Blog Archives
HUD Audits Accuse Major Lenders of False Claims Fraud
The Huffington Post reported late yesterday that five of the country’s largest mortgage lenders may have defrauded taxpayers by filing false claims with the Federal Housing Administration (FHA). Confidential audits conducted on Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial (formerly GMAC) provided information which has now been referred to the Department of Justice for a decision on filing charges.
The author of the article, Shahien Nasiripour, said the Inspector General (IG) of the Department of Housing and Urban Development (HUD) conducted five separate investigations in February and March and concluded that the banks filed false claims against the Federal Housing Administration, a violation of the False Claims Act, a Civil War-era law.
According to the Huffington Post, “The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.
“The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.”
Apparently Bank of America and one other company refused to cooperate with the investigations but the BoA audit finds that the company failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October. Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.
The Huffington Post quoted a federal official as saying that most of the targeted banks have not seen the audits but they are generally aware of the findings.
The HUD actions are the latest in a series of investigations, discussions, and proposed settlements between lenders and mortgage servicers arising out of the housing and foreclosure crisis. Earlier this week the New York Attorney General Eric T. Schneiderman was said to have requested documents and requested “discussions” with three major banks apparently regarding the institution’s securitization activities prior to the crisis (FULL STORY). A task force composed of the 50 state attorneys general has been negotiating a settlement with major mortgage servicers, most of which are owned by the major banks, over claims of wrong doing related to foreclosures.
Also according to the Huffington Post, this week the mortgage servicers under investigation by the attorneys general offered $5 billion to set up a fund to help distressed borrowers and settle claims of inappropriate foreclosures. “That offer — also floated by the Office of the Comptroller of the Currency in February — was deemed much too low by state and federal officials. Associate U.S. Attorney General Tom Perrelli, who has been leading the talks, last week threatened to show the banks the confidential audits so the firms knew the government side was not “playing around,” one official involved in the negotiations said. He ultimately did not follow through, persuaded that the reports ought to remain confidential, sources said. Through a spokeswoman, Perrelli declined to comment.”
The Huffington Post article is available at http://www.huffingtonpost.com/2011/05/16/foreclosure-fraud-audit-false-claims-act_n_862686.html
MUST SEE MSNBC Nightly News Fraudclosure Series
No End in Sight to Foreclosure Quagmire
Posted by Foreclosure Fraud on May 11, 2011MSNBC Foreclosure Crisis Reports
You can view/read the main text article for the special report here:
http://www.msnbc.msn.com/id/42881365/ns/business-personal_finance/
Foreclosure Crisis: The Mortgage Loan Modification Trap
http://www.msnbc.msn.com/id/21134540/vp/42938007#42938007
Foreclosure Crisis: The Whistleblowers
http://www.msnbc.msn.com/id/21134540/vp/42938009#42938009
Foreclosure Crisis: Manufactured Loan Documents
http://www.msnbc.msn.com/id/21134540/vp/42938017#42938017
Foreclosure Crisis: The Face of Foreclosure: One Family’s Story
http://www.msnbc.msn.com/id/21134540/vp/42938294#42938294
~
State AGs Offer New Settlement Terms to Mortgage Servicers
American Banker | Wednesday, May 11, 2011
By Cheyenne Hopkins
WASHINGTON — After months of stalemate, the state attorneys general have proposed new terms to the top five mortgage servicers that drop some controversial provisions of their first attempt at a settlement, including a push to force banks to reduce principal on thousands of mortgages.
The new offer, which was expected to be discussed at a meeting between the two sides on Tuesday, moves them closer to a final agreement, but does not detail how much state AGs are seeking in penalties for servicing issues uncovered by federal and state regulators.
Banks have privately said that they will not agree to a fine above $10 billion — far below a discredited $20 billion figure floated in the press two months ago — arguing that regulators have not provided evidence that servicing problems led to wrongful foreclosures.
The AGs are considering using whatever money they receive from banks to start a “cash for keys” program to help troubled borrowers move out of their homes and speed the foreclosure process by providing them cash incentives to leave. The funds are also expected to be used to promote mortgage counseling and offer some forebearance to troubled homeowners.
While banks have not agreed to the new terms, they do appear much more beneficial than an offer made in February, which demanded sweeping changes across the servicing industry, including principal reductions. By dropping that requirement, banks have already scored a key victory, observers said.
“It makes sense for principal reduction to be off the table because it creates a tremendous number of legal and logistical obstacles that in the context of a complex settlement are obviously difficult and distracting,” said David Dunn, a partner at Hogan Lovells law firm. “It makes sense for that to come off the table for the parties to reach agreement on issues that are less difficult and controversial.”
But the term sheet would still require the servicers to enact substantial changes to their practices, and could potentially raise issues in new areas.
Under the new terms, according to several sources, servicers would be required to allow borrowers that received a trial Treasury Home Affordable Mortgage Program modification — but which were denied a permanent mod — to reapply for the program.
The state AGs are also continuing to insist that servicers stop pursuing loan modifications and foreclosures at the same time, a process known as dual tracking that has drawn complaints from confused consumers.
The revised term sheet raised some new issues, including a proposed requirement for more documentation concerning the basis of knowledge for a foreclosure and notes and assignments. The state AGs are seeking to require documentation on the appropriate transfer and delivery of endorsed notes and deeds of trust at the formation of a mortgage-backed security. Essentially, servicers would have to document that they not only have positions with the MBS but document that the securitization was formed properly.
The new term sheet would also expand protections provided by the Servicemembers Relief Act to prohibit foreclosures on servicemembers who have been permanently moved to a post in a different state.
The new settlement also includes language that servicers must make borrowers aware of loss mitigation options prior to referral to foreclosure and facilitate loss mitigation applications. But the state AGs have dropped a demand that servicers provide to the Consumer Financial Protection Bureau their formulas for calculating the net present value of a home.
It remains unclear if banks are amenable to the proposed new terms. Also unknown is whether the new requirements would be extended to the rest of the servicing industry.
“I don’t know where the banks are with this because they are working on their federal consent orders,” said Lisa DeLessio, a partner at Hudson Cook LP. “I still think it’s very unclear what this means. If the AGs reach a settlement with the banks, what will this mean for the rest of mortgage servicers? What will happen to them?”
Despite the proposed new terms, many observers were pessimistic the two sides will reach a deal anytime soon. Fed up with the delay in the process, the banking regulators already moved forward in April with a cease and desist action against the top 14 mortgage servicers.
The state AGs, meanwhile, have been beset by doubts on their own side after the initial release of their 27-page term sheet. Several Republican AGs said pursuing principal reductions were a mistake, while GOP members on Capitol Hill criticized the CFPB’s involvement in the settlement process.
Some said the process was liable to continue to drag out.
“I do not believe the prospects of a full resolution in the short term are very high as there remain divergent views among all parties,” said Andy Sandler, co-chair of BuckleySandler LLP.
Others said the AGs will not force a settlement until they can provide more details on what exactly the banks did wrong. While the banking regulators released an 18-page report detailing deficiencies at the servicers, the state AGs have not spelled out what issues they uncovered.
“There has to be some more due diligence and investigation before they have the credibility to enforce a settlement,” said Josh Rosner, managing director of the research firm Graham Fisher & Co. “If they did a credible investigation of origination and servicing and detailed the findings of that investigation it would demonstrate how troubled the situation is and how deep the economic morass is.”
Since August 2007, which marked the beginning of the “foreclosure crisis”, MainStreet has provided guidance, direction and peace of mind to over 150 families. These families are from every walk of life and each of their mortgage situations is as unique as each individual tied to it.
Call US TODAY
MainStreet Resolutions is
Your Path to A Fresh Start!
1-888-728-3020
Are you in default or foreclosure? If you suspect you have been the victim of Predatory Lending here in Florida, suspect you might be a victim of fraud, suspect the lender who provided your mortgage may have been less than honest, or may have even purposely overvalued your property in the Appraisal, please contact me, Tiffany Arthur at mainstreetemail@aol.com or visit my website for more information at www.mainstreetresolutions.com We are interested in helping the homeowner find a permanent resolution to keep them in their home.
I-Team: The Secret Truth About Foreclosures
86-year old Collis McDuffie chokes back tears when he thinks about losing the home that he bought back in 1963, to foreclosure.
“When you go through what I’m going through. Lord have mercy,” McDuffie said, as he questioned his future.
“At my age, where am I going to go?”
His daughter Zella is blunt.
“And this is where the banks are making money. They’re making money off of people. It doesn’t matter. Who cares if you’re living on the streets,” said Zella McDuffie-Smith.
Making money off of people? Big banks profiting from foreclosures? That news stunned many South Floridians who responded to questions from the CBS4 I-Team.
“I think it’s wrong,” said one man.
“Well, appalled of course,” was a woman’s reaction.
Another woman told us, “I think it’s disgraceful. That’s what I think.”
This shopper in South Dade was very pointed, “That’s criminal.”
In fact, it just might be criminal.
Fifty state attorneys general are currently investigating the foreclosure fiasco.
Legal Services of Greater Miami’s Jaqueline Ledon is helping Collis McDuffie, fight to keep his home.
“The practical thinking is, why would a bank want to own a property, maintain it, pay the taxes… all that,” said Ledon.
According to some critics, the practical or old way of thinking doesn’t hold up anymore. Why? It’s estimated that 95% of all mortgages are not even owned by the bank that loaned you the money. Most banks have sold them off.
In the most simplistic terms… banks bundled mortgages much like a gift is boxed, wrapped and tied up with a bow.
That way, they looked safe to conservative investors, such as the people who buy long-term investments for pension funds.
But when the housing market unraveled, much like a bow comes untied, it left the investors holding, in essence, a nicely wrapped empty box worth very little.
In many cases… nobody even knows who really owns the mortgages anymore.
“They’re worthless,” said Ledon. “They’re worthless. The mortgage itself is worthless.”
Since the bank that originally made the loan sold it off, foreclosure is not even a risk to them anymore, according to Weston attorney Roy Oppenheim.
“Typically the way the servicers were compensated, they would receive more compensation through a foreclosure than through a modification,” Oppenheim explained.
So what is a servicer? It’s a bank or financial company that handles your mortgage, doing such things as collecting your monthly payment.
As a servicer, they get to collect fees, fines and penalties. Servicers are also the first in line to collect even more money once a property is repossed.
“And therefore, it was in their interest to have the foreclosure go through the process versus a modification,” Oppenheim told CBS4′s Chief Consumer Investigator Al Sunshine.
Basically, you, the borrower are asking for a modification from the very same people who can make more money from your foreclosure, than if they offered you a cheaper, or modified mortgage, in order to keep you in your home.
Isn’t that an inherent conflict of interest?” Al Sunshine asked attorney Oppenheim.
“The whole process is wrought with conflicts of interest. It’s just a rotten bag of apples,” Oppenheim concluded.
INVITE: TODAY Thurs Nov 11th: Fort Lauderdale Happy Hour for Combatants of Illegal Foreclosures
This is an extension of 4ClosureFraud’s West Palm beach Happy Hour in FORT LAUDERDALE. GO HERE: http://wp.me/pFWnq-3F6
YOU have something to share! Please come and join other Homeowners, Real Estate / BK / Title Attorneys, Realtors, Distressed Property Specialists, Bankers and others interested in Foreclosure Alternatives, Defense and Government policy.
Come join us at our 1st monthly Happy Hour in Fort Lauderdale, an informal gathering where we can relax, socialize, enjoy stimulating conversation, and use our collective brain power to make a positive impact on the Foreclosure Crisis that is rampant in our communities across the Nation.
According to the Center For Responsible Lending, (CRL) October 2010 Policy Brief, “To date, 2.5 million homeowners have already lost their homes and another 5.7 million are at imminent risk of foreclosure. Looking ahead, independent analysts have projected that between 10 and 13 million foreclosures will have occurred by the time the crisis abates.”
MainStreet promotes CRL’s recommendation that States REQUIRE loss mitigation analysis prior to foreclosure, that Lender’s and Servicer’s are transparent and accountable for their loss mitigation efforts, specifically through the HAMP PROGRAM and others promoted through our Government.
Hope to see you there!
HOST
Tiffany L. Arthur
Direct: 954-639-0003 xt 4
Fax: 954-342-2330
www.MainStreetResolutions.com
RSVP TO: tiffanylarthur@aol.com
EVENT INFO:
5:30 til ???
LOCATION:
MOJO
4140 N Federal Hwy
Fort Lauderdale, FL 33308
(SE side of Commercial and US 1)
(954) 568-4443
Website: http://www.mojofl.com
SPECIALS:
$5.00 bar bits and 2 for 1 drinks ….Thursday night all night. At 8pm live entertainment.
