GOP Stalk Mortgage Task Force Like Pedophiles At A Playground

April 27, 2012 By Steve Dibert Leave a Comment

George Zornick, The Nation

Republicans frequently criticize President Obama as an adversary of capitalism: they say he wants to “put free enterprise on trial” (Mitt Romney) or that the president believes the country’s problems “must be the fault of those people on Wall Street” (Mitch McConnell).

But oddly, when Obama announced in January the formation of the Residential Mortgage-Backed Securities working group, Republicans were completely silent. The working group’s stated purpose is to investigate and potentially prosecute major Wall Street firms, but no Republican presidential candidate or member of Congress publicly criticized the effort.

Behind the scenes, however, Republicans are keeping a close eye on the group—and letting the members know they are watching. The Nation has exclusively obtained a letter to the working group from Representative Patrick McHenry, a North Carolina Republican with major Wall Street donors. The letter openly questions the purpose of the working group, and asks some intrusive questions about funding, staffing and expenses—and reminds the members that the House Committee on Government Oversight Reform, of which McHenry is a member, can investigate “any matter” it chooses.

The letter, which was sent to several members of the working group in early February, lays out seven questions and demands an answer within two weeks. The questions are:

1. Please explain in detail the mission and goals of the Residential Mortgage-Backed Securities Working Group.

2. Please provide a detailed accounting of the Residential Mortgage-Backed Working Group’s anticipated staffing, funding (both state and federal sources), and expenses.

3. Please distinguish in detail how the work of the Residential Mortgage-Backed Securities Working Group will differ from the existing work of the Financial Fraud Enforcement Task Force.

4. Insofar as the Financial Enforcement Task Force has achieved “limited success” and “has fail[ed] to produce any major prosecutions stemming from the housing crisis,” how will the Residential Mortgage-Backed Securities Working Group achieve different results?

5. The Office of SIGTARP recently announced a 72-month sentence for a defendant convicted of defrauding financial clients who sought mortgage modifications. If the Office of SIGTARP continues to pursue convictions stemming from illegal mortgage-related activities, please explain what enforcement gap the Residential Mortgage-Backed Securities Working Group will fill.

6. Please explain how the work of the Residential Mortgage-Backed Securities Working Group will be affected by any settlement agreement executed by state attorneys general and large financial institutions. Will such a settlement affect the Residential Mortgage-Backed Securities Working Group’s ability to pursue actions against the financial institutions who are parties to the settlement? If so, how?

7. To the extent that the work of the Residential Mortgage-Backed Securities Working Group is not duplicative or redundant and actually succeeds where other efforts have failed, will the settlement agreement with state attorneys general preserve all avenues of relief and compensation for any newly identified homeowner who was not in default yet foreclosed upon anyway?

The letter closes with a rather ominous reminder:

The Committee on Oversight and Government Reform is the principal oversight committee of the House of Representatives and may at “any time” investigate “any matter” as set forth in House Rule X. We request that you provide the requested information as soon as possible.

Less than one-in-five GSE loans hold a second lien

April 6, 2012 By Steve Dibert Leave a Comment

Jon Prior, Housing Wire

Less than 18% of Fannie Mae and Freddie Mac mortgages have a second lien, according to industry estimates provided to HousingWire.

Both government-sponsored enterprises guarantee a combined 29.2 million home loans, meaning roughly 5.1 million have a second lien attached, according to the analysis.

Federal Housing Finance Agency Acting Director Edward DeMarco said in a recent interview with the Financial Times that a massive first-lien principal reduction initiative would unfairly push more borrower payments to the big banks that hold those seconds.

The Treasury Department is working on a proposal with the FHFA to provide even more taxpayer dollars to Fannie and Freddie to write down principal for delinquent first-lien borrowers.

Anthony Sanders, a professor of finance with George Mason University, said it would be interesting to know the average second lien sizes, but such information has eluded analysts.

“Yes it does deflate DeMarco’s argument on a second bailout,” Sanders said. “But it doesn’t change his argument of firsts. I agree with him that forbearance dominates principal reductions.”

The FHFA is also afraid such a program would incentivize borrowers who are current on their loan to default in order to take advantage of such a program. DeMarco said recently three-in-four underwater homeowners are still making their payments.

The Outcome Of This Lawsuit Could Affect Most Securitized Loans

April 4, 2012 By Steve Dibert Leave a Comment

Why NY businesses should worry about BofA’s new MBS defense

Alison Frankel, Reuters

U.S. District Judge Mariana Pfaelzer of federal court in Los Angeles is poised to deliver a ruling in AIG’s mortgage-backed securities case against Countrywide that could have an impact on just about every company headquartered in New York. The issue: How long do N.Y. businesses have to bring fraud claims? Are they entitled to the benefit of the state’s generous six-year statute of limitations? Or, as Countrywide argues in a supplemental motion to dismiss filed on March 23, are companies headquartered in New York instead restricted to the generally stingier time limits in their states of incorporation?

To understand how this question arose in AIG’s MBS case, we have to back up a few steps. It’s no secret that in MBS litigation, there’s no more potent defense than arguments that investors waited too long to file suit. It’s a quick, clean way to excise big chunks of a plaintiff’s case, particularly because federal securities claims, with exceptions for American Pipe tolling (if you don’t know, don’t ask), are generally time-barred after three years under the statute of limitations or the more-obscure-until-MBS-litigation statute of repose. That’s why we’ve seen so many MBS plaintiffs — including AIG and the satellite insurance companies that are also plaintiffs in its Countrywide suit – assert state-law fraud claims in addition to federal securities claims.

New York has a notably generous six-year statute of limitations for fraud. It also has what’s known as a “borrowing” provision to prevent forum shoppers from taking advantage of that big window for fraud claims. The provision isn’t exactly a model of clarity, but it holds that other states’ time limits generally apply unless “the cause of action accrued in favor of a resident of the state.” You have to be a New York resident, in other words, to benefit from the state’s statute of limitations.

From The Bowels Of Academia Rises Lady Sterculius

March 29, 2012 By Steve Dibert Leave a Comment

One Of The Most Asinine Editorials On Housing I Have Ever Read

Steve Dibert, MFI-Miami

Five years ago, most people had never heard of Elizabeth Warren, a Harvard Professor who lectured about consumer affairs. After the market crash in 2007, she became a regular talking head on cable news talking about the financial crisis. She tried to claim that this whole crisis was the fault of unscrupulous mortgage brokers doing dastardly things to unsuspecting homeowners. What she wasn’t doing was blaming Wall Street and as we later learned, Wall Street was behind this $70 trillion Ponzi scheme.

Warren’s arguments were later proven wrong but that wasn’t before for she used her influence as a Harvard Professor with key members of Congress to perform her version of “Sherman’s March” on the wholesale lending industry.

Five years after Elizabeth Warren burst on the scene with her crazy claims dreamt up at the Harvard Faculty Club while being serenaded by the Harvard Mens’ Choir singing Fair Harvard, another whacked out academic type is emerging from that same bubble.

This new Warren-wannabe is Erika Christakis who some how convinced the fine editors at the Financial Times in London to let her write an op-ed piece in yesterday’s edition about how home ownership is bad for Americans because it fosters a sense of hate and despair. Her logic is if you buy a house and hate the people in your neighborhood you’re screwed.

She writes:

“First, why, in the face of overwhelming reasons for selfishness, are humans altruistic and co-operative? Second, how do groups stay co-operative when confronted by people in their midst who don’t want to co-operate?”

It’s apparent her parents never let her watch Sesame Street as a kid because any American who grew up watching Sesame Street can still recite the words to “Who Are The People In Your Neighborhood?”

Like Bob and the Muppets tell us that if we talk to our neighbors, even the grumpy ones, we can live and work to make our neighborhoods a community.

Ms. Christakis’ cynical response to this is that Americans only communicate out of their own self interests. It appears instead of watching Sesame Street, her parents brainwashed her with Ayn Rand novels.

After reading her editorial, its pretty clear Ms. Christakis never worked in lending or real estate. It also appears that like my 50 year old friend who still lives at home with his parents, she has never left the warm comfy bed of academia. According to her biography on her blog, she is a:

Hybrid-educator/public health advocate/Harvard College administrator/ journalist. Uncommon sense for the common good. Unmarketable bachelor’s degree (Harvard, anthropology) Semi-marketable graduate degrees (Johns Hopkins, University of Pennsylvania…). Career at the intersection of family, society, and schools. (Including pop-culture diversions and long stint in parenting vortex.) Forging a new path to connect all of the above.

During my time researching her, I found that other than writing uninformed and asinine editorials about real estate, she penned a whacked out neo-feminist editorial for Time Magazine that read like a treatment for a Lifetime movie. In that piece, she used her same inept logic to claim that men who hated the Twilight movies are sexist and bigoted because they want to deny women their right to fantasize.

The big difference between Elizabeth Warren and Erika Christakis is Elizabeth Warren actually had some knowledge of what she was talking about and would later educate herself enough to learn that mortgage brokers weren’t the reason for the housing crisis. Erika Christakis on the other hand is more like Mel Brooks’ character Comicus in “History of the World, Part 1″:

Filed Under: Colorado, Connecticut, Florida, Maryland, Massachusetts, Michigan, Mortgage News, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Steve's Blog, Washington, Washington, D.C., Wisconsin Tagged With: Ayn Rand, economic meltdown, Elizabeth Warren, Erika Christakis, financial crisis, Harvard, Harvard Professor, home ownership, Housing Crisis, Mel Brooks, mortgages, real estate, Sesame Street, Wall Street

GOP Stalk Mortgage Task Force Like Pedophiles At A Playground

Less than one-in-five GSE loans hold a second lien

The Outcome Of This Lawsuit Could Affect Most Securitized Loans

Why NY businesses should worry about BofA’s new MBS defense

From The Bowels Of Academia Rises Lady Sterculius

One Of The Most Asinine Editorials On Housing I Have Ever Read

Translation

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