats scurry…..

Of the many financial reforms in Dodd-Frank, a requirement that lenders retain a share of the risk in mortgages they sell to investors seemed like a no-brainer. If lenders were on the hook, too, the thinking went, they would tighten standards and avoid the kind of defaults that contributed to the collapse of the housing marketand the financial crisis.

But now that a rule to implement this provision has been written, critics say the requirement will make it so hard to get a mortgage that it will further depress the housing market and undercut a struggling economy. “I’ve been in this business 32 years and I have never seen guidelines as tight as they are now,” said Scott Eggen, senior vice president for capital markets with PrimeLending, a mortgage lending subsidiary of Dallas-based Plains Capital Corp.

This is bad?

“The proposal as introduced will literally erase a decade of accomplishment in defining what is a responsible loan,” said David Berenbaum, chief program officer with the Coalition, an advocacy group for community organizations that support affordable housing and equal access to credit. “It is going to narrow the range of loans that lenders are willing to originate to the point that only consumers with the best credit scores—meaning white and affluent consumers—are going to get loans.”

Accomplishment?  What are you smoking?

Look folks, here’s the record on this “accomplishment” — median household income went from $29,943 to $49,445, an increase of 65% from 1990 to 2010.

Household mortgage debt went from $2.34 trillion to $9.97 trillion during the same time, or an increase of 326%.^{Source: Fed Z1}

Accomplishment? What accomplishment?

There has been no accomplishment.  There has only been a false hope sold to the putative homeowner and massive price inflation in homes which is supported not by fundamental values or improvements in the common man’s earnings power but rather by financialization of a consumer durable good into a speculative mania.

Regulators defined qualifying residential mortgages very conservatively, requiring a 20 percent down payment, caps on a borrower’s debt-to-income ratio, restrictions on loan terms, and other limits designed to restrict the number of loans that would qualify for the exemption.

Good.  The definition of a “sound mortgage” for fifty years was 20% down, 28% front end ratio (or “PITI” to income) and 36% back end ratio (or all debt service to income.)

Of course everyone wants to claim that they can “hedge off” the risk and be “safe” writing loans that violate these strictures in one form or another.  The problem with such claims is that whether they’re true or not is immaterial to the underlying reality: The purpose of these rules is not solely to prevent mortgage-related meltdowns – it is to put a stop to predicating financial pyramid schemes on houses!

These rules are not only appropriate they should have always been present.

There are times that one has to wonder out loud exactly who’s passing envelopes full of $100 bills around to State Attorneys general – or whether what’s being passed is threats instead.

(Reuters) – State attorneys general are negotiating to give major banks wide immunity over irregularities in handling foreclosures, even as evidence has emerged that banks are continuing to file questionable documents.

A coalition of all 50 states’ attorneys general has been negotiating settlements with five of the biggest U.S. banks that would include payment of up to $25 billion in penalties and commitments to follow new rules. In exchange, the banks would get immunity from civil lawsuits by the states, as well as similar guarantees by the Justice Department and Department of Housing and Urban Development, which have participated in the talks.

So now perjury is ok?  Oh, and not just past perjury either: According to Reuters robosigning is still going on!

It takes a special set of brass balls to get caught submitting bogus documents in a courtroom thousands of times, negotiate for some way to not get bent over the table (and perhaps imprisoned!) for doing it, and while negotiating some sort of settlement continuing to do the same thing that got you in trouble in the first place!

We’ve seen this in the defense and drug industry in the past, but this is particularly outrageous for the simple reason that it touches nearly everyone, and is so “in your face.”

I am not arguing that there should be “free houses” handed out.  But at the same time you cannot allow banks – or anyone else – to make a mockery of the justice system.  This pattern of behavior is extremely dangerous, for it risks the people deciding that the law no longer has meaning at once that happens all pretense of civil order is lost.

Longtime readers know I’ve been covering the registers of deeds, county officials who wield some degree of power in the case of foreclosure fraud, because they hold in their offices a good deal of physical evidence about mortgage assignments and associated documents.  Jeff Thigpen, the register of deeds for Guilford County, North Carolina, did a preliminary investigation of a set of documents in his office and found widespread fraud, particularly from forged documents.  Thigpen’s key partner, John O’Brien, a register in Southern Essex County, Massachusetts, has been fighting this fight as well.  He vowed not to record any documents he suspected of fraud, which would slow some foreclosures.  He demanded that MERS pay millions of dollars in back recording fees which were not paid when banks tracked their own mortgage transfers on a database.  But O’Brien hadn’t done the work of auditing his office.  Until this week, at a convention for county registers.

At the Annual Conference of The International Association of Clerks, Recorders, Election Officials and Treasurers (IACREOT), Register John O’Brien revealed the results of an independent audit of his registry.  The audit, which is released as a legal affidavit was performed by McDonnell Property Analytics, examined assignments of mortgage recorded in the Essex Southern District Registry of Deeds issued to and from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America during 2010.  In total, 565 assignments related to 473 unique mortgages were analyzed.

McDonnell’s Report includes the following key findings:
• Only 16% of assignments of mortgage are valid
• 75% of assignments of mortgage are invalid.
• 9% of assignments of mortgage are questionable
• 27% of the invalid assignments are fraudulent, 35% are “robo-signed” and 10% violate the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could only be determined for 287 out of 473 (60%)
• There are 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership can be traced.

McDonnell told O’Brien… “What this means is that the degradation in standards of commerce by which the banks originated, sold and securitized these mortgages are so fatally flawed that the institutions, including many pension funds, that purchased these mortgages don’t actually own them because the assignments of mortgage were never prepared, executed and delivered to them in the normal course of business at the time of the transaction.  In a blatant attempt to engineer a ‘fix’ to the problem, the banks set up in-house document execution teams, or outsourced the preparation of their assignments to third parties who manufactured them out of thin air without researching who really owns the mortgage.”

This is why, and I’ll get into this in a future post, the Bank of America settlement with investors, which appears to indemnify the bank and facilitate a conspiracy of silence between banks and investors on these securitization issues, is a really raw deal.  It “solves” one problem, BofA’s exposure to the investors in its mortgage backed securities.  But it in no way solves the much larger problem, namely who actually owns these mortgages.  An independent auditor, after looking at the evidence, could not figure it out.

Predictably, after O’Brien vowed not to record fraudulent documents, the banks started getting back replacement documents, including five from Bank of America, all with brand-new signatures and officers and notaries.  They just whitewashed and redid the documents. ” These Lenders chose not to sign my affidavit, but rather to submit completely new documents,” O’Brien said.  “I believe the Bank’s actions speak louder than words and show their consciousness of guilt.”

O’Brien is engaged in some real activism.  He told every homeowner in his district to check the records at his website and see if their home mortgage documentation has been robo-signed.  He’s facilitating consumer protection complaints through the Massachusetts AG.  He has provided letters that homeowners can print out and send to their servicers, demanding their full chain of title pursuant to federal law.  This is his perspective:

O’Brien asked McDonnell what this means for his constituents.  “It is vitally important for your constituents to know that if they are in foreclosure now or if their homes have been foreclosed upon, they can stop the foreclosure from proceeding, or institute a court action to vacate a completed foreclosure. The Massachusetts Supreme Judicial Court has established the law of the land in its decisions U.S. Bank, N.A. v. Ibanez and Wells Fargo Bank, N.A. v. LaRace and I can tell you that every single assignment of mortgage that was recorded for the purpose of foreclosing the homeowner is invalid, overtly fraudulent, or criminally fraudulent. My findings also show that your constituents who are not in foreclosure, and have never been delinquent in their payments also have clouds on title due to the recording of defective and invalid discharges and assignments of mortgage.”

“My registry is a crime scene as evidenced by this forensic examination,” stated John O’Brien. “This crime that has affected thousands of homeowners in Essex County who, through no fault of their own, have had their property rights trampled on and their chain of title compromised. This evidence has made it clear to me that the only way we can ever determine the total economic loss and the amount damage done to the taxpayers is by conducting a full forensic audit of all registry of deeds in Massachusetts. I suspect that at the end of the day we are going to find that the taxpayers have been bilked in this state alone of over 400 million dollars not including the accrued interest plus costs and penalties. The Audit makes the finding that this was not only a MERS problem, but a scheme also perpetuated by MERS shareholder banks such Bank of America, Wells Fargo, JP Morgan and others. I am stunned and appalled by the fact that America’s biggest banks have played fast and loose with people’s biggest asset – their homes.  This is disgusting, and this is criminal,” said O’Brien.

We literally have two registers of deeds doing the work that the federal government and state regulators should have engaged in for the last decade.

FireDogLake

Oh boy, and then the taxpayers – that’s you and I – bailed out both firms, and in fact we continue to right now, with Geithner, under Obama’s direction, continuing to pour in the cash.

The first sign of what would ultimately become a $3 billion fraud surfaced Jan. 11, 2000, when Fannie Mae executive Samuel Smith discovered Taylor, Bean & Whitaker Mortgage Corp. sold him a loan owned by someone else.

But did Fannie tell anyone, like, for instance, The FBI?

Nope.

Fannie Mae officials never reported the fraud to law enforcement or anyone outside the company. Internal memos, court papers, and public testimony show it sought only to rid itself of liabilities and cut ties with a mortgage firm selling loans “that had no value,” as Smith, the former vice president of Fannie Mae’s single family operations, said in a 2008 deposition.

Just dump it off on someone else, right?  And who else?  Well, that would be the other GSE, who they also didn’t tell….

Taylor Bean would have collapsed in 2002 “but for the fraud scheme,” according to prosecutors. It also survived because Freddie Mac began picking up the company’s business within a week of Fannie Mae’s cutoff, Jason Moore, Taylor Bean’s former chief operating officer, said in an interview.

Isn’t that nice?

Oh yeah, and this little charade factored into the Colonial Bank collapse too.

But all of it would have ended immediately had the government’s sponsored enterprises done what they had an obligation to do – turn over evidence of criminal lawbreaking to the authorities.

They did not and as a result serious financial harm was done – and now we, as taxpayers, get to pay for it.

Oh, and both Fannie and Freddie?  They’re still in business, now 80% owned by Treasury.  That’s you and I, who were bent over the table not just once, not twice, but each and every day this crap is allowed to continue and these firms are not shut down and the parties responsible for this intentional malfeasance remain free without prosecution.

Incidentally, Geithner and Obama, by supporting these firms, are both personally responsible for this crap continuing, and you, the taxpayer, being repeatedly screwed.

The Market-Ticker

Call for Experiences
Deposing Employees of Document Mills

Action Date: June 18, 2011
Location: West Palm Beach, FL

Linda Green’s name may appear on two million mortgage assignments, yet she has never been deposed. While there are a few depositions of robo-signers from document mills, in many cases, the document mills seek AND RECEIVE protective orders – arguing that such discovery is burdensome and meant only to harass. If you are a foreclosure defense attorney or a pro se homeowner fighting foreclosure, please send your experiences with this issue for an investigative report on Fraud Digest to szymoniak@mac.com.