FBI: Mortgage fraud still prevalent, hard to catch
BY NEDRA PICKLER
The Associated Press
First published August 12, 2011
Washington – Mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught, the FBI said Friday.
The FBI’s annual report said mortgage schemes are particularly resilient and hard to discover, and their total cost is unknown. Real estate firm CoreLogic says more than $10 billion in loans originated with fraudulent application data last year, the report noted.
Fraud last year remained at levels seen in 2009 as the housing market remained in distress, providing ample opportunity for schemes, the report said. It predicted that perpetrators would “continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market.”
“These methods will likely remain effective in the near term, as the housing market is anticipated to remain stagnant through 2011,” the FBI said.
Read the entire article here: http://www.sltrib.com/sltrib/money/52377543-79/fraud-mortgage-fbi-market.html.csp
Mortgage rates fall again, 30-year near record low
August 11th, 2011 @ 9:50am
By Derek Kravitz, Associated Press
WASHINGTON (AP) – Fixed mortgage rates fell to at or near record lows. That’s good news for the few who can afford to buy a home or are able to refinance. But the rates have done little to lift the ailing housing market.
Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage fell to 4.32 percent this week from 4.39 percent. The 30-year loan hit a record low of 4.17 percent in mid-November.
The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to a record low of 3.50 percent, from last week’s record rate of 3.54 percent.
Mortgage rates tend to track the yield on the 10-year Treasury note. A weakening U.S. economy has led many investors to shift money from stocks to bonds, which are seen as safer bets. That has pushed Treasury yields to historic lows.
In theory, low mortgage rates should provide a boost to the troubled housing market. But rates have been below 5 percent for nearly two years and haven’t helped home sales much. Rates on the 30-year fixed loan were near 6.5 percent five years ago and higher than 8 percent in 2000.
Read the entire article here: http://www.ksl.com/?nid=153&sid=6251308
Deutsche Bank foreclosure sale overturned by N.J. appellate court
Published: Wednesday, August 10, 2011, 11:28 AM
Updated: Wednesday, August 10, 2011, 11:35 AM
By Eliot Caroom/The Star-Ledger
A New Jersey foreclosure by Deutsche Bank was overturned by a state appellate court panel yesterday because the bank could not show it possessed a debt note for the house when it moved to foreclose in 2008.
The case could impact the prospects of many state foreclosure cases, according to Peggy Jurow, a senior attorney for Legal Service of New Jersey who deals with foreclosure and predatory lending cases.
“What today’s case does is say that the lender has to have had the assignment of mortgage and possession of the (loan) note before it files a foreclosure action,” Jurow said yesterday. “They can’t fix up that sort of paperwork problem afterwards. They have to dismiss the case and start again.”
Read the entire article here: http://www.nj.com/business/index.ssf/2011/08/deutsche_bank_foreclosure_sale.html
Washington State Sues BofA Over Foreclosures
By Nick Timiraos
August 9, 2011, 1:08 PM ET
A lawsuit filed last Thursday by the Washington state attorney general shows why foreclosure-document problems aren’t limited solely to so-called “judicial” states where banks must use the courts to foreclose.
Attorney General Rob McKenna alleged that a unit of Bank of America Corp. that handles foreclosures on behalf of the bank had improperly executed thousands of foreclosures over the last three years. The suit alleges that ReconTrust Co., a wholly owned BofA subsidiary that serves as a trustee in foreclosure sales, didn’t act in good faith when foreclosing on homeowners.
Washington is one of 27 so-called “non-judicial” states where, rather than going before a judge to foreclose, banks hire a trustee to carry out an administrative process that varies slightly from state to state. Trustees notify homeowners that they are in default and, if the borrower doesn’t become current or work out a modification, the trustee eventually carries out the foreclosure.
The lawsuit alleges that ReconTrust “committed unfair and deceptive acts” by failing to act as a neutral party between borrowers and lenders. ReconTrust “has failed to comply” with state foreclosure law “in each and every foreclosure it has conducted since at least June 12, 2008,” said the lawsuit.
Read the entire article here: http://blogs.wsj.com/developments/2011/08/09/washington-state-sues-bofa-over-foreclosures/
AIG sues Bank of America for $10B over mortgages
BY PETER SVENSSON
The Associated Press
First published August 8, 2011
New York – Insurer AIG wants more than $10 billion from Bank of America, saying the bank cheated it by selling it overvalued mortgage-backed securities.
American International Group Inc. filed suit Monday in New York State’s Supreme Court.
Read the entire article here: http://www.sltrib.com/sltrib/money/52347681-79/bank-america-aig-securities.html.csp
Wells Fargo, BofA in Court News
Wells Fargo & Co. (WFC), the biggest U.S. home lender, said it reached a $590 million settlement in principle with plaintiffs who claimed in a lawsuit that Wachovia Corp. misled investors.
The accord, subject to court approval, is reflected in the bank’s financial statements and “will not have a material adverse effect on Wells Fargo’s consolidated financial position,” according to a regulatory filing Aug. 5 by the San Francisco-based company. Wells Fargo acquired Wachovia in 2008.
Investors had accused Wachovia of making misleading disclosures relating to the sale of securities between 2006 and 2008, according to the complaint. The statements related to the quality of assets linked to the mortgage portfolio of Golden West Financial, a California home lender it had acquired.
Bank of America Corp. (BAC)’s ReconTrust unit failed to conduct foreclosures as a neutral third party as required by law, Washington state Attorney General Rob McKenna said in a lawsuit.
ReconTrust, which acted as a trustee handling foreclosures, had a duty to act in good faith to borrowers as well as lenders, McKenna said Aug. 5 at a press conference announcing the suit. ReconTrust also concealed or misrepresented the actual owner of the debt when handling foreclosures, according to the complaint filed in state court in Seattle.
The lawsuit follows an investigation of Washington trustees’ foreclosure practices, including faulty documentation. McKenna said the lawsuit was filed because ReconTrust didn’t take corrective actions to change its ways.
Read the entire article here: http://www.bloomberg.com/news/2011-08-08/wells-fargo-mariner-energy-langford-bofa-sac-facebook-in-court-news.html
New York Attorney General Schneiderman Drops Bomb on Bank of America Settlement and Bank of New York
Friday, August 5, 2011
Naked Capitalism
The meltdown in the financial markets obscured an important development on the mortgage front, namely, that New York state attorney general Eric Schneiderman filed a motion to intervene in the proposed $8.5 billion settlement between Bank of America and the Bank of New York acting as trustee of 530 Countrywide residential mortgage securitizations.
We said when the deal was announced that it was not a done deal and it stank to high heaven, so we are glad to see confirmation of our dim view. In keeping, the motion charges Bank of New York with “fraudulent and deceptive conduct”. As we will see, the allegations that Schneiderman has made against Bank of New York opens up a whole new front of mortgage securitization liability, that of the trustees failing to live up to their contractual duties and worse, making ongoing certifications that they had. This is an area we’ve discussed at some length before and have been surprised hasn’t been taken up until now.
By way of background, the proposed settlement purportedly had Bank of New York acting on behalf of investors, although it conferred with only 22 and did not even go through the motions of consultation with the rest. In addition, we indicated, many of that 22, such as the New York Fed, had reason to support Bank of America getting a sweetheart deal if it alleviated questions about the bank’s solvency. Moreover, as we pointed out, Bank of New York itself had substantial conflicts of interest in entering into this deal. BofA represented nearly 2/3s of Bank of New York’s trustee business, and as Adam Levitin had noted prior to the settlement being filed that Bank of New York would “inevitably have to be deferential” to Bank of America.
Read the entire article here: http://www.nakedcapitalism.com/2011/08/new-york-attorney-general-schneiderman-drops-bomb-on-bank-of-america-settlement-and-bank-of-new-york.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
Stocks turn lower as optimism about jobs fades
August 5th, 2011 @ 8:57am
By DANIEL WAGNER
AP Business Writer
(AP) – Even a good jobs report wasn’t good enough to calm financial markets.
The Dow Jones industrial average turned lower Friday morning as traders focused on Europe’s latest efforts to contain the region’s debt crisis. The Dow had jumped as many as 171 points shortly after the opening bell on report that U.S. hiring picked up last month. By midmorning it was down 42 points.
European leaders are calling emergency meetings and seeking to reassure markets that a large nation such as Italy or Spain won’t become the latest country in the region to need a financial backstop.
The economy added 117,000 new jobs in July, and hiring in May and June were not as bad as reported previously, the Labor Department reported. The unemployment rate inched down to 9.1 percent from 9.2 percent, partly because some unemployed workers stopped looking for work. Health care providers and manufacturers added jobs.
About twice as many jobs as that must be created every month in order to rapidly reduce the unemployment rate. That rate has topped 9 percent in every month except two since the recession officially ended in June 2009. Many economists still fear that the economy might dip back into recession.
Read the entire article here: http://www.ksl.com/?nid=152&sid=6225073
Property tax trouble: Can you fight city hall?
August 4th, 2011 @ 7:20am
By Randall Jeppesen
SALT LAKE CITY — For three years in a row, the average homeowner saw property values drop in Salt Lake County. At the same time, many are paying higher taxes. If you think your property value and taxes are way off, how do you go about fixing it?
Homeowners should have received a letter from the county assessor’s office saying how much their homes are worth and the property tax due. Chief Deputy at the Salt Lake County Assessor’s Office, Kevin Jacobs, says the property value drop countywide is around 2.5 percent.
“The biggest decrease this year was in the southwest area, Bluffdale, Riverton, South Jordan. Those areas went down about 5 percent,” said Jacobs.
Read the entire article here: http://www.ksl.com/?nid=148&sid=16657284
California man wants foreclosures deemed unconstitutional in the state
by KERRI PANCHUK
HOUSINGWIRE
Thursday, August 4th, 2011, 7:31 am
A California man is on a mission to end foreclosures across his state, claiming an outright ban on the practice would force banks to help distressed borrowers.
In documents filed with California’s secretary of state, Sacramento resident David Benson said he’s trying to gain enough signatures – 807,615 to be exact – to get his foreclosure ban considered by voters across the state.
Benson wants to amend the California constitution, making homeownership a fundamental right.
His plan would require lenders to assist borrowers unable to pay for their homes due to financial distress and illness.
It also would force lenders to reduce a loan’s principal amount to reflect declines in property value that go beyond 10%.
Read the entire article here: http://www.housingwire.com/2011/08/04/california-man-wants-foreclosures-deemed-unconstitutional-in-the-state
Wasatch Front home sales and prices down
August 2nd, 2011 @ 6:31pm
By Jasen Lee
SANDY – The number of homes sold along the Wasatch Front during the second quarter of 2011, as well as the prices buyers paid for them, declined significantly compared to the same period last year.
Data from the Salt Lake Board of Realtors showed the largest decreases came in Tooele County as sales fell more than 15 percent, while prices dropped more than 18 percent. Weber County sales declined 15 percent with prices decreasing slightly more than 10 percent.
Utah County saw the smallest sales volume decrease at just 1.3 percent to go along with a 5.4 percent drop in the median sales price.
Sales of single-family homes in Salt Lake County in the second quarter of 2011 decreased 11.4 percent compared to the same quarter last year, with the median sales price falling 8.4 percent. Davis County experienced a 9 percent drop in sales volume and a 9.5 percent decrease in median price.
Read the entire article here: http://www.ksl.com/?nid=960&sid=16638133
Report: Few signs of Wasatch housing rebound
By LESLEY MITCHELL
The Salt Lake Tribune
First published Aug 02 2011 10:59AM
What housing recovery?
The Salt Lake Board of Realtors released its second-quarter report Tuesday, and home values and sales still aren’t headed in the right direction.
From April through June, sales of single-family homes in Salt Lake County declined by 11.4 percent, to 2,591, compared with the same period last year, while the median selling price fell by 8.4 percent, to $201,595. The pattern was the same in the other Wasatch Front counties.
“The housing market is just fragile and extremely weak,” said James Wood, director of University of Utah’s Bureau of Economic and Business Research, who reviewed the data.
Wood and other forecasters had thought that enough jobs would have been created by now to jump-start the housing market and help compensate for the large volume of foreclosures and other distressed properties. But that hasn’t happened.
Read the entire article here: http://www.sltrib.com/sltrib/money/52310857-79/ogden-sales-price-median.html.csp
Mortgage paperwork mess: Next housing shock?
(CBS News)
If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.
Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents. As more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
See the entire video here: http://www.cbsnews.com/video/watch/?id=7361572n
Read the entire transcript here: http://www.cbsnews.com/stories/2011/04/01/60minutes/main20049646.shtml
U.S. home ownership falls to lowest since 1998
BY KATHLEEN M. HOWLEY
Bloomberg News
First published Jul 29 2011 03:45PM
Updated Jul 29, 2011 11:35PM
Boston – Stricter credit standards pushed the second-quarter U.S. home-ownership rate to the lowest level since 1998.
The ownership rate through June was 65.9 percent, the lowest since the same rate 13 years ago, the U.S. Census Bureau said in a report Friday. The vacancy rate, the share of properties empty and for sale, was 2.5 percent, compared with 2.6 percent in the first quarter.
The strictest mortgage standards in more than a decade are disqualifying potential buyers while owners are being evicted from homes after falling behind on loan payments, said Wayne Yamano, director of research at John Burns Real Estate Consulting in Irvine, Calif. Home purchases fell in June to a 4.77 million annual pace, the National Association of Realtors said July 20. If housing demand remains at that level, 2011 would have the fewest sales since 1997.
Read the entire article here: http://www.sltrib.com/sltrib/money/52290078-79/percent-homes-rate-ownership.html.csp
Bank makes foreclosure offer she can’t refuse
By Todd Ruger
Published: Friday, July 29, 2011 at 9:42 a.m.
Last Modified: Friday, July 29, 2011 at 9:42 a.m.
SARASOTA COUNTY – The bank spent the last two years denying Deborah Johnson’s efforts to save her Sarasota home from foreclosure, and then out of nowhere, last month, sent her an unbelievable offer.
If Johnson can find someone to buy the property for half of what is owed on the mortgage, JP Morgan Chase bank will not only forgive the remaining $100,000 or so of debt, but also send her away with $35,000 in her pocket.
The proposal was far better than a foreclosure, which would punish her credit score more severely, strand her without money for a new place to live, and expose her to collection efforts for the unpaid balance for the rest of her life.
Read the entire article here: http://www.heraldtribune.com/article/20110729/ARTICLE/110729503/2055/NEWS?Title=Bank-makes-foreclosure-offer-she-can-t-refuse
Utah cities among top foreclosure locales
July 27th, 2011 @ 3:51pm
By Jasen Lee
SALT LAKE CITY – Three of Utah’s most populous cities rank among the metropolitan areas with the highest rates of foreclosure filings in the country.
But the good news is that the percentage of homes in the Beehive State with mortgage defaults is falling significantly.
According to RealtyTrac’s Midyear 2011 Metropolitan Foreclosure Market Report, foreclosure activity – default notices, scheduled auctions and bank repossessions – decreased on a year-over-year basis in 178 out of the nation’s 211 metro areas with a population of at least 200,000.
The report also showed that all top 10 metro areas with the highest foreclosure filings in the first half of 2011 posted decreasing foreclosure activity compared with the first half of last year – and Utah’s largest metros followed suit.
Salt Lake City ranked No. 20, with one in every 54 households receiving a foreclosure filing during the first six months of the year. The Provo-Orem metro ranked No. 27, with one in 62 households recording a default, followed by Ogden-Clearfield at No. 38, with one in 74 properties registering a foreclosure filing.
Read the entire article here: http://www.ksl.com/index.php?nid=960&sid=16552681
Exclusive: Facing criticism, MERS cuts role in foreclosures
By Scot J. Paltrow
Wed Jul 27, 2011 4:52pm EDT
NEW YORK (Reuters) – MERS, the electronic mortgage registry that faces multiple investigations for its role in thousands of problematic foreclosure cases, changed its rules to lower its profile in court-supervised foreclosures.
MERS, a unit of Merscorp Inc. of Reston, Virginia, owns the computerized registry, Mortgage Electronic Registration Systems. Mortgage loan giants Fannie Mae and Freddie Mac and several of the largest U.S. banks established MERS in 1995 to circumvent the costly and cumbersome process of transferring ownership of mortgages and recording the changes with county clerks.
In rule changes announced to MERS members on July 21, the company forbade members to file any more foreclosure actions in MERS’s name.
It also required mortgage servicers to obtain mortgage assignments and record them with county clerks before beginning foreclosures.
Mortgage-loan servicers perform routine duties for the investment trusts that own pools of mortgages, including collecting mortgage payments and, when necessary, filing foreclosures.
Read the entire article here: http://www.reuters.com/article/2011/07/27/us-mers-foreclosure-idUSTRE76Q67L20110727
Foreclosure Accord Liability Releases Draw Resistance From Three States
By David McLaughlin
Bloomberg
Jul 26, 2011 3:07 PM MT
Three states conducting their own probes of residential mortgage practices are resisting broad liability releases sought by banks to settle a nationwide foreclosure investigation.
The banks, in settlement talks with state and federal officials, are seeking releases that would protect them from future legal liabilities. Massachusetts Attorney General Martha Coakley said yesterday she won’t endorse a deal that includes certain releases. New York and Delaware have raised similar concerns over terms of a possible deal.
All three states are conducting investigations tied to mortgage operations of banks. Delaware and Massachusetts officials say a settlement shouldn’t release banks from some claims, including those related to bundling mortgages into securities, while the inquiries continue.
“We’re not prepared to do a broad liability release for either securitization issues or for MERS until we’ve completed that piece of investigation,” Coakley said in a telephone interview yesterday. Mortgage Electronic Registration Systems Inc., or MERS, is a national mortgage database used by banks.
Read the entire article here: http://www.bloomberg.com/news/2011-07-25/massachusetts-to-spurn-any-foreclosure-accord-with-some-liability-releases.html?utm_source=twitterfeed&utm_medium=twitter
New-home sales fell 1 percent in June
By MARTIN CRUTSINGER
The Associated Press
Updated Jul 26, 2011 08:30AM
Washington – Fewer people bought new homes in June, evidence that the housing market remains weak.
Sales of new homes fell 1 percent last month to an annual rate of 312,000, the Commerce Department said Tuesday. That’s less than half the 700,000 homes sold per year that economists say is typical in healthy markets.
Last year was the worst for new-home sales on records dating back a half century. Through the first six months of this year, sales are lagging behind last year’s totals.
In June, new-home sales fell to record lows in the Northeast and West. The median price of a new home rose to $235,200 in June because of the influx of spring buyers. The median price is not adjusted for seasonal factors.
A separate report showed home prices in major U.S. cities rose for the second straight month in May. But after adjusting for seasonal buyers, prices fell in a majority of markets.
Read the entire article here: http://www.sltrib.com/sltrib/money/52262506-79/homes-sales-fell-june.html.csp
Home sales on pace for worst showing in 14 years
By DEREK KRAVITZ
The Associated Press
First published Jul 20 2011 08:21AM
Updated Jul 21, 2011 07:25AM
Washington – Halfway through 2011, people are buying homes at the weakest pace in 14 years.
Sales of previously occupied homes fell in June for a third straight month to a seasonally adjusted annual rate of 4.77 million homes, the National Association of Realtors said Wednesday.
Home sales have fallen in four of the past five years. This year’s pace is lagging behind the 4.91 million homes sold last year – the fewest since 1997. In a healthy economy, people buy roughly 6 million homes per year.
Fewer first-time homebuyers are entering the market. Many can’t obtain a loan or meet larger down payment requirements.
Another problem is that a growing number of contracts are being canceled before sales are finalized, many because of lower appraisals that are scuttling loans. And the slowdown in hiring is making people think twice about taking on extra debt.
High unemployment, millions of foreclosures and tighter credit are likely to keep people from buying homes in the second half of the year, economists say. Even low home prices and cheap mortgage rates are unlikely to draw buyers to the market.
Read the entire article here: http://www.sltrib.com/sltrib/money/52226024-79/sales-homes-percent-foreclosures.html.csp
Litigation costs mount at BofA, Chase over foreclosure, mortgage issues
by Jon Prior
Thursday, July 21st, 2011, 11:13 am
Legal expenses at Bank of America and JPMorgan Chase more than doubled for the second quarter from the previous period, according to each bank’s financial documents.
BofA reported $1.9 billion in litigation expenses for the second quarter, most of it related to its foreclosure and mortgage issues. It’s an increase from $785 million for the previous quarter.
Chase reported $1.3 billion in legal expenses for the second quarter, more than triple from the $400 million for the previous quarter and nearly double the $700 million added to reserves one year ago. However, legal expenses peaked in the fourth quarter of 2010 at $1.5 billion.
Read the entire article here: http://www.housingwire.com/2011/07/21/litigation-costs-mount-at-bofa-chase-over-foreclosure-mortgage-issues
Special Report: Banks Continue Robo-signing
by Scot J. Paltrow
Tuesday, July 19, 2011
Reuters
America’s leading mortgage lenders vowed in March to end the dubious foreclosure practices that caused a bruising scandal last year.
But a Reuters investigation finds that many are still taking the same shortcuts they promised to shun, from sketchy paperwork to the use of “robo-signers.”
In its effort to seize the two-bedroom ranch house of 87-year-old Margery Gunter in this down-on-its-luck Florida town, OneWest Bank recently filed a court document that appears riddled with discrepancies. Mrs. Gunter, who has lived in the house for 40 years and gets around with the aid of a walker, stopped paying her loan back in 2009, her lawyer concedes. To foreclose, the bank submitted to the Collier County clerk’s office on March 3 a “mortgage assignment,” a document essential to proving who owns a mortgage once the original lender sells it off.
But OneWest’s paperwork is problematic. Among the snags: state law permits lenders to file to foreclose only if they already legally own a mortgage. Yet the key document establishing ownership wasn’t signed and officially recorded until months after OneWest filed to foreclose on Mrs. Gunter. OneWest declined to comment on the case.
Read the entire article here: http://finance.yahoo.com/loans/article/113161/banks-continue-robo-signing-reuters
Wells Fargo settles mortgage-abuse case for $85 million
The Associated Press
First published Jul 20 2011 01:57PM
Updated Jul 20, 2011 11:30PM
Washington – Wells Fargo & Co. has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom.
The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said Wednesday.
Wells Fargo, the nation’s largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated.
The Fed said Wells Fargo inflated borrowers’ incomes on loan documents to qualify for mortgages they otherwise couldn’t afford from 2004 until 2008. Wells Fargo sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.
Between 3,700 and roughly 10,000 people could be compensated under the settlement, the Fed said. The payments will likely range from $1,000 to $20,000.
Read the entire article here: http://www.sltrib.com/sltrib/money/52228313-79/fargo-lenders-wells-borrowers.html.csp
Life on MERS: Archive is at center of mortgage mess
Jul 18 21:28 EDT
By Scot J. Paltrow
NEW YORK (Reuters) – A little-known institution in Reston, Virginia, has done much to help loan servicers produce foreclosure documents of questionable legitimacy, according to multiple recent court rulings and deposition testimony.
Mortgage Electronic Registration Systems, or MERS, has only about 50 full time employees. Yet it claims to own about half of all mortgages in the United States, roughly 60 million loans, and is involved in about 60 percent of new mortgages issued.
Fannie Mae, Freddie Mac and several large banks established MERS in 1995, as a registry meant to speed up the recording and transfer of mortgages. Until then, this had to be done in individual county clerks offices and the process was glacial. The founders went ahead even though no state laws authorized them to bypass the required filing with clerks.
The purpose of MERS was simple: to make it possible to track the owner and servicer of each individual mortgage, and to make it easier to rapidly transfer mortgages. Lenders designated MERS as either the mortgagee (the legal holder of a mortgage, even though MERS had never paid a penny to obtain it), or as “assignee” (an entity to which a mortgage is entrusted). In either case, MERS was granted power to assign mortgages as they changed hands from one real owner (such as a bank) to another (such as a mortgage security trust) – even though MERS itself didn’t have a financial interest in any of the mortgages. MERS also claims the right to transfer promissory notes, even though it doesn’t own them.
In deposition testimony beginning in 2009, it emerged that MERS’s own employees did little but maintain the computer database. The real work was done by loan servicers — banks and other companies that do routine work for trusts that own the mortgages, including collecting and tracking payments from homeowners and filing to foreclose when a borrower defaults. For a $25 fee, employees of any of the 3,000 loan servicers that belonged to MERS could get themselves designated as a MERS “vice president” or “assistant secretary,” authorized to sign official documents on behalf of MERS.
This April, upon announcing settlements with 14 lenders over allegedly improper foreclosure practices, federal bank regulators required MERS too to sign an agreement to reform. The regulators said MERS had failed to establish adequate internal controls, and “engaged in unsafe or unsound practices” in transferring mortgages. Like the 14 lenders, MERS neither admitted nor denied wrongdoing.
In practice, when servicers needed to create mortgage assignments to replace missing ones for foreclosure cases, their own employees, signing as MERS officials, printed out newminted documents and signed their names to them. MERS has served in effect as an instant teller machine for mortgage assignments. Servicers simply have their own employees sign the needed documents as MERS officials.
For some time, most courts around the country rejected homeowners’ challenges to MERS and upheld the mortgage assignments. But recent decisions by state and federal appellate courts have been ruling that MERS doesn’t have the right to transfer promissory notes and mortgages. A New York State appellate court in June ruled that MERS, because it does not own the notes, has no power to transfer to servicers the right to foreclose. Federal district and bankruptcy courts in multiple states recently have issued similar rulings. (Bank of New York v Silverberg, 2011 Slip Op 05002, New York State Appellate Division, Second Department.)
A spokeswoman noted that judges in multiple states continue to uphold MERS powers. In response to pressure from regulators and the courts, MERS had said it is redrafting some of its procedures.
(Editing by Michael Williams)
Read the entire article here: http://mw3.vzwwap.com/app/news/storydetails.aspx?nid=TRE76I07N&ncat=National&tid=02MR1G0000IX04TJ7HX883GGF
Rising number of Utah bankruptcies bucks U.S. trend
By Steven Oberbeck
The Salt Lake Tribune
First published Jul 18 2011 05:42PM
Updated 9 minutes ago Updated Jul 19, 2011 10:17AM
A growing number of the state’s residents filed for bankruptcy during the first half of this year, countering a national trend.
David Sime, clerk of the U.S. Bankruptcy Court for Utah, said Monday the court received 9,927 bankruptcy petitions in the first six months of 2011, an 11 percent increase over the number filed in the same period a year ago.
“Our percentage increase was not as great as last year, but there is no indication that we’re going to see any downturn in the near future,” Sime said.
Bankruptcy filings in the state during the first half of 2010 were up 31 percent over the previous year as Utahns continued to struggle with financial problems in the wake of the Great Recession.
Utah’s first-half increase in filings this year ran opposite of U.S. numbers. But the reasons why may surprise you.
The American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center, reported that filings nationwide totaled 709,303, an 8 percent decrease from the first half of 2010.
“The drop in bankruptcies shows the continued efforts of consumers to reduce their household debt, and the overall pullback in consumer credit,” Samuel Gerdano, the Institute’s executive director, said in assessing the national picture.
Utah’s rising bankruptcy numbers may be a sign that the state is a victim of its own economic success.
Relatively low unemployment here – 7.3 percent versus 9.2 percent nationally – may be providing more of the state’s residents with the financial wherewithal to file for bankruptcy, compared with elsewhere.
Jean Lown, a professor at Utah State University who has done research into consumer bankruptcy trends, said some of her earlier research suggested many debtors must save up to pay their filing and attorney fees.
“They could not afford to file after losing a job. They had to wait until they got a new job to be able to afford to file,” she said. “So as the economy improves, more debtors who have no hope of repaying all their unsecured debts will file once they get a new [usually lower-paid] job.”
Another expert also has suggested that Utah’s job picture may have contributed to the state’s bankruptcy rate.
Earlier this year, University of Arizona law professor and resident American Bankruptcy Institute scholar Jean Braucher said that when the economy starts to improve, people “realize they have assets that they now are in a better position to protect.”
Of the 9,927 bankruptcy petitions filed in Utah during the first half of this year, Sime said 66 percent sought Chapter 7, which involves a trustee liquidating a debtor’s assets and distributing the proceeds to creditors. The remaining 34 percent sought Chapter 13, which gives debtors – typically wage earners – the opportunity to formulate a plan to repay their obligations over time.
steve@sltrib.com Twitter: OberbeckBiz
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Bank of America’s $8.8 Billion Black Eye
By Matt Koppenheffer
Posted 1:30PM 07/19/11
“The largest loss in Bank of America‘s (BAC) history.” That’s the sound bite from the bank’s second quarter earnings report, which disclosed an $8.8 billion bottom-line loss.
If it seems odd that B of A would announce such a massive loss this far out from the financial crisis, perhaps an analogy will help. Imagine you’re at a party and tip back a few too many. You then proceed to kick over the punchbowl onto a white rug, use a standing lamp as a javelin, have your Olympic-caliber throw stopped short by a flat-screen TV, and make a pass at your best friend’s wife. And that’s just what you can remember.
Now imagine the next week, when the pounding headache has finally subsided to some extent. It’s time to make apologies and, more importantly, settle up with the host and other party goers to cover the damages (both emotional and physical) that you caused.
That’s more or less where Bank of America is right now.
Time to Settle Up
During the second quarter, Bank of America agreed on amends with a wide-ranging group of investors that includes BlackRock (BLK), MetLife (MET), and the Federal Reserve Bank of New York. The deal covers mortgages that soured after Bank of America packaged them into bonds. Assuming the agreement gets approved, Bank of America would pay the group $8.5 billion.
Additional mortgage-related settlements during the quarter helped plunge the bank’s Consumer Real Estate Services segment to a $14.5 billion loss.
Read the entire article here: http://www.dailyfinance.com/2011/07/19/bank-of-americas-8-8-billion-black-eye/
How the Bubble Destroyed the Middle Class
by Rex Nutting
Friday, July 8, 2011
MarketWatch
A lot of people say they are deeply puzzled by the slow recovery in the U.S. economy. They look at the 9+% unemployment rate and the mediocre growth in national output, and they scratch their heads and wonder: Where is the boom that inevitably follows a deep bust, such as we experienced in 2008 and 2009?
But there is no mystery. What other result would you expect from the financial ruin of the once-great American middle class?
And make no mistake, the middle class has been ruined: Its wealth has been decimated, its income isn’t even keeping pace with inflation, and its faith in the American economy has been shattered. Once, the middle class grew richer each year, grew more comfortable, enjoyed a higher living standard. It was real progress in material terms.
Read the entire article here: http://finance.yahoo.com/banking-budgeting/article/113086/bubble-destroyed-middle-class-marketwatch?mod=bb-budgeting&sec=topStories&pos=5&asset=&ccode
BofA deal means more could lose their homes
By NELSON D. SCHWARTZ
The New York Times
First published Jul 16 2011 07:02PM
Updated Jul 17, 2011 12:22AM
Tens of thousands of Bank of America’s most distressed borrowers could be evicted and lose their homes more quickly as a result of a proposed settlement between the bank, which is the country’s largest mortgage servicer, and investors in its troubled mortgage securities.
For struggling borrowers in better financial shape, the outcome could be more positive. The deal would include incentives for mortgage servicers to help homeowners who have fallen behind on their payments and whose homes are worth less than what they borrowed.
“The goal is to reinstate as many borrowers in a modification that performs well,” said Tony Meola, a servicing executive with BofA. “It also is likely to lead to faster resolution in those unfortunate situations where foreclosure is inevitable. While not a desirable outcome, the recovery of the housing markets depends on moving through the foreclosure process as quickly and fairly as possible.”
Although powerful investors stand to benefit from the $8.5 billion settlement over the bank’s bundling of shoddy mortgages as securities, the fallout for the nearly 275,000 borrowers who took out those loans depends greatly on how deep they are in the foreclosure process and whether they earn enough money to dig themselves out. (BofA also is the largest holder and servicer of mortgages in Utah.)
Although no exact income qualification has been set as part of the agreement, which was announced last month, many servicers use a formula in which borrowers can qualify for a modification as long as the new monthly payment does not exceed 31 percent of a borrower’s monthly gross income. For borrowers who are unemployed or lack the income to cover even reduced mortgage payments, foreclosure and eviction could be much more immediate.
With 1.3 million borrowers at risk of foreclosure, BofA has been overwhelmed by the surge in defaults, and the accord has raised hopes that this logjam will finally begin to ease. But skeptics say that previous arrangements, like another multibillion-dollar settlement by BofA in 2008, have barely made a dent in the problem.
“The mortgage servicers have repeatedly promised to do things and then not done them,” said Michael Barr, a former assistant Treasury secretary who now teaches law at the University of Michigan. “I think it’s positive in general, but I don’t expect it to be transformative of what we’ve witnessed from the mortgage servicers over the last four years.”
Matthew Weidner, a Florida lawyer who represents borrowers facing foreclosure, said he was skeptical of promises by the deal’s architects that lower monthly payments would be easier to obtain.
Read the entire article here: http://www.sltrib.com/sltrib/money/52191311-79/borrowers-foreclosure-bofa-servicers.html.csp
Bank of America shares dip below $10
July 15th, 2011 @ 2:35pm
By PALLAVI GOGOI
AP Business Writer
NEW YORK (AP) – Bank of America shares fell below $10 for the first time since May 2009.
The stock price hit a low of $9.88 Friday, making it the only one of the four largest banks with a share price in the single digits. Most large bank stocks fell on Friday on fears of the fallout of the European debt crisis and the results of stress tests on the European banks’ ability to withstand economic stress.
Investors have ben bailing out of Bank of America stock for several months, driving the price. In the past 12 months, Bank of America Corp.’s stock has fallen 35 percent, making it the third worst performing stock in the Standard & Poor’s 500 index. On Friday, the stock closed at $10, down 0.7 percent for the day.
The stock decline is a setback for the nation’s largest bank and its CEO Brian Moynihan, who has had to deal with multiple crises in the last year, mostly related to mortgage problems stemming from the bank’s 2008 purchase of Countrywide Financial.
On June 29, Bank of America announced its latest settlement with investors who claim they were knowingly sold poorly written mortgage bonds. At $8.5 billion, it was the largest bank settlement ever announced. The amount eclipsed the last three years of earnings at the Charlotte, N.C. bank.
The stock also reflects investors’ anxieties over how deep Bank of America’s problems might be, says Cassandra Toroian, president and chief investment officer at Bell Rock Capital.
“(If) investors feel like there’s no end to the losses and the settlements…why own it?” Toroian says.
The uncertainties are numerous. The latest settlement is already being challenged in court by one investor group and the New York attorney general is investigating how the deal was reached. Since the beginning of the year, the bank has agreed to pay $12.7 billion in settlements to multiple investors. The bank increased its litigation reserves by $940 million in the first quarter and is expected to add to that when it announces second quarter results next Tuesday. Experts say the move makes it clear company officials believe there’s more to come.
In March, the Federal Reserve didn’t allow Bank of America to increase its dividend, citing uncertainty about the depth of its mortgage problems. It was the only denial issued to any of the four largest U.S. banks. And it raised questions with investors about whether the bank was strong enough to withstand another economic downturn.
Bank of America is in worse shape than other major banks like JPMorgan Chase & Co. and Wells Fargo & Co. because of its purchase of Countrywide for $4 billion in 2008. That seemed like a bargain price for the country’s largest mortgage lender. But the purchase has cost the bank tens of billions more in mortgage losses, regulatory fines, repurchases of poorly-written loans and expensive litigation. All told, the bank services one out of every five U.S. mortgages.
Read the entire article here: http://www.ksl.com/?nid=153&sid=16388602
Utah’s Division of Real Estate director resigns
The Salt Lake Tribune
First published Jul 15 2011 02:33PM
Updated Jul 15, 2011 09:19PM
State Division of Real Estate Director Deanna Sabey has resigned.
Francine Giani, executive director of the Utah Department of Commerce, said Friday that Sabey resigned this past week to pursue other opportunities as an attorney.
“What she told us was she was going back to private practice,” said Giani. “She had been on vacation, had a chance to reflect and decided she kind of wanted to go in another direction.”
Sabey could not be reached for comment. She assumed the post in August 2009, replacing Mark B. Steinagel, who left to become director of the Division of Occupational and Professional Licensing.
Giani said she hopes to announce a new director for the Real Estate Division next week. The division provides education, licensing and regulation of people working in real estate, mortgage and appraisal businesses.
Thad LeVar, deputy director of the department, has been appointed interim director of the division.
The Salt Lake Tribune
Read the entire article here: http://www.sltrib.com/sltrib/money/52198814-79/director-division-estate-real.html.csp
Utah ranks 4th in foreclosure rate
July 14th, 2011 @ 8:48am
By ksl.com
SALT LAKE CITY – The Beehive State continued its dubious distinction of being among the top foreclosure states in the nation, according to a new report.
The RealtyTrac Midyear 2011 Foreclosure Market Report showed Utah with the fourth highest rate of filings in the country, behind only Nevada, Arizona and California.
Highest foreclosure rates
- Nevada (near 5%)
- Arizona (2.82%)
- California (1.96%)
- Utah (1.65%)
- Georgia (1.50%)
- Idaho (1.49%)
- Michigan (1.34%)
- Florida (1.28%)
- Colorado (1.19%)
- Illinois (1.15%)
Utah’s rate of 1.65 percent during the first six months of the year indicated that one in every 61 households in the state recorded a foreclosure filing – default notice, scheduled auction or bank repossession. However, the rate is 13.11 percent lower than at the same time last year, the data showed.
The report stated that 15,691 properties in Utah recorded a foreclosure filing during the period.
Nationally, almost 5 percent of all Nevada housing units – one in 21 – received at least one foreclosure filing in the first half of 2011, the highest foreclosure rate in the U.S. A total of 53,217 Nevada properties received a foreclosure filing, a 17 percent decrease from both the previous six months as well as from the first six months of 2010.
Arizona registered the second highest state foreclosure rate, with one in 36 households – or 2.82 percent – of the state’s housing units receiving a foreclosure filing. The Golden State of California registered the nation’s third highest state foreclosure rate at 1.96 percent of its housing units or one in 51 households receiving a filing during the six-month period.
Read the entire article here: http://www.ksl.com/?nid=960&sid=16363661
Judge sides with homeowners in foreclosure suit
By Tom Harvey
The Salt Lake Tribune
First published May 18 2011 06:42PM
Updated Jun 2, 2011 02:31AM
U.S. District Judge Dee Benson left open a legal window Wednesday for two South Jordan residents facing the loss of their house, one of the first cracks in federal court for Utahns trying to save homes from the wave of foreclosures swamping the state.
Benson declined to grant a motion to dismiss the lawsuit brought by Michael and Dana Geddes to halt the foreclosure on their home while they try to negotiate a loan modification. That means the couple and their attorney can proceed with gathering testimony and documents to try to prove their contention that the foreclosure process to which they’re being subjected does not comply with Utah and federal laws.
By one estimate, Utah could be facing 40,000 foreclosures this year, the blowback from the financial crisis that was created by an out-of-control mortgage process where many loans were granted with greatly fluctuating interest rates or to people who normally would not qualify.
The practices created a real estate bubble of rapidly inflating home prices that began to burst in late 2007, dragging down the U.S. financial system.
Federal judges in Utah have generally been hostile to lawsuits by homeowners who say that, in the process where mortgages were packaged and resold to groups of investors, traditional property recording practices and laws were bypassed and that, as a result, foreclosures were proceeding illegally.
Benson conducted a 90-minute hearing in the Geddes lawsuit in which he intently grilled both sides over various legal questions. But what seemed to sway him was the admission by attorneys for the foreclosing entities that they were not sure who actually owned the couple’s mortgage note.
Homeowner attorneys have argued that because entities such as Bank of America do not own the actual notes, which are in the hands of investors, they cannot legally institute foreclosure proceedings. Benson said the Geddeses made a sufficient case to allow them to demand evidence of who owned the note on their home.
“I think it went into a securitization pool,” he said. “But we don’t know.”
Attorney Abraham Bates, who represented the couple at the hearing, said they both had been diagnosed with cancer and started treatments when they sought a loan modification. But after spending hours on the phone trying to negotiate a modification, ReconTrust Co., the foreclosure arm of Bank of America, began to foreclose.
Benson disputed Bates’ characterization that federal courts in Utah were automatically dismissing such cases, saying he was making decisions on a case-by-case basis.
But his decision to not grant dismissal does create a split among local federal judges, others of whom have routinely dismissed many of the dozens of foreclosure suits they’ve heard.
Chief Judge Tena Campell has granted orders temporarily halting foreclosures and Judge Clark Waddoups also has granted a temporary restraining order, though he has ruled several times in favor of the entities bringing most of the foreclosure actions in Utah, the Mortgage Electronic Registration Systems and ReconTrust.
Twitter: tomharveysltrib
Read the entire article here: http://www.sltrib.com/sltrib/money/51841563-79/foreclosure-benson-federal-utah.html.csp
Utah event aims to help avoid foreclosures
By Tom Harvey
The Salt Lake Tribune
First published Jul 12 2011 06:06PM
Updated Jul 13, 2011 12:05AM
Utahns facing default on their mortgages will have an opportunity Thursday to talk directly to representatives of some of the banks who hold or service their loans, including giant Bank of America.
The Utah Housing Coalition and Utah Foreclosure Crisis Coalition, a group of organizations that provide information and help to residents facing the potential loss of their homes, is presenting “Utah Housing & Ownership Preservation Day.” The event will match up homeowners with banks, counselors and other professionals with the aim of trying to avoid foreclosures through loan modifications or other means.
Included will be representatives from BofA, the largest home loan servicer in Utah. Representatives of Fannie Mae, the now-federally owned home loan support company, JP Morgan Chase & Co. and GMAC also will send officials, and there may be others, said Afton January of the Utah Housing Coalition.
“People who are in default or in danger of imminent default, meaning they know they are going to miss mortgage payments soon, can come down and meet with those servicers face to face to see if they can work something out before they go through foreclosure,” she said.
Some homeowner advocates say Utah is in the midst of a foreclosure crisis, with mortgage bankers noting that 1 in 10 Utah homeowners is struggling to make payments or already facing foreclosure. That’s often been the result of interest rates resetting at higher levels amid economic setbacks at a time when many homes are worth less than what is owed on their mortgages.
Utah ranks fourth worst in the nation for foreclosure rates – one of every 322 housing units, according to the real estate information company RealtyTrac. Only Nevada, Arizona and California fare more poorly.
At the event Thursday, counselors approved by the Department of Housing and Urban Development also will be on hand. January said there will be activities available for children whose parents may have to wait several hours to meet with someone.
She urged homeowners to bring all available documentation, loan papers, proof of income and correspondence with loan servicers.
“They should bring everything they’ve got in terms of their financials.”
Twitter: @tomharveysltrib
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Foreclosed homeowners may seek case reviews
By Julie Schmit
USA Today
More than 2 million homeowners hit by a foreclosure in 2009 or 2010 can demand reviews of their cases and they’ll receive letters explaining their rights, banking regulators said Thursday.
The letters are intended to help identify homeowners who believe they were harmed financially because of improper foreclosure practices by mortgage servicers, said Julie Williams, chief counsel of the Office of the Comptroller of the Currency, at a congressional hearing Thursday.
The number of affected homeowners includes those who completed a foreclosure in 2009 or 2010 or who had one in process then, the OCC said.
Read the entire article here: http://www.usatoday.com/money/economy/housing/2011-07-08-mortgage-foreclosure-errors_n.htm
Mortgage Rates Are Great, If You Qualify
The Wall Street Journal
With interest rates near rock bottom and home prices down, this ought to be a great time to buy a home. But for most people, it’s a lousy time to get a mortgage.
Years after the collapse of the real-estate market and resulting financial crisis, it takes nearly pristine credit scores and hefty down payments to get the best rates.
“Since 2009, credit has become a lot tighter,” says Greg Reiter, who follows mortgage-backed bonds at RBS Global Banking & Markets.
For borrowers, this highlights the need to pay close attention to credit scores. New rules unveiled last week should make it easier for consumers to see how their credit scores affect the interest rates they pay. These rules, the result of last year’s Dodd-Frank financial-services legislation, require banks and other lenders to disclose to consumers the scores used to determine interest rates charged borrowers, or to deny credit.
The new reality for borrowers can be seen in the FICO credit scores on the loans that banks are giving out and that are backed by government agencies Fannie Mae and Freddie Mac. These days the two agencies essentially finance 75% of all mortgages by purchasing the loans from the banks. In the process, they shape how much it costs to borrow.
FICO scores range from 300 to 850. Pre-crisis, a score of 700 to 725 was deemed solid and a borrower could expect to get a “conventional” mortgage at the lowest rates.
From 2003 through 2006, 82% of Fannie Mae mortgages were for borrowers with a score between 700 and 750, according to data compiled by RBS.
But so far in 2011, only 13% of Fannie Mae mortgages carry that score, and just 1.7% have a score of 700 to 725, according to RBS. This year, 75% of Fannie Mae mortgages are for FICO scores of 750 to 775, up from less than 5% before 2005.
Meanwhile, the median score is 711, according to FICO.
“Half the population is locked out” from the best mortgages, says Mr. Reiter.
The upshot is that borrowing costs more even with a 730 score and a 20% down payment, says Norman Calvo, president of Universal Mortgage in Brooklyn, N.Y.
“Three years ago, if you had 730 it was excellent,” Mr. Calvo says. Today, he says, it could cost an extra 0.125 percentage point per year on a mortgage, “just because you have one little nick on your credit report.”
For more typical scores, the premiums are even bigger. At 700 to 725, it’s usually an extra quarter percentage point, and at 630 — if a borrower can find a loan — the additional cost is 1.5 percentage points, Mr. Calvo says. “If you have a credit score of less than 680, you’ve got to be worried about approvability.”
The news is also grim for those looking to refinance. Based on the level of interest rates, RBS estimates 60% of agency-backed mortgages should be eligible to refinance. But once home values and credit scores are factored in, just 12% are eligible.
These trends show the importance of understanding credit scores. Mr. Calvo says borrowers sometimes unintentionally make matters worse. For example, closing an unused credit card can actually lower a score in the short term, he says.
Check your credit scores at AnnualCreditReport.com. And to learn more about scores, visit the education section of myFICO.com.
Read the entire article here: http://online.wsj.com/article/SB10001424052702303544604576436331698560662.html?mod=WSJ_RealEstate_RIGHTTopCarousel
Poll: Despite doubts, owning a home retains allure
By DAVID STREITFELD
and MEGAN THEE-BRENAN
The New York Times
First published Jul 01 2011 01:01AM
Updated Jul 2, 2011 03:53PM
Owning a house remains central to Americans’ sense of well-being, even as many doubt their home is a good investment after a punishing recession.
Nearly 9 in 10 Americans say homeownership is an important part of the American dream, according to the latest New York Times/CBS News poll. And they are keen on making sure it stays that way, for themselves and everyone else.
Support for helping people in financial distress over housing is higher than support for helping those without a job for many months.
Forty-five percent of the respondents say the government should be doing more to improve the housing market, while 16 percent say it should be doing less. On the politically contentious issue of direct financial assistance to those having trouble paying their mortgages, slightly more than half of those polled, 53 percent, say the government should help. And almost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals.
President Barack Obama, who has been criticized both for doing too much to help the housing market and for not doing enough, was given poor marks. Only 36 percent of those polled approve of what Obama has done, while 45 percent disapprove.
The nationwide telephone poll was conducted June 24 to 28 with 979 adults and has a margin of sampling error of plus or minus 3 percentage points for all adults.
Read the entire article here: http://www.sltrib.com/sltrib/money/52107335-79/percent-housing-market-poll.html.csp
Lehman: More creditors sign on for bankruptcy plan
The Associated Press
First published Jul 01 2011 05:03PM
Updated Jul 2, 2011 12:06AM
New York – Lehman Brothers is getting broader support for its new bankruptcy plan.
The investment bank, whose bankruptcy filing in 2008 helped precipitate the financial crisis, said Friday that creditors holding claims of $100 billion have approved its payment plan.
The plan will give creditors a “fair and reasonable” outcome, Lehman CEO Bryan Marsal said. If approved, creditors “will avoid the costly, uncertain and protracted litigation that would undoubtedly follow in the absence of this compromise solution.”
Lehman says it has $65 billion to settle $325 billion in claims.
Lehman was the largest bankruptcy in U.S. history when it filed for Chapter 11 in September 2008 and listed $613 billion in debts.
The new plan still needs approval of a majority of creditors and the federal bankruptcy court. Alternative plans will be put on hold while Lehman moves its proposal forward.
Lehman Brothers Holdings Inc. also said that it has settled derivative claims with seven of the 13 largest banks. Lehman expects to settle an additional claim “shortly,” resolving a total $9.6 billion in derivative claims for $6.2 billion.
Read the entire article here: http://www.sltrib.com/sltrib/money/52116834-79/lehman-bankruptcy-billion-creditors.html.csp
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Unemployment rose to 9.2 percent as hiring stalls
By CHRISTOPHER S. RUGABER
The Associated Press
First published Jul 8, 2011
Hiring slowed to a near-standstill last month. Employers added the fewest jobs in nine months and the unemployment rate rose to 9.2 percent.
The economy generated only 18,000 net jobs in June, the Labor Department said Friday. And the number of jobs added in May was revised down to 25,000.
Utah’s unemployment-rate numbers for June likely will be released next week. But May’s numbers came in at 7.3 percent. While there were 17,400 more wage and salaried jobs in May over the same month in 2010 – a 1.5 percent gain – the year-over-year increases for the four previous months were between 18,000 and 19,000.
The number of Utahns considered unemployed declined in May, but only by 300 to 99,700. Still, the state’s unemployment rate was 0.1 percent better than in April .
The latest national report offered stark evidence that the recovery will be painfully slow. It also raised doubts that the economy will rebound in the second half of the year after hitting a spring slump.
Businesses added just 57,000 jobs last month- the fewest in more than a year. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions.
Stock futures plunged after the report’s release.
“June’s employment report doesn’t have a single redeeming feature,” said Paul Ashworth, an economist at Capital Economics. “It’s awful from start to finish.”
Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.
Companies have pulled back on hiring after adding an average of 215,000 jobs per month from February through April. The economy typically needs to add 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.
Economists have said that temporary factors have, in part, forced some employers to hold back on adding workers. High gas prices have cut into consumer spending. And supply-chain disruptions stemming from the Japan crisis have slowed U.S. manufacturing production.
In June, hiring was weak in most sectors: Manufacturers added only 6,000 jobs; Education and health care, which added jobs through the recession, was flat; and professional and business services, which include accounting, legal and engineering jobs, grew by only 12,000.
Construction and financial services cut jobs.
The weak economy and slow hiring is causing more people to simply give up looking for work. More than a quarter-million people stopped their job searches in June. That kept the unemployment rate from rising even further. When laid-off workers stop looking for work, they are no longer counted as unemployed.
Including discouraged workers and those working part time, but who would prefer full-time work, the “under-employment” rate jumped from 15.8 percent to 16.2 percent.
Unemployment has topped 8 percent for 29 months, the longest streak since the 1930s. It has never been so high so long after a recession ended. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.
Read the entire article here: http://www.sltrib.com/sltrib/money/52153647-79/jobs-percent-unemployment-economy.html.csp
Gov’t to ease foreclosure rules for unemployed
By DEREK KRAVITZ
The Associated Press
First published Jul 7, 2011
Washington – The Obama administration is making it easier for out-of-work homeowners to stay in their homes, as it tries to revamp its signature, but troubled, foreclosure-prevention program.
Starting Aug. 1, the Federal Housing Administration will extend the period for unemployed homeowners to miss mortgage payments from three or four months to a full year. That will allow qualified homeowners to go without making a monthly payment for 12 months before the foreclosure process begins.
The extended grace period only applies to FHA-backed loans, which represent about 14 percent of all active mortgages and roughly 25 percent of new mortgages, and homeowners in the government’s foreclosure-prevention program.
Housing and Urban Development Secretary Shaun Donovan said Thursday that administration officials hope private lenders and government-controlled mortgage giants Fannie Mae and Freddie Mac, which back 90 percent of all new mortgages, will adopt a similar policy.
“Our hope is that this will have broader effects,” Donovan said during a conference call.
The government launched its chief foreclosure program in 2009 to help those at risk of foreclosure by lowering their monthly payments. Borrowers start with lower payments on a trial basis. But the program has struggled to convert them into permanent loan modifications.
More than 1.6 million troubled homeowners received trial modifications over the past two years. But a majority of the applicants, about 854,000 homeowners, have dropped out of the program entirely.
In recent weeks, administration officials have acknowledged that housing has become a significant drag on the economy. President Barack Obama said the housing market has “been most stubborn to us trying to solve the problem,” during a town-hall-style meeting Wednesday on Twitter.
Homeowners accepted into the program receive interest rates as low as 2 percent for five years. They can repay their loans over a longer period. The median savings for those who remain in the program is about $526 per month.
Those who have their payments delayed must repay them, with interest.
But many homeowners have complained that the program has been a bureaucratic mess. Some have said they were disqualified after banks lost their documents and failed to return their phone calls. Banks have blamed homeowners for failing to submit needed paperwork.
Read the entire article here: http://www.sltrib.com/sltrib/money/52147548-79/homeowners-program-foreclosure-administration.html.csp
Utah law firm sues to halt BofA foreclosures
The Salt Lake Tribune
First published Jul 6, 2011
Updated Jul 6, 2011 10:38AM
A Salt Lake City law firm says it has filed a proposed class-action suit against Bank of America and its subsidiary ReconTrust “for conducting thousands of unauthorized foreclosures in Utah.”
Mumford West & Snow filed the suit Tuesday in Third District Court. The action comes in the wake of the Utah Legislature creating civil penalties against what authorities consider illegal foreclosures.
The firm, in a statement, also said it intends to seek a statewide restraining order and a preliminary injunction “prohibiting the named defendants from conducting any additional foreclosure sales within the state.”
In addition, the Utah Attorney General’s office pledged in May that it would file suit against the Charlotte, N.C. banking giant if ReconTrust continued to file foreclosure proceedings in violation of state law.
Lead counsel for the law firm, Marcus R. Mumford, said in a statement that Bank of America and Recon “have demonstrated a long-standing pattern of illegal activity in taking thousands of homes from Utah homeowners in unauthorized foreclosures.”
“They continue to kick people out of their homes claiming that they are not required to follow Utah law,” he said. “We intend to put a stop to that.”
Calls to Bank of America for reaction to the suit were not immediately returned.
Read the entire article here: http://www.sltrib.com/sltrib/money/52138891-79/utah-law-firm-foreclosures.html.csp
Mortgage Fraud Investigations Results in 525 Arrests and $3 Billion in Losses
National Mortgage News
Tuesday, July 5, 2011
A year after “Operation Stolen Dreams” concluded tracking mortgage fraud nationwide, more than $3 billion in estimated losses resulted from this search, according to the Federal Bureau of Investigation.
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The operation was the largest collective enforcement effort ever brought to bear in confronting mortgage fraud throughout the country. The Mortgage Fraud Working Group of President Obama’s interagency Financial Fraud Enforcement Task Force organized the operation, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.
Between March 1, 2010 and June 18, 2010, there were 1,517 criminal defendants nationwide involved in some type of mortgage fraud, resulting in 525 arrests. The operation also led to 191 civil enforcement actions and the recovery of more than $196 million.
“Mortgage fraud has cost the FHA program, borrowers, the American taxpayers and Michigan homeowners millions of dollars,” said HUD-OIG special agent in charge Breck Nowlin. “The successes of Operation Stolen Dreams and our continued pursuit of financial fraudsters highlights the tireless efforts of law enforcement to bring to justice those who seek to defraud desperate homeowners.”
Since the operation ended in June 2010, 30 individuals have either pleaded guilty or found guilty of federal offenses relating to mortgage fraud, resulting in 27 separate prison terms. The highest sentencing so far against a fraudster has been 108 months in prison.
Civil forfeitures imposed so far against the convicted fraudsters have totaled more than $1.5 million. In addition, 22 new indictments have been filed pertaining to mortgage fraud offenses, which involve millions of dollars of alleged loss.
The U.S. Attorney’s Office is also pursuing individuals who are defrauding senior citizens by stealing their equity from their homes through fraudulent Home Equity Conversion Mortgages, which are FHA-insured reverse mortgages. Federal, state and local law enforcement agencies meet regularly with regulators, real estate professionals, victim rights organizations and lenders to investigate the latest fraud trends to avoid another crisis in the real estate market.
“Mortgage fraud, like all financial crimes, threatens the financial health of our communities, victimizing everyone from low-income families to lenders and investors,” said Erick Martinez, a special agent in charge. “IRS Criminal Investigation will follow the money and work with our law enforcement partners to collect the evidence needed to prove tax and money laundering violations, bring to justice those who create this havoc.”
Read the entire article here: http://www.nationalmortgagenews.com/nmn_features/mortgage-fraud-525-arrests-1025526-1.html
Bank of America’s big make-good check won’t be its last
The Associated Press
First published Jun 29 2011 06:06PM
Updated Jun 29, 2011 11:24PM
New York – Bank of America’s $8.5 billion settlement with investors announced Wednesday is the largest any bank has ever paid.
It might help assuage worries about how deep the bank’s mortgage problems will be and how long it might take to settle them. But for the nation’s largest bank and its CEO Brian Moynihan, the slate is far from clean.
The payout Wednesday settles claims by just 22 investors who said Bank of America Corp. sold bonds based on substandard home mortgages. The bonds fell in value when the housing market collapsed and left the investors with losses on $424 billion worth of mortgages. The $8.5 billion settlement eclipses the past three years of earnings at the bank.
The uncertainty about just how bad BofA’s mortgage issues might be has scared investors and led to a 31 percent decline in Bank of America’s stock price since January of last year, when Moynihan took over.
“This is a major step forward for our company,” Moynihan said in a conference call with investors on Wednesday.
Wall Street cheered the move, sending the stock up 3 percent, to $11.14. It has been one of the worst-performing stocks in the S&P 500 index in the past year.
But that rally could be short-lived. Analysts say the $8.5 billion is double the amount they’d expected. The bank continues to fight other investor groups that are demanding similar settlements. Lawsuits from the Federal Home Loan Bank of Boston, bond insurers MBIA and Syncora Holdings linger. The 50-state attorneys general investigation into poor foreclosure practices continues. And Bank of America is likely to be ordered to pay a hefty portion of the estimated $20 billion multibank settlement over the mishandling of hundreds of thousands of home foreclosures.
Paul Miller, a bank analyst at FBR Capital Markets, says he’s concerned about the bank’s ability to increase earnings at a pace that would make up for these higher costs. These worries are magnified by the fact that the economic recovery in the U.S. is slowing. That could reduce the number of loans the bank is able to make to consumers and businesses.
Read the entire article here: http://m.sltrib.com/sltrib/money/52101787-79/bank-america-billion-investors.html.csp
NY Appeals Court Sides with Borrower, Overturns MERS Ruling
National Mortgage News
Wednesday, June 15, 2011 By Austin Kilgore
A New York state appeals court overturned a ruling in favor of the Mortgage Electronic Registration Systems, finding Bank of New York did not have standing to initiate a foreclosure.
The June 7 decision, issued by the Supreme Court of the State Of New York Appellate Division, reversed the lower court’s ruling and granted the borrower’s motion to dismiss the May 2008 foreclosure lawsuit against Stephen and Fredrica Silverberg.
The case is unique in that Bank of New York and Countrywide, the servicer of the loan, could not produce a correctly endorsed promissory note showing Bank of New York’s ownership as trustee.
The Silverbergs took out two mortgages on their Greenlawn, N.Y. home, which were later consolidated into one loan. Countrywide was the named lender and note holder on the consolidation agreement but it was MERS-not Countrywide-that executed the document, in its capacity as the mortgagee of record and Countrywide’s nominee.
Prior to the commencing of the foreclosure, the mortgage was assigned from MERS to Bank of New York through a “corrected assignment of mortgage,” (as opposed to the typical “assignment of mortgage” filed to put a mortgage in the name of a trustee or servicer).
The court agreed with the Silverbergs that the consolidation agreement broke the chain of ownership of the notes to BNY, preventing BNY from proving its standing in court.
Read the entire article here: http://www.nationalmortgagenews.com/dailybriefing/2010_368/overturns-mers-ruling-1025244-1.html