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Editor’s Comment: Among the unsung culprits in the false securitization scheme were the developers who conspired to raise prices to unconscionably high levels and the Wall Street funding that loaned the money for construction of new residential palaces. The reason the developer did it was once again, no risk and all profit, knowing that no matter how high the price, the appraisal would be approved. And the reason why IndyMac and other fronts for Wall Street’s tsunami of money did it was the same, no risk and all profit.

So what we have going on is that a few bankers are being thrown under the bus to take the blame for “isolated”instances of malfeasance. Their defense bespeaks of the widespread nature of this crime and how it created its own context of right and wrong. Many of them are saying they were following industry standards. Here’s the rub: they are right. The problem is that the new industry standards were illegal, fraudulent and disgraceful.

So here we have three IndyMac executives — out of thousands of people who did the exact same thing they did — accused of approving unworkable loans that were never repaid because in every Ponzi scheme the result is the same: when people stop putting in new money, the scheme collapses.

The question is not why these three are being charged in a civil action. The real questions are why are they not being charged with criminal fraud, and why thousands of other individuals who engaged in identical behavior are not being charged both civilly and criminally.

Then we have an interesting question: if it was improper for these three IndyMac execs to approve bad loans to developers, why are there no charges pending for approving bad loans and misleading homeowners?

DOJ keeps saying that they did not accumulate enough evidence to prove a criminal case, which as we all know, must be proven beyond a reasonable doubt. But I say the DOJ simply went for the low-hanging fruit, intimidated by the complexity of securitization. But if they take two steps back and get their heads out of the thickets, they will see a simple Ponzi scheme that can be prosecuted easily.

Other than a criminal environment, what bank or other organization would set bonuses based upon the number of loans or the amount of money they moved? In the real world where right and wrong are inserted into the equation, bonuses, salary and employment is based upon the perception of management that an individual is contributing to a profit center. Here the bank is said to have “lost money” much of which was off set by insurance, Federal bailout and gigantic fees paid tot he bank for pretending to be a lender when they were not.

Criminal larges are way overdue against both the corporate mega banks and the titans who ran them, right down the line to anyone who had enough knowledge to realize the acts they were committing were wrong. But the money was too damn good — getting paid 4-10 times usual compensation was enough for them to keep their mouths shut — but not in all cases. Some people did quit or blow whistles. They are buried in the mounds of documents and statements taken by law enforcement all over the country.

It is not the lack of evidence that keeps the prosecutions, even the civil ones, from becoming a wave, it is the will of the people charged  with law enforcement decisions whose opinions were guided by political pressures. The Obama administration owes a better explanation of what is happening in the housing market and how it can be fixed. Without taking economists seriously on the importance of housing and prosecuting those who break the rules, the economy will continue to drag.

Japan just announced they had an annual GDP decline of 3.5%. Remember when we afraid japan’s money would take over the world? Their shrinking economy is due to the fact that they ideologically stuck to their guns and refused to stimulate the economy, protect their currency, and reign in the big money people. All they needed was a philosophy that the common man doesn’t matter. Hopefully our election which broke in favor of the democrats because of demographics, will teach a lesson — that without the success and hopes and good prospects for the common person entering the workforce, the economy can stall for decades.

FDIC seeks damages from three former IndyMac executives

Trial begins on a civil lawsuit that accuses them of negligence in approving loans that developers and home builders never repaid.

By E. Scott Reckard, Los Angeles Times

When the Federal Deposit Insurance Corp. seized Pasadena housing lender IndyMac Bank four years ago, the scene resembled the grim bank failures of the 1930s.

Panicked depositors, seeking to reclaim their money, lined up outside branches of the big savings and loan, whose collapse under the weight of soured mortgage and construction loans helped usher in the financial crisis and biggest economic downturn since the Great Depression.

As those memories fade, the government’s effort to reclaim losses stemming from the financial debacle grinds on, with one IndyMac case winding up this week before a federal jury in Los Angeles.

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The civil lawsuit seeks damages from three former IndyMac executives, accusing them of negligence in approving 23 loans that developers and home builders never repaid, costing the bank almost $170 million.

The executives approved ill-advised loans because they earned bonuses for beefing up lending to developers and builders, said Patrick J. Richard, a lawyer representing the FDIC.

“They violated their duties to the bank,” Richard said in his opening statement to the jury Tuesday. “They violated standards of safe and reasonable banking.”

The bankers deny wrongdoing, contending that they made solid business decisions, which at the time were well-considered and approved by regulators and higher-ups at IndyMac.

“This case,” defense attorney Damian J. Martinez said in his opening statement Wednesday, “is about the government evaluating these loans with 20/20 hindsight after the greatest recession we’ve had since the Depression in the 1930s.”

The defendants — Scott Van Dellen, Richard Koon and Kenneth Shellem — ran IndyMac’s Homebuilder Division, a sideline to the thrift’s main business of residential mortgage lending. Court filings show the FDIC settled its case against a fourth former executive at the builder operation, William Rothman, by agreeing to a $4.75-million settlement to be paid by IndyMac’s insurance companies.

The trial, playing out before U.S. District Judge Dale S. Fischer, highlights how federal authorities — often stymied at bringing criminal cases against major players in the financial crisis — have pursued civil damages on a number of fronts.

One high-profile example involved the Securities and Exchange Commission‘s investigation of Countrywide Financial Corp. of Calabasas. The SEC exacted a $67.5-million settlement from former Chief Executive Angelo Mozilo, who ran Countrywide as it expanded to become the nation’s largest purveyor of subprime and other high-risk mortgages.

A Justice Department probe of Mozilo had found too little evidence to support a criminal prosecution. Admitting no wrongdoing, Mozilo paid $22.5 million of the SEC settlement himself, with corporate insurance policies covering most of the balance.

On another front, federal and state prosecutors have filed a series of civil lawsuits accusing major home lenders including Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and JPMorgan Chase & Co. of fraud and recklessness that cost taxpayers and investors billions of dollars.

Taking a different approach, the FDIC suits aim to recover losses in its insurance fund, which compensates depositors when banks fail. The agency says it has authorized lawsuits against 665 insiders at 80 institutions seized during the recent crisis, with 33 suits already filed.

The IndyMac case now going to trial, filed in July 2010, was the first of those suits.

Recoveries typically are modest compared with the losses.

IndyMac’s failure cost the federal insurance fund more than $13 billion, the largest loss among the 463 banks that have failed since 2008. But the FDIC is seeking only $170 million in the suit that has gone to trial in L.A., plus $600 million in a separate suit against former IndyMac Chief Executive Michael Perry.

(Perry contends that the pending lawsuit, accusing him of negligently allowing $10 billion in dicey mortgages to pile up on IndyMac’s books, is without merit.)

The FDIC is proceeding with the IndyMac case despite a setback in its efforts to collect from IndyMac’s insurance. U.S. District Judge Gary Klausen ruled July 2 that IndyMac officer and director insurance policies at the time of its failure cannot be used to cover any damages the agency wins against former bank insiders.

An appeal of that ruling is before the U.S. 9th Circuit Court of Appeals. If the ruling stands, the FDIC could only try to recover damages by attaching the defendants’ personal assets.

The IndyMac defendants’ earnings were modest by the standards of executives running large financial firms, such as Mozilo, whose take during the housing bubble has been estimated at nearly $470 million. But their compensation — in the $500,000 annual range for Koon and Shellem and well over $1 million for Van Dellen, who headed the Homebuilder Division — merited note by the FDIC.

Richard, the lawyer making the FDIC’s opening statement, noted that Van Dellen had rejected a suggestion by Perry in July 2006, as cracks appeared in the housing markets, that IndyMac take a cautious approach in its lending to home builders.

Van Dellen replied in an email that “now is the time to pounce,” Richard told the jury. “So what was his motivation? His bonus for 2006 production was 4 1/2 times his base salary — $914,000 — tied to production” of more builder loans.

scott.reckard@latimes.com

la-fi-indymac-trial-20121110,0,3796443.story

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21 Responses

  1. Had to Share this from todays paper,
    X replaces names …
    Mind Boggling

    COUNTRYWIDE HOME LOANS, INC.

    PLAINTIFF

    VS

    XXXXXXXXXXXX XXXXXXXX

    COMMONS HOMEOWNER’S ASSOCIATION, INC.;
    BANK OF AMERICA, N.A. (USA);

    DEFENDANTS

    07 CH

    NOTICE OF SALE PURSUANT TO JUDGMENT OF FORECLOSURE UNDER ILLINOIS MORTGAGE FORECLOSURE ACT ***THIS DOCUMENT IS AN ATTEMPT TO COLLECT ON A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE*** PUBLIC NOTICE IS HEREBY GIVEN that pursuant to a Judgment of Foreclosure and Sale entered by said Court in the above entitled cause on February 25, 2008,

    Any Comments?

  2. UPDATE:
    NO MORE DIRTY DEEDS
    Citizens have lost their right to due process as 96% of all foreclosures go uncontested because of forged documents. IT MUST STOP! “The integrity of land title records and the rights of the public now hang in the balance. It’s time to occupy the Recorders office. We need to identify and develop our own candidates to challenge bank-owned incumbents.”

    http://www.msfraud.org/no-more-dirty-deeds_2-14.html

  3. Fortunate for us this Property didn’t have an existing lien like most of yours. But it did have a Revocable turned Irrevocable trust encumbering it, and continued to encumber it until 2010, at the point I offered full tender. They didn’t except …

    That’s when NOA sent for taxes and ins not yet due.

    Its all about the timeline ……

  4. Bank of America N.A
    .
    vs

    XXXXX and the UNITED STATES OF AMERICA; STATE OF ILLINOIS; UNKNOWN OWNERS AND NON RECORD CLAIMANTS

    _________________________________________________________

    Foreclosure Judgment Granted here. Are you kidding me? ( I xxx the borrowers names for their privacy).

  5. The Fed messed with the wrong senator …………………………… http://www.salon.com/2013/04/15/fed_messed_with_the_wrong_senator/

  6. The party who has standing and jurisdiction is the party with the right to enforce (wether it be a payoff or a forclosure), If they cant enforce how can they honor a contract? Will the real PII please step forward. Lets get back to the basics.

  7. 2008 fraud upon the court and slander to title covered under settlement. 2011 Criminal Slander to Title not Covered. Who filed the LP release? Answer .. their Attorney (one in the same) No ledgable signatures and no printed name of signing attorney anywhere on the release to be found to verify … And if two clouds on the title were not bad enough, in Sept 2011 … we get the 3rd famous MERS transfers Note and Mortgage together giving BOA both. Would you continue to do business with them? Only if you are a Fool! Demand Enforcement of the Contract!

  8. It really went global. Same fraud, same issues, sames disasters. This is what LL has been claiming for years: every debt was paid long ago and people are still being squeezed out of their last cent worldwide. The only response is a global debt jubilee, imo.

    http://www.newera.org.za/sa-banks-must-pay-out-big-time/

    SA Banks Must Pay Out Big Time
    Oct 02, 2012
    by NewERA

    Up to a trillion rand could be refunded to South African customers by the banks. This is precisely the kind of cash injection that will help bring our country out of debt slavery and into a new age of prosperity.

    Millions of South Africans who have loans or credit could see their monthly repayments reduced substantially. And tens of thousands of people who have had judgments against them over the past two decades may be eligible for compensation. Garnishee orders should be slashed and small businesses struggling with overdrafts should be released from the shackles of debt slavery.

    In simple terms – it is very possible that your credit card, home loan, personal loan, vehicle loan or any form of credit you may have, has been settled in full by a third party, called a Special Purpose Vehicle (SPV). Because your loan has been settled in full (ie. the bank has been paid out for your loan), the bank cannot bring your case to court. Under these circumstances, the collections process undertaken by banks, and any judgments taken by the bank as a result, would be unlawful.

    Once a loan has been securitised (this is the technical term for this process), the bank loses the legal right to the asset. Confirmation of this was given to the New Economic Rights Alliance in the form of the attached letter from the South African Reserve Bank (see page 5, para AD8).

    Unfortunately the banks “neglect” to tell the customer that their loan has been settled thanks to securitisation. This is why The New Economic Rights Alliance, a non-profit organisation, was formed. We are here to educate the South African people, and take legal action if required.

    An example of where a bank has admitted outright securitisation, and withdrawn their court case, is the case of ABSA vs Louis Louw. You can read about this case in our legal documents at http://www.thebigcase.co.za.

    Several overseas court cases have also proven that what we are saying is correct. For example:

  9. Very damning report from ProPublica with even more damning comments from Jann Swanson. I didn’t post the entire article. Click on the link for more.

    http://www.mortgagenewsdaily.com/11092012_hamp_servicers.asp

    by Jann Swanson
    Report: Treasury, Freddie Mac Flubbed HAMP Oversight
    Decrease Font Size Text Increase Font Size
    Nov 9 2012, 9:05AM

    Paul Kiel of ProPublica has published a serious critique of the Treasury Department’s early oversight of the Home Affordable Modification Program (HAMP) that probably won’t surprise anyone who has followed the troubled path of that program. HAMP, established in 2009, was an effort to stem the rapidly rising flood of foreclosures. It required mortgage servicers to offer loan modifications to eligible homeowners in order to lower their monthly payments and, theoretically, stay in their homes. The program was given a budget of $50 billion and a goal to modify three to four million mortgages; to date $4 billion has been spent and 1.1 million loans modified.

    Some servicers are independent companies but the largest are owned by the largest banks including Wells Fargo, CitiMortgage, Chase, and Bank of America. Their role was to review homeowner applications and negotiate the modifications under government rules and supervision.

    Working with heavily redacted documents obtained through multiple Freedom of Information Act (FOIA) requests that Treasury did its best to avoid, Kiel paints a picture of a well intention program run by federal employees who appear to have been either scared to death or in the thrall of the big banks they needed to actually run the program.

    Documents obtained by Kiel show that the government did not complete a major audit of at least two of the largest servicers, Bank of America and Wells Fargo, until over a year and that audits at other servicers were rare in the first two years after the program began. During these two years the servicers reviewed 2.7 million applications for modifications and denied two-thirds of them while homeowner complaints about mistreatment mounted.

  10. For people who don’t understand why getting an attorney is so important.

    Procedural Fun on My Birthday

    Posted on November 12th, 2012 by Mark Stopa

    Tomorrow is my birthday, but foreclosure cases don’t stop for my birthday, so my work doesn’t, either. Hence, though I have to go to court, I get a hearing on a fact-pattern I love.

    I prevailed in obtaining an Order Granting Summary Judgment, a final order where the court dismissed the pending foreclosure case without prejudice. The plaintiff moved for rehearing, making what may appear to be some half-way-decent arguments, centered around their contention that the hearing was cancelled, so they didn’t attend.

    But here’s the fun part. Established rules of procedure require that motions for rehearing such as this be filed within 10 days. See Fla.R.Civ.P. 1.530. Since Plaintiff did not do so, the court lacks jurisdiction to consider the motion, and it must be denied. See Galvez v. Ramos, 941 So. 2d 475 (Fla. 3d DCA 2006) (“a motion for rehearing must be served within ten days after the date judgment was filed. If not, the court lacks authority to grant rehearing. … Ramos was required to serve his Motion for Rehearing within the ten days afforded under Florida Rule of Civil Procedure 1.530(b). He did not do this, and thus, the trial court lacked jurisdiction to entertain his motion.”); Fuller v. Fuller, 706 So. 2d 57 (Fla. 4th DCA 1998) (“Rule 1.530 provides that a motion for rehearing shall be served not later than 10 days after the date of filing of the judgment … Where a motion for rehearing was untimely, the trial court is without jurisdiction to grant it.”); Catsicas v. Catsicas, 669 So. 2d 1126 (Fla. 4th DCA 1996) (“Because the March motion for rehearing was untimely, the trial court was without jurisdiction to grant it.”).

    Here, the plaintiff didn’t serve the motion within 10 days. Hence, it should not matter whether the motion otherwise had merit – it has to be denied.

    In case you hadn’t noticed, I love making arguments like this. Applying the Florida Rules of Civil Procedure and rigidly enforcing them … this approach must be at the heart of any good foreclosure defense.
    Mark Stopa
    http://www.stayinmyhome.com

  11. @dcb – Congress protects the FDIC with a law that disallows liabilities going forward from assets seized by the FDIC. New definition of “No Limit Hold ‘EM”. Not much to insure that way.

  12. What happens when the IRS sends you a 1099-A with out including a 1099-C?
    Sent from Indymac/One West,lender Freddie,
    2. Balance: 364,000.00
    3. Fair market: 430,347.15
    Foreclosure location CA. “loan” was a refinance. Flipper purchase price: $260,000.00 Cash
    Any information would be greatly appreciated.

  13. ” Hopefully our election which broke in favor of the democrats because of demographics, will teach a lesson — that without the success and hopes and good prospects for the common person entering the workforce, the economy can stall for decades.”

    You gotta be kidding!

    Neither candidate has any “prospects for the common person…”. Its really hilarious that the blogger here supposes Obama has any good intentions for the “little people.” He’s a puppet for the corporatists just like Romney. There isn’t a particle of difference between them. Obama was just better with the rhetoric and had the right skin color

  14. This is the real problem. The media continues to aid the fraud unwittingly or with intent. The FDIC has never seized a bank in its history and never will because they are without the authority to do so. When we talk of the FDIC having these alleged powers we further confuse the public and begin to percieve a private insurance company as a federal regulatory agency with some type authority to close banks or even regulate them.

    The FDIC is a private insurance company for lending instituions, and although they will typically be appointed conservator for federally regulated banks, they don’t do the regulating or the seizing.

    On multiple occasions I have seen news writer’s like E. Scott Reckard and even Martin Mandelman claim the FDIV was repsonsible for the seizure of banks. This is what happens when you get people that know a few buzz words writing stories about monetary policy and private lending institutions.

    Neil, since you further published this mistake you should post the correction and notify the author of the article. The more credibility we give the FDIC, the more they will socialzie the Fannie and Freddie losses to the taxpayer instead of the bankers, just like they did with IndyMac and AHMI.

  15. The scheme and the scams starts at the point where the borrower went to a mortgage broker to get a loan. It is even BEFORE the origination that the scam started. Money never was loaned out. It was an accounting scam that made it look like money went somewhere. It did not, but now the homeowner is made to look like the deadbeat, and our land is being stolen. Actually, is is kind of a different take on the fractional lending BS. Debt is created out of thin air, and we, the borrowers pay it back forever.

  16. @ALL

    One thought that this raises is that FDIC insured the assets through the back door by guaranteeing them in the FDIC takeover–if i understand correctly—so the action taken is actually the basis for a bounty-hunter action under False Claims act–perhps???

    maybe one could take this case–find the same pattern elsewhere in your local community–you were victmized by somebody you know—turn them in to the insuring agency?????

  17. Ha what has happened is the elderly were forced into false values and high taxes eating them out of house and home.  Many elderly like Shirley and others and my mother are so badly property taxes they can barely make it. My mother has lucked out so far. She has lost a lot of her income due to this crime, but has sold property and paid her house off. Only owes the property taxes that are so high she does not know if she can keep up with the taxes having lost her retirement income in the stock market and has little left to pay taxes with her pension funds.  The property taxes need to go down with property values. Many had to refi their homes to keep up with the taxes taxing them out of their homes.  With set pension funds and set incomes.

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