The Justice Department plans to use its tentative $13 billion settlement with JPMorgan Chase as a blueprint for reaching similar deals with other banks in probes related to bad mortgages and the 2008 financial crisis, a law enforcement official familiar with the negotiations said Monday. If such an effort is successful, it could usher in an era of high-priced settlements throughout the banking industry.
A dozen U.S. Senators have asked the Consumer Financial Protection Bureau and the U.S. Justice Department to look into residential tax lien sale and foreclosure practices that they say are unfairly––and potentially illegally––causing seniors, veterans and the disabled to lose their homes. In a letter to the the CFPB and the Justice Department, the senators cited a Washington Post series detailing how in Washington, D.C., third-party investors sometimes purchase tax liens at auctions then try to rake in profits by charging property owners exorbitant processing, legal and other fees that can significantly increase the amount owed by a property owner, sometimes buy multiples of 30 to 40 times. For some property owners, the fees are too much to bear and they are forced to vacate.
“She’s an excellent choice, and I believe she’ll be confirmed by a wide margin,” Charles Schumer of New York, the Senate’s No. 3 Democrat, said in a statement. Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, pledged to work “to move her nomination forward in a timely manner,” saying her depth of experience is unmatched.
Housing lenders rely on a variety of government data, such as verification of borrowers' income, which are unavailable with the partial closure of the Internal Revenue Service and other agencies. The mortgage industry has found creative ways to work around the shutdown. Banks are getting data from other sources. Sometimes they're simply taking the risk of making loans without some information.
Anyone thinking of skating on mortgages owned by either Fannie Mae or Freddie Mac may want to think again. As a result of new government reports, the two companies say they are going to do a better job of going after so-called strategic defaulters. Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That's called a strategic default, and many borrowers are taking that step — typically throwing in the towel because their homes are no longer worth as much as they owe.
In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem. Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.
Meg Burns, senior associate director for housing and regulatory policy for FHFA, joined Zillow for a Google+ Hangout session to field questions from underwater homeowners and explain HARP’s finer points. Hosting the call was Erin Lantz, Zillow’s director of mortgages. Responding to borrowers’ worries about their financial situations, Burns reiterated that HARP has no minimum income or credit score requirements (though different lenders may have their own criteria).
Look down your street: chances are, there's a neighbor whose mortgage is held by Fannie Mae or Freddie Mac. In Washington, policy wonks and lawmakers have been debating, with glacial slowness, whether that should come to an end. Fannie and Freddie are the outgrowth of the New Deal belief that housing is a public good, and an effective government will do what it can to make home ownership possible for as many people as possible. Fannie and Freddie are middlemen: they exist to make sure you can get a mortgage by promising your bank that if you don't pay, they'll take on the risk.
“This is the third straight year SIGTARP investigators have been recognized for their superior work in rooting out fraud to protect taxpayers ’ TARP investments ,” said Christy Romero, Special Inspector General for TARP (SIGTARP) . “ This recognition highlights SIGTARP’s commitment to exposing fraud related to TARP undertaken at the expense of the Ame rican public . SIGTARP and our law enforcement partners will continue to bring justice to those who seek to exploit and defraud TARP."
To be eligible, one must successfully complete a short sale under the FHA short sale program. The borrowers must meet the following requirements: 1) They cannot list the property with or sell it to anyone with whom they are related or have a close personal or business relationship. In legal terms, it must be an “arm’s-length” transaction. 2) Any knowing violation of the arm’s-length requirement may be a violation of federal law. 3) Your mortgage must be in default, on the date the short sale transaction closes.
The Office of the Comptroller of the Currency, which regulates the nation’s biggest banks, Tuesday issued the first detailed standards for consulting firms hired by banks to comply with enforcement orders. Consultants are supposed to work at the behest of regulators to provide objective assessments of an institution’s problems. But lawmakers have raised doubts about the independence of consultants handpicked by financial firms accused of wrongdoing. “While consultants can provide knowledge, expertise, and additional resources, we must take care to ensure they maintain independence and are subject to appropriate oversight,” Comptroller of the Currency Thomas J. Curry said in a statement.
Democratic lawmakers are still frustrated by a lack of information on the nearly 11-month-old multibillion-dollar settlement U.S. regulators announced to end a troubled review of foreclosure abuses. In a letter being sent Monday to Federal Reserve Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry, three lawmakers criticized bank regulators for failing to publish a report on regulators’ decision to halt the comprehensive review of foreclosure files in favor of a settlement with banks. Announced last January, the settlement ended the long-running foreclosure probe after regulators concluded it was taking too long and resulting in large payments to consulting firms hired to conduct the reviews. The settlement, originally announced as an $8.5 billion pact with 10 banks, has since expanded to 15 banks and is worth nearly $9.8 billion.
Schneiderman's legal action reminds us what a scam that supposedly groundbreaking settlement was from the get-go. Remember that settlement? Trumpeted by the regulators as a huge victory for the consumer, it required five big banks to pay $25 billion and adhere to a long list of proper foreclosure practices. The improper bank practices that were supposed to be wiped out included submitting forged or fraudulent documents, "robo-signing" documents the "signers" hadn't read, and banks' foreclosing on homeowners at the same time they were negotiating with them for loan modifications. The banks were Wells, Bank of America, JPMorgan Chase, Citibank and Ally Financial (formerly GMAC).
The fact that half of the fine would deal with WaMu’s liability in that FHFA lawsuit confirms that this is the model. If so, the way in which this is being presented by Justice and the New York AG is remarkable in its deceitfulness. This is supposed to be a “global settlement” on all of JPM’s mortgage-backed securities exposure. In reality, they’re settling the FHFA lawsuit, the one that would be really damaging as a precedent and lead to all sorts of private litigation, and Justice and Schneiderman are piggy-backing their lawsuits on top, for pennies, to attach themselves like barnacles to a big settlement number.
An overhaul of Fannie Mae and Freddie Mac continues to draw chatter in Washington, prompting a number of people to break long-held silence on the legacy of the government-sponsored enterprises. Adding his voice to the conversation is former Fannie Mae CFO Timothy Howard, who was ousted in late 2004 along with then-CEO Franklin Raines. Howard, who spent 15 of his 22 years at Fannie Mae running its mortgage investment portfolio, is releasing a book Dec. 2, "The Mortgage Wars," to present his view of what burst the housing bubble and created the 2008 financial crisis.
We write today to follow up on your agencies' assurances that they would release a public report on the Independent Foreclosure Review (IFR) process.
....We have raised significant concerns about the decision to conclude the IFR process before all borrower requests for review had been satisfied and randomly selected samples of eligible loan files had been reviewed. Based on the information provided to us at the time of the settlements, we could not assess whether the settlement amount and terms were adequate, whether it was appropriate for the mortgage servicers themselves to decide how to compensate the borrowers they harmed, and whether the outside consultants hired by the servicers collected and analyzed accurate information.
The implication is that the pet dream of Republicans, to kill the GSEs, isn’t realistic unless they want to kill the housing market as it goes through a brutal transition period to more on-balance sheet bank lending. The reason is not simply securitization allowed for mortgages to be issued much more cheaply due to eliminating the cost bank equity and FDIC insurance. A bigger reason is that the 30 year fixed interest rate mortgage with an unrestricted borrower right of prepayment would never exist absent government support.
As the Town of Greenburgh prepares to begin foreclosure proceedings on at least 300 properties on Tuesday, it has launched an amnesty program to waive up to $6 million in interest charges that tax scofflaws have accumulated since 1995. The amnesty program, which went into effect on Thursday, comes as Greenburgh moves forward on a townwide foreclosure program for the first time in more than 15 years. The crackdown was announced three weeks after town Supervisor Paul Feiner fought off a challenge from Edgemont attorney Bob Bernstein in a Democratic primary. He faces no opposition in November and looks forward to his 12th term in office in January.
The Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac, offered to sell foreclosed homes to bidders who didn’t meet required standards, the agency’s inspector general said. The FHFA offered 2,500 homes last year in a pilot bulk-sale program to help Fannie Mae reduce its portfolio of foreclosed properties and expand the supply of rental housing. Bidders were required to show they had financial and management capability and a commitment to working with hard-hit communities, according to a report released today. Twelve of the 47 applicants at least partially failed to meet the criteria, as determined by an outside contractor.
The Federal Housing Administration dramatically expanded its role after the subprime market collapsed, but at the expense of its own finances. Now, the government agency will get a first-ever bailout of $1.7 billion. In a letter Friday to Congress, the agency's head said it needed money to stabilize its long-term finances and cover potential losses on the huge volume of low-down-payment mortgages it insured from 2007 to 2009. It's the first time the 79-year-old FHA — created during the Great Depression to keep home lending flowing — will require taxpayer funding.