Securitization representatives are forcefully pushing back against a proposal under review by three jurisdictions in California to use eminent domain to seize performing, underwater mortgages out of non-agency MBS pools, renegotiate them on terms more favorable to the borrowers, and repackage and sell them off to another group of private investors. Last Friday, a joint powers authority created by San Bernardino County and two of its cities, Ontario and Fontana, formally convened for the first time for an organizational meeting. Two groups that represent the securitization industry, the American Securitization Forum and the Securities Industry and Financial Markets Association, expressed their opposition during the meeting. The ASF said that this inappropriate use of government power, which is based on a plan by San Francisco-based Mortgage Resolution Partners, a private investment firm, was designed...
Bank of America shareholders may proceed with their securities fraud lawsuit which claims that BofA concealed its potential problems with the Mortgage Electronic Registration System, exposing investors to risky mortgage securities, a federal judge ruled last week. However, U.S. District Judge William Pauley of the Southern District of New York determined that the shareholders, led by the Pennsylvania Public School Employees Retirement System, can move forward only against the company itself and not against BofA executives. The investors filed suit in September 2011 alleging they had been misled into...
Principal reduction loan modifications completed by five major banks as part of the national servicing settlement have not been applied disproportionately to mortgages in non-agency mortgage-backed securities, according to Fitch Ratings. Non-agency MBS investors have raised concerns that servicers that agreed to the recent $25.0 billion settlement will complete their mandated principal reduction mods on non-agency MBS instead of on portfolio loans. Although still early, there has been no evidence of ...
Wells Fargo agreed last week to pay more than $125.0 million and offer $50.0 million in downpayment assistance to settle subprime-related fair lending claims by the Department of Justice and others. The claims center on brokered originations for African-American and Hispanic borrowers. The DOJ alleged that between 2004 and 2009, Wells charged approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin ...
Mortgage-backed security investors continue to claim that a proposal in San Bernardino County to seize certain mortgages in non-agency MBS via eminent domain is unconstitutional. They also warn that if the Homeownership Protection Program is implemented there will be negative consequences. It could severely negatively impact the value of your home, it could scare away jobs from the desert, it could scare away new construction, it might even result in the inability to get a mortgage or financing anywhere in the county ...
Fannie Mae executives and staffers were at the front of the line of Countrywide Home Loans sophisticated influence peddling operation that showered not just GSE employees but Washington insiders with deeply discounted mortgage loans in order to curry favor, according to a newly released House committee report. The 136-page report completes a three-year investigation by the House Oversight and Government Reform Committee of Countrywides so-called Friends of Angelo program, named after CEO Angelo Mozillo, which ran for a dozen years until the lender was acquired by Bank of America in 2008.
The Consumer Financial Protection Bureau last week issued a final rule to codify protections for privileged information submitted by financial institutions. The rule makes clear that an institution that provides privileged information to the CFPB does not waive any privilege it may have related to third parties, affirming what the agency said in January to the financial institutions under its supervisory authority. It also makes clear that bureau sharing of privileged information to another federal or state government agency does not waive any privilege that might apply...
Three jurisdictions in California are raising a lot of industry hackles over a plan that could lead to the use of eminent domain to seize currently performing underwater mortgages and force a restructuring of their terms. Its a plan more like Grand Theft Mortgage than a silver bullet for the regions housing woes, according to former Fannie Mae executive Edward Pinto. At issue is a resolution adopted last week by Californias San Bernardino county and the cities of Ontario and Fontana in which the jurisdictions entered into a joint powers agreement. Under the resolution...
The Supreme Court of the United States surprised many industry and legal observers late last month by deciding it would not take on a key dispute under the Real Estate Settlement Procedures Act. The writ of certiorari is dismissed as improvidently granted, the high court said in a terse announcement. At issue in First American Financial v. Edwards is whether someone who has not suffered any actual damages from alleged RESPA violations has the legal standing to sue in federal court. The SCOTUS decision to not rule on the case, after deciding a year ago to take it on, means the...
A New York state appeals court last week upheld a lower court ruling which dismissed an investor groups attempt to overturn Bank of Americas proposed $8.5 billion MBS settlement. The five-judge panel of New Yorks First Department Appellate Division affirmed Judge Barbara Kapnicks March 28 decision to dismiss the complaint brought by Walnut Place LLC and related entities. Walnut Place, which represents investors that bought about $1.4 billion of Countrywide non-agency MBS, filed suit in February 2011 claiming Countrywide made false representations on nearly 66 percent of the 2,166 mortgage...