The Securities and Exchange Commission is considering launching a civil injunctive action against Standard & Poors Rating Services, alleging violations of federal securities laws with respect to the companys ratings for a 2007 collateralized debt obligation. According to a Form 8-K filing this week by McGraw-Hill, the rating services parent, the federal agency is looking into S&Ps rating of Delphinus CDO 2007-1, which was to be mostly backed by non-agency residential MBS. In connection with the contemplated action, the [SEC] staff may recommend that the commission seek civil money penalties, disgorgement of fees and...
Certain elements of the Dodd-Frank Act such as the new standard related to unfair, deceptive and abuse acts and practices (UDAAP), along with the Federal Reserves ability to repay provisions proposal, present significant litigation risk to lenders, a top litigation attorney told industry representatives early this week. Speaking to attendees at the Mortgage Bankers Associations regulatory compliance conference in Washington, DC, on Sunday, Andrew Stutzman, a partner with Stradley, Ronon, Stevens & Young LLP, said, Im very troubled by Dodd-Frank in many respects. I think it and the regulations that are coming out and have come out the Feds ability-to-repay proposal are extremely complicated and extremely confusing.
The U.S. Department of Labors Occupational Safety and Health Administration has ordered Bank of America to rehire a Countrywide Financial Corp. employee who led internal investigations that revealed widespread and pervasive wire, mail and bank fraud involving Countrywide employees and was later dismissed. The employee alleged that those who attempted to report fraud to Countrywides employee relations department suffered persistent retaliation. The employee was fired shortly after Countrywides acquisition by BofA.
Sept. 2 was the most significant day for mortgage crisis litigation since the onset of the crisis in 2007, Isaac Gradman, managing member of IMG Enterprises, said in reference to the non-agency mortgage-backed securities lawsuits filed by the Federal Housing Finance Agency. He predicted that the involvement of the U.S. government in mortgage litigation will encourage more private litigants to file lawsuits seeking securities law claims and buybacks. Gradman, whose MBS consulting firm specializes in analyzing contractual rights, potential liabilities and MBS regulation, said the FHFA lawsuits could provide plaintiffs with a roadmap to recoveries. ...
Unwarranted and false public allegations have prompted Michael Perry, the former chairman and CEO of IndyMac, to mount a defense via a new website. His Not Too Big to Fail site offers the facts about Mike Perry and IndyMac. On the site, Perry takes aim at lawsuits against him by the Securities and Exchange Commission and Federal Deposit Insurance Corp. as well as private litigation and audits by the Office of the Inspector General of the Department of Treasury. ...
Alabama. The U.S. District Court for Alabama’s Eastern Division recently dismissed the borrowers’ counterclaim against Mortgage Electronic Registration Systems, Inc. and Merscorp in response to a Freddie Mac eviction action. In Freddie Mac v. Brooks, the government-sponsored enterprise filed an eviction action against the borrowers after the completed foreclosure sale. The borrowers responded by filing a counterclaim against MERS, Merscorp and Freddie, claiming wrongful foreclosure and alleging that the mortgage was invalid and unenforceable because
Facing a statute of limitations deadline, the Federal Housing Finance Agency filed lawsuits against 17 firms last week in an effort to recover losses the government-sponsored enterprises suffered on their investments in non-agency mortgage-backed securities. The FHFA claimed violations of securities laws, alleging that non-agency MBS prospectuses contained material false statements and omissions. The lawsuits relate to more than $196.2 billion in non-agency MBS purchased by the GSEs. The GSEs combined holdings of subprime and Alt A MBS have declined since at least the fourth quarter of 2007 when they totaled $217.2 billion, according to an analysis by Inside Nonconforming Markets,. ...
The American Securitization Forum positioned its new model repurchase principles as a better option to restore investor confidence in non-agency mortgage-backed securities than the risk retention required by the Dodd-Frank Act. The risk-retention rules proposed by regulators are not sufficiently tailored to different asset classes and will likely cause a host of negative unintended consequences, said Tom Deutsch, executive director of the ASF. ...
Iowa Attorney General Tom Miller this week sought to allay concerns of the New York congressional delegation, denying that Empire States attorney general was ousted from an executive committee negotiating a nationwide foreclosure settlement with major banks to silence legitimate opposition. Responding to a letter from NY House Democrats, Miller said New York AG Eric Schneiderman was invited to join the core negotiating team of state AGs in June but refused. Miller, who is leading the negotiations, said Schneiderman voluntarily walked away from the negotiating table to pursue another path. Miller said Schneiderman was asked to...
The Federal Housing Finance Agency this week defended its massive legal action against many of the nations largest financial institutions on behalf of Fannie Mae and Freddie Mac over the government-sponsored enterprises losses on non-agency mortgage backed security purchases. The Finance Agency contends that 17 financial institutions sold Fannie and Freddie some $196 billion of MBS, mostly between 2005 and 2008, that caused losses to the GSEs for which there should be compensation. Filed late last week in federal and state courts in New York and in federal court in Connecticut, the lawsuits seek damages and civil penalties under... [Includes one data chart]