Like The Missing Kiszka, Note Goes Missing

May 16, 2012 By Steve Dibert Leave a Comment

…And The Lawyers Want It Back!

Kimberly Miller, Palm Beach Post

A suburban West Palm Beach foreclosure case has even bank employees confused, with internal emails that question whether the wrong entity is repossessing the house – but that then decide to move forward anyway.

Bank attorneys now want to purge the court file with the messages, which were filed mistakenly. The emails also mention trying to avoid mounting community association fees.

“I think the emails basically say the plaintiff doesn’t own the loan, and it belongs to a different lender,” said attorney Peter Snyder, who is representing Abby Lopez. “It may be Bank of America, or Bank of America could just be the servicer. That’s where it all gets crazy.”

Homeowner advocates say the three email exchanges exemplify one of their biggest concerns – that the wrong bank will take their home.

The concern arose when boom-time loans were repeatedly bundled or broken into pieces and sold by the original lender to trusts, investors or other lenders. As a result, a bank may be responsible for collecting payments and daily loan oversight, but not be the true owner.

The emails in Lopez’s case were filed in October with a sworn “affidavit of indebtedness” that details how much Lopez owes on the mortgage, and asserts that Bank of America is the servicer of the loan.

But Bank of America is not listed as a plaintiff in the case. HSBC Bank USA, “as trustee for the holders of Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-Bar1 Mortgage Pass-Through Certificates,” is the party named as foreclosing on the home.

Felix Salmon Says BofA’s Principal Write-downs Are Only The Beginning

May 15, 2012 By Steve Dibert Leave a Comment

Steve Dibert, MFI-Miami

I have to admit when Bank of America announced last week that they were going to begin issuing principal write downs for a select group of homeowners I was and still am skeptical of anything the banks say will benefit homeowners. I still believe this announcement by Bank of America is similar to Carnival Barkers luring people into rigged ring tossing tents at travelling carnival.

Then after I made these comments I read a blog by one of my favorite financial bloggers, Felix Salmon from Reuters. He disagrees with me and believes this the beginning of universal mortgage write downs by the vast majority of mortgage lenders. I don’t share Felix’s optimism because I have clients who have been burned by the banks by believing what they tell them.

Felix’s optimism is the reason I like his style. He’s an Englishman who doesn’t blog or write like an stereotypical English finance writer. Most English financial writers dress like the politicians from Stanly Kubrick’s A Clockwork Orange from 1971 and spout outdated Thatcheresque dogma from the 1980s while trashing Americans as if they live high atop some Ivory Tower like Edward Longshanks.

Felix Salmon has shattered that stereotype in a big way. He understands finance and along with Max Keiser are the two media types in the world that can breakdown very complex financial formulas and explain it so you don’t need a MBA in finance to understand what he’s talking about. He also writes with a sense of optimism and wonderment that is rare and at one time was considered American.

This why I found his Reuters editorial from last week so fascinating even though I disagree with his overall premise. He not only breaks down what has gone wrong in the past 4 years but actually gives some common sense approaches to fixing it. Here’s an excerpt:

So what should happen when people get into trouble making their mortgage payments on a house that is underwater? After 2008, banks tended to do one of two things. They waited for an interminable amount of time, then initiated foreclosure proceedings and kicked the family out of their home. Alternatively, they worked out a mortgage modification that didn’t reduce the amount owed by a single dollar, thereby maximizing the probability of a redefault and of the homeowner’s having to go through the same painful process all over again.

There are multiple ways of doing this better. The simplest is just for the banks to unilaterally reduce the principal amount owed on a mortgage. It’s much more effective, always, for a bank to reduce principal and keep the interest rate constant than it is to do what they tended to do after 2008, which was to keep the principal constant and reduce the interest rate. Why don’t they reduce principal? They don’t because doing so involves writing down the value of the mortgage on their books — something they’re bound to do sooner or later, but which they’d much rather do later than sooner.

You can read the whole article here. It’s worth the read.

Filed Under: Financial News, Steve's Blog Tagged With: Bank of America, economic meltdown, Felix Salmon, financial crisis, foreclosure, foreclosure crisis, foreclosure fraud, foreclosures, Housing Crisis, illegal foreclosures, mortgage backed securities, Mortgage Crisis, mortgage fraud, mortgages, principal write-downs, Reuters

Does R-I-C-O Spell Relief For BofA Homeowners?

May 13, 2012 By Steve Dibert Leave a Comment

Joel Sucher, American Banker

While shareholders queue up for a seat at the annual Bank of America extravaganza on Wednesday and the forces of Occupy get ready to mount major protests, a small group of lawyers plots its own campaign to take on what they call the “predatory mortgage banking cartel.”

They are pained at the lack of real regulatory enforcement actions in the wake of the financial meltdown, and angry about how easy it’s been for the megabanks – B of A, in particular – to “get over” on the American public, continuing a pattern of foreclosure behavior despite tongue-lashings by the Federal Trade Commission and Department of Housing and Urban Development.

So, how do they spell relief for this fraud-induced indigestion? R-I-C-O.

Yes, RICO, that iconic legal strategy developed in the 1970s – one with teeth – that spelled calamity for the bosses of the Genovese and Gambino crime families, restored some semblance of order to mob-run Teamster Local 560 in New Jersey, and sent the immensely popular mayor of Providence Rhode Island, Vincent “Buddy” Cianci, to the can for running his office as a financially self-serving criminal enterprise. But the case that took it beyond the boundaries of common thugdom was RICO’s successful prosecution of Wall Street junk bond peddler, Michael Milken. While controversial, the case emphasized the expansive nature of the statute in pursuing corporate crime, and the fact that RICO provides for both criminal penalties and a civil cause of action for financial damages, has this group of attorneys intrigued.

So, how might B of A qualify as a likely target? It’s definitely an “enterprise,” one of the criteria of a RICO prosecution. According to several lawyers, there’s a pattern of activities, mainly surrounding B of A’s 2008 acquisition of Angelo Mozilo’s Frankenstein, a/k/a Countrywide Financial, that provide potential prosecutorial fodder insofar as securities fraud and consumer protection violations are concerned.

Mortgage Settlement Monitor Wants To Hear Your Gripes

May 11, 2012 By Steve Dibert Leave a Comment

But Don’t Expect Any Help

Ben Hallman, Huffington Post

Have a complaint about the bank managing your home loan? Joseph Smith, the former North Carolina banking commissioner charged with enforcing the national mortgage settlement, would like to hear it.

On Thursday, Smith announced the launch of an online tool for attorneys and other advocates to report their clients’ mortgage servicing complaints. There is also a tool for homeowners to lodge a complaint directly.

“This allows me, as monitor, to hear complaints and learn more about advocates’ impressions of how the settlement is working,” he said. “Although I’ll extensively review reports and monitoring from the banks and my own team of auditors, it is still critical for me to receive information from the heart of each community this settlement serves.”

While filing a grievance may help the settlement’s top enforcer keep an eye on the banks — Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial — Smith does not have the power to investigate individual complaints or help homeowners. This speaks to the limitations of the mortgage settlement, which expires in three years and was never intended to give individual homeowners an opportunity to have their appeals for help directly heard.

Under the settlement, banks pledged to overhaul how they manage troubled loans. That includes eliminating “dual-tracking,” the practice of banks pursuing foreclosure proceedings against homeowners who are at the same time seeking a trial loan modification. Financial institutions must also establish a single point of contact for troubled borrowers — a response to widespread complaints from homeowners that when they called for help, they never could speak to the same person twice.

Homeowners’ biggest complaint over the past few years is the lack of response from banks and the government to their claims about wrongful fees, misapplied payments and botched foreclosures.

Like The Missing Kiszka, Note Goes Missing

…And The Lawyers Want It Back!

Felix Salmon Says BofA’s Principal Write-downs Are Only The Beginning

Does R-I-C-O Spell Relief For BofA Homeowners?

Mortgage Settlement Monitor Wants To Hear Your Gripes

But Don’t Expect Any Help

Translation

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