ALERT: COMMUNITY BANKS AND CREDIT UNIONS AT GRAVE RISK HOLDING $1.5 TRILLION IN MBS

I’ve talked about this before. It is why we offer a Risk Analysis Report to Community Banks and Credit Unions. The report analyzes the potential risk of holding MBS instruments in lieu of Treasury Bonds. And it provides guidance to the bank on making new loans on property where there is a history of assignments, transfers and other indicia of claims of securitization.

The risks include but are not limited to

  1. MBS Instrument issued by New York common law trust that was never funded, and has no assets or expectation of same.
  2. MBS Instrument was issued by NY common law trust on a tranche that appeared safe but was tied by CDS to the most toxic tranche.
  3. Insurance paid to investment bank instead of investors
  4. Credit default swap proceeds paid to investment banks instead of investors
  5. Guarantees paid to investment banks after they have drained all value through excessive fees charged against the investor and the borrowers on loans.
  6. Tier 2 Yield Spread Premiums of as much as 50% of the investment amount.
  7. Intentional low underwriting standards to produce high nominal interest to justify the Tier 2 yield spread premium.
  8. Funding direct from investor funds while creating notes and mortgages that named other parties than the investors or the “trust.”
  9. Forcing foreclosure as the only option on people who could pay far more than the proceeds of foreclosure.
  10. Turning down modifications or settlements on the basis that the investor rejected it when in fact the investor knew nothing about it. This could result in actions against an investor that is charged with violations of federal law.
  11. Making loans on property with a history of “securitization” and realizing later that the intended mortgage lien was junior to other off record transactions in which previous satisfactions of mortgage or even foreclosure sales could be invalidated.

The problem, as these small financial institutions are just beginning to realize, is that the MBS instruments that were supposedly so safe, are not safe and may not be worth anything at all — especially if the trust that issued them was never funded by the investment bank who did the underwriting and sales of the MBS to relatively unsophisticated community banks and credit unions. In a word, these small institutions were sitting ducks and probably, knowing Wall Street the way I do, were lured into the most toxic of the “bonds.”

Unless these small banks get ahead of the curve they face intervention by the FDIC or other regulatory agencies because some part of their assets and required reserves might vanish. These small institutions, unlike the big ones that caused the problem, don’t have agreements with the Federal government to prop them up regardless of whether the bonds were real or worthless.

Most of the small banks and credit unions are carrying these assets at cost, which is to say 100 cents on the dollar when in fact it is doubtful they are worth even half that amount. The question is whether the bank or credit union is at risk and what they can do about it. There are several claims mechanisms that can employed for the bank that finds itself facing a write-off of catastrophic or damaging proportions.

The plain fact is that nearly everyone in government and law enforcement considers what happens to small banks to be “collateral damage,” unworthy of any effort to assist these institutions even though the government was complicit in the fraud that has resulted in jury verdicts, settlements, fines and sanctions totaling into the hundreds of billions of dollars.

This is a ticking time bomb for many institutions that put their money into higher yielding MBS instruments believing they were about as safe as US Treasury bonds. They were wrong but not because of any fault of anyone at the bank. They were lied to by experts who covered their lies with false promises of ratings, insurance, hedges and guarantees.

Those small institutions who have opted to take the bank public, may face even worse problems with the SEC and shareholders if they don’t report properly on the balance sheet as it is effected by the downgrade of MBS securities. The problem is that most auditing firms are not familiar with the actual facts behind these securities and are likely a this point to disclaim any responsibility for the accounting that produces the financial statements of the bank.

I have seen this play out before. The big investment banks are going to throw the small institutions under the bus and call it unavoidable damage that isn’t their problem. despite the hard-headed insistence on autonomy and devotion to customer service at each bank, considerable thought should be given to banding together into associations that are not controlled by regional banks are are part of the problem and will most likely block any solution. Traditional community bank associations and traditional credit unions might not be the best place to go if you are looking to a real solution.

Community Banks and Credit Unions MUST protect themselves and make claims as fast as possible to stay ahead of the curve. They must be proactive in getting a credible report that will stand up in court, if necessary, and make claims for the balance. Current suits by investors are producing large returns for the lawyers and poor returns to the investors. Our entire team stands ready to assist small institutions achieve parity and restitution.

FOR MORE INFORMATION OR TO SCHEDULE CONSULTATIONS BETWEEN NEIL GARFIELD AND THE BANK OFFICERS (WITH THE BANK’S LAWYER) ON THE LINE, EXECUTIVES FOR SMALL COMMUNITY BANKS AND CREDIT UNIONS SHOULD CALL OUR TALLAHASSEE NUMBER 850-765-1236 or OUR WEST COAST NUMBER AT 520-405-1688.

BLK | Thu, Nov 14

BlackRock with ETF push to smaller banks • The roughly 7K regional and community banks in the U.S. have securities portfolios totaling $1.5T, the majority of which is in MBS, putting them at a particularly high interest rate risk, and on the screens of regulators who would like to see banks diversify their holdings. • “This is going to be a multiple-year trend and dialogue,” says BlackRock’s (BLK) Jared Murphy who is overseeing the iSharesBonds ETFs campaign. • The funds come with an expense ratio of 0.1% and the holdings are designed to limit interest rate risk. BlackRock scored its first big sale in Q3 when a west coast regional invested $100M in one of the funds. • At issue are years of bank habits – when they want to reduce mortgage exposure, they typically turn to Treasurys. For more credit exposure, they habitually turn to municipal bonds. “Community bankers feel like they’re going to be the last in the food chain to know if there are any problems with a corporate issuer,” says a community bank consultant.

Full Story: http://seekingalpha.com/currents/post/1412712?source=ipadportfolioapp

OCC Announces EverBank Agrees to Pay $37 Million to Customers, $6.3 Million to Housing Assistance Groups

Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services. Get advice from attorneys licensed in the jurisdiction in which your property is located. We do provide litigation support — but only for licensed attorneys.
See LivingLies Store: Reports and Analysis

In its never-ending quest for putting distance between the Bank and the Homeowners who have been misled into thinking that Bank of America has any servicing or ownership rights over their mortgage, BOA has been transferring any mortgage they can to other entities — perhaps even paying the other entities to “take” the mortgages, which BOA didn’t own in the first place.

One such entity is EverBank which is a small thinly capitalized entity. The gimmick worked. Using the balance sheet of EverBank instead of Bank of America, the fine was probably one tenth or less than the the fine that would have been levied upon Bank of America. EverBank is getting paid to be thrown under the bus. The OCC used the EverBank Balance Sheet as a measuring stick and figured that $37 million fine for wrongful foreclosure processing was enough. If they had looked behind the curtain, which they most certainly had the knowledge about, they would have been fining Bank of America for the wrongful, illegal and immoral foreclosures.

And EverBank continues to file foreclosures that are riddled with obvious defects because they don’t have a real plaintiff, a real lender, a real loan, a real default or any real servicing rights. It is safe to say that they are so far removed from the realities of any actual transaction that it will be impossible to actually respond to discovery requests.

So I figured I would share with you some notes on a few of the cases with EverBank that you might find useful. As stated a thousand times before, do NOT use these forms or notes or anything else unless you ARE an attorney licensed in the jurisdiction in which the property is located or you consult with one.

NOTES ON EVERBANK FORECLOSURES

  1. The Plaintiff is self-identified in its own attachments as a servicer which means that judgment can only be rendered for the real creditor who under Florida Statutes governing credit bids can only be the actual creditor.
  2. The complaint is in rem and does not sue on the note, so there is no basis for the deficiency demanded in the wherefore clause.
  3. The servicing rights actually never existed because they would arise from a pooling and servicing agreement for a REMIC trust that was never funded nor was it able to purchase loans, nor were such loans transferred within the time limits prescribed by the REMIC laws and the terms of the pooling and servicing agreement. Since the REMIC was ignored, the terms of the PSA were ignored, no servicer could exist except with apparent authority. It remains to be seen to whom the the payments were made after receipt of payments from the Homeowner Defendant. despite the lack of any actual legal authority for servicing rights through any enforceable agreement to which the Homeowner defendant was a party  parties variously assigned servicing rights and endorsed the unenforceable note.
  4. Generally they were transferred by BOA as successor to BAC as successor to one of several Countrywide entities none of which were the lenders, servicers, or mortgage brokers for the loan. The reference to succession is false. Countrywide changed its name to BAC for a short while, following which Bank of America falsely claimed ownership, as successor to Countrywide despite the fact that the FDIC records show that a merger of some sort took place between Red Oak merger Corporation and Countrywide, but there is no indication that the agreement in the FDIC records shown in its “Reading Room” on the internet, that Bank of America ever acquired Red Oak or that Red Oak was a wholly owned subsidiary of Bank of America or anything of the sort.
  5. The mortgagee is named as either MERS as a naked nominee with no interest in the loan, or another entity that does not exist in the records of the Florida Secretary of state or anywhere else, and does not even pretend to be an entity organized and existing under the laws of any state. Hence there is no actual payee under the note and there never was, and there is no mortgagee under the mortgage, because the alleged party having an interest int he collateral is a naked nominee without any disclosure as to the true party in interest. This prevents the entire purpose of recording which is to allow for the complete transparency of ownership and encumbrances so that buyers and sellers can be certain that their transaction is valid.
  6. The complaint fails to state any loan or advance of money was ever made to the defendant Homeowner because the Homeowner has learned through hiring professional forensic auditors that none of the parties in the chain leading up to the Plaintiff Evergreen ever had ownership or servicing rights tot he loan. Instead, the loan came from the account of an investment bank that was used as a conduit for the money of investors who thought they were buying mortgage bonds from a REMIC trust organized under the laws of the State of New York. However the trust was never funded and the loan was never transferred into the trust. Accordingly the real creditor, with whom, the Defendant would like to engage in settlement or modification discussions, is a group of investors who might be loosely identified as a general partnership that does not qualify as a bank, lender, or even mortgage broker.
  7. The complaint fails to state any injury to any party in the complaint. his is because the money came from investors and on top of that, the intermediaries in the cloud of false securitization claims, received multiple payouts of the entire loan balance that should have reduced the account receivable of the investors who were the only parties who advanced money, to either zero, less than zero (with money owed back to the borrower) or at least less than the amount demanded  by Evergreen, who had no right to issue a demand letter since the actual owners of the loan had never given such an instruction.

ROUGH DRAFT OF MOTION TO DISMISS

Motion to Dismiss:
a. The pleadings conflict with the attachments. Everbank is named as either servicer or holder but no party is named as creditor. The attachments show a different party as the lender.
b. The complaint fails to allege injury to Evergreen and a short plain statement of how EverBank was financially damaged. Plaintiff fails to attach cancelled check(s) or wire transfer receipt(s) or wire transfer instructions for an actual transaction — which is the essential element and foundation for use of the note and mortgage as evidence of the transaction and the terms of repayment depending upon whether Plaintiff is attempting to enforce the terms of the NOTE, MORTGAGE, DEBT, LOAN OR ASSIGNMENT.
c. Prior communications with Countrywide, BAC and BOA and the borrower indicate alternately that each of those entities was the holder, but then revealed the existence of a loan pool claiming an interest. Plaintiff should be required to attach a copy of the cancelled checks or wire transfer receipts to show which party is actually claiming injury and a short plain statement of why their claim is secured.
d. Plaintiff has failed to allege that it or any affiliate or predecessor or successor has responded to the RESPA 6 (Qualified Written Request) sent by borrower or the Debt Validation Letter sent to the apparent servicer which alternated between Countrywide, BAC and Bank of America.
e. Plaintiff has filed to allege and attach relevant copies of documentation demonstrating proof of ANY POTENTIAL OR ACTUAL LOSS nor any authority to represent the creditor(s) and identifying the creditor who meets the standard of a party qualified to submit a credit bid at foreclosure auction, execute a satisfaction of mortgage upon payment, or a a correct accounting of the loan receivable or bond receivable if the loan is in fact claimed by any of the above stakeholders to be owned by a loan pool, REMIC, Special purpose vehicle or trust.
f. Unless the Plaintiff can allege and attach documents showing financial injury to Plaintiff as of the date that the complaint was filed, it lacks standing in this case.
g. Since the case is essentially in rem with the requested relief being the foreclosure sale of the property owned by the Defendant, Plaintiff has failed to state a cause of action upon which relief could be granted.

h. Even if the court were to rule that the Plaintiff had standing to initiate foreclosure proceedings, the Plaintiff must identify the party in the Judgement who will be  named, and supply the accounting required to show the amount of  financial injury, produce and attach the required documents to the complaint and prove its allegations and exhibits by competent evidence.

i. It is apparent here that Plaintiff lacks standing and certainly has failed to plead and attach required documents demonstrating financial injury since according to its own pleadings and attachments it was neither the lender nor the purchaser of the loan according to the existing allegations and exhibits.

WHEREFORE, Defendant prays that this Honorable Court will dismiss Plaintiff’s complaint with prejudice unless Counsel for Plaintiff can proffer in good faith that it can plead and attach the required exhibits and grant Defendant reasonable attorney fees and costs for defending a patently sham pleading.

OCC Announces EverBank Agrees to Pay $37 Million to Customers

Aug 23, 2013 – EverBank was subject to a cease and desist order for unsafe and unsound practices in mortgage servicing and foreclosure processing.

EXCLUSIVE: EverBank takes flight as regular ‘jumbo’ loan RMBS issuer
http://www.housingwire.com/news/2013/04/01/exclusive-everbank-takes-flight-regular-jumbo-loan-rmbs-issuer

Everbank Exits Wholesale Lending to Focus on Correspondent

http://www.mortgagenewsdaily.comNews HeadlinesMND NewsWire Home

Federal Reserve Seeks to Fine HSBC, SunTrust, MetLife, U.S.

4closurefraud.org/…/federal-reserve-seeks-to-fine-hsbc-suntrust-metlife-…

Apr 1, 2012 – Last week, a senior Federal Reserve official recommended fines for these Bank, MetLife, U.S. Bancorp, PNC Financial Services, EverBank, OneWest and in residential mortgage loan servicing and foreclosure processing 

OCC: 13 Questions to Answer Before Foreclosure and Eviction

13 Questions Before You Can Foreclose

foreclosure_standards_42013 — this one works for sure

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Note: Some banks are slowing foreclosures and evictions. The reason is that the OCC issued a directive or letter of guidance that lays out in brief simplistic language what a party must do before they can foreclose. There can be little doubt that none of the banks are in compliance with this directive although Bank of America is clearly taking the position that they are in compliance or that it doesn’t matter whether they are in compliance or not.

In April the OCC, responding to pressure from virtually everyone, issued a guidance letter to financial institutions who are part of the foreclosure process. While not a rule a regulation, it is an interpretation of the Agency’s own rules and regulation and therefore, in my opinion, is both persuasive and authoritative.

These 13 questions published by OCC should be used defensively if you suspect violation and they are rightfully the subject of discovery. Use the wording from the letter rather than your own — since the attorneys for the banks will pounce on any nuance that appears to be different than this guidance issued to the banks.

The first question relates to whether there is a real default and what steps the foreclosing party has taken to assure itself and the court that the default is real. Remember that the fact that the borrower stopped paying is not a default if no payment was due. And there is no default if it is cured by payment from ANYONE after the declaration of default. Thus when the subservicer continues making payments to the “Creditor” the borrower’s default is cured although a new liability could arise (unsecured) as a result of the sub servicer making those payments without receiving payment from the borrower.

The point here is the money. Either there is a balance or there is not. Either the balance is as stated by the forecloser or it is not. Either there is money due from the borrower to the servicer and the real creditor or there is not. This takes an accounting that goes much further than merely a printout of the borrower’s payment history.

It takes an in depth accounting to determine where the money came from continue the payments when the borrower was not making payments. It takes an in depth accounting to determine if the creditor still exists or whether there is an successor. And it takes an in depth accounting to determine how much money was received from insurance and credit default swaps that should have been applied properly thus reducing both the loan receivable and loan payable.

This means getting all the information from the “trustee” of the REMIC, copies of the trust account and distribution reports, copies of canceled checks and wire transfer receipts to determine payment, risk of loss and the reality of whether there was a loss.

It also means getting the same information from the investment banker who did the underwriting of the bogus mortgage bonds, the Master Servicer, and anyone else in the securitization chain that might have disbursed or received funds in connection with the subject loan or the asset pool claiming an interest in the subject loan, or the owners of mortgage bonds issued by that asset pool.

If the OCC wants it then you should want it for your clients. Get the answers and don’t assume that because the borrower stopped making payments that any default occurred or that it wasn’t cured. Then go on to the other questions with the same careful analysis.

http://www.businessweek.com/news/2013-05-17/wells-fargo-postpones-some-foreclosure-sales-after-occ-guidance

/http://www.occ.gov/topics/consumer-protection/foreclosure-prevention/correcting-foreclosure-practices.html

WILLIAMS AND CONNOLLY FILE COMPLAINT AGAINST OCC

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

EDITOR’S COMMENT: FINALLY! A law firm in Washington DC has filed a lawsuit against the OCC to reveal the documents, disclosures and findings of the agency relating to the banks, the OCC Foreclosure Review and related matters. These are the kind of actions that should be filed in my opinion against state and Federal agencies that are enabling the securitization myth, foreclosures, defective auction bid, corrupted title and severe economic damages to people who don’t even realize they are victims of a scam and instead feel guilty about not paying their fair share.

The principal is simple: in any case where an agency fails to do its duty, or in case where someone wants to know what the agency is doing the Freedom of Information Act and other laws can be invoked to force the agency to comply with its statutory duty to regulate, commerce, banks, recording or whatever the case might be. Generally it is called an action in mandamus, which an action against an agency to perform its duties as set forth in the enabling statutes.

Note that the law firm filed the complaint in its own name and not the name of any client. The case is pure and simple. OCC is supposed to do its job and we have right to know whether they a re doing it. Having failed to respond, they are sued and the court will make them reveal whatever is in their files, which in this case is likely to be very damaging to both the agency and the banks it allegedly regulates.

See also Yves Smith on this subject generally:

Wells Fargo’s “Reprehensible” Foreclosure Abuses Prove Incompetence and Collusion of OCC
http://www.nakedcapitalism.com/2013/04/wells-fargos-reprehensible-foreclosure-abuses-prove-incompetence-and-collusion-of-occ.html

I have been pushing lawyers to bring actions against agencies and even the courts — going to the Supreme Court of each state demanding that they set procedures and standards of proof that a re consistent with existing law and consistently applied in all lower tribunals.

Actions against the FDIC, Federal Reserve that are similar in nature are already in the pipeline. Give your support to these actions any way you can. Follow the cases carefully because it is probably these cases that are going to crack the TBTF myth wide open along with dismantling the theory that loans were securitized when in most cases the loans were not securitized, and the creditor — the real creditor — is left with an unsecured receivable subject to set off for payments made to the agents of the investors (insurance, credit default swaps etc paid to the investment banks and other participants in the fake securitization chain).

COMPLAINT: WILLIAMS & CONNOLLY, LLP v. OFFICE OF COMPTROLLER OF CURRENCY
http://4closurefraud.org/2013/03/29/complaint-williams-connolly-llp-v-office-of-comptroller-of-currency/

133043433-Gov-uscourts-dcd-159019-1-0

Regulators Ask Banks to Re-check their Foreclosures

CHECK OUT OUR EXTENDED DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, Tennessee, Georgia, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comments: There are two ways of looking at this development. One is that the regulators are setting up the banks for failing to comply with the requirements of their regulators — and potentially extending the statute of limitations on Fed action against the banks.

The other is that the regulators are either politically motivated or so incredibly stupid that they are outsourcing the investigation of wrongful behavior of the banks to the potential defendants and respondents.

I can see a rationale in the first scenario but I am concerned that it is the second rationale that is at play here. The Paulson-Geithner doctrine of keeping the banks safe from collapse still appears to be guiding the regulators and law enforcement.

This isn’t really so difficult: first you ask those already in litigation to send in their papers. Second you ask the banks to show proof of payment and the entire money trail to show proof of loss. If the banks are able to show the actual proof of loss then the paperwork problems become less severe in terms of twisting the outcome. If the banks are not able to show they had any losses then it is true, all hell will break loose.

If the banks were in fact not using their own money on the loans that were originated, transferred and eventually offered for assignment into the loan pools, then their claims of loss to insurance companies and counter-parties to credit default swaps and other hedge products (and of course TARP) are subject to repayment to the insurers because the banks had no insurance interest and received the money anyway — not as agent for the investors who are the real losers, but for themselves. Having lied to the insurers, the ratings companies, and the investors, they were forced to lie to the government who gave them the TARP money to save the banks from going under as a result of huge losses in the credit markets.

A quick look at the 10K annual reports filed with the SEC will show that the banks were not showing any exposure to a risk of loss on the residential mortgage loans that were funded with investor money. Simple arithmetic would establish whether or not the total money given by investors was even close to the money used to fund actual loans.

One of two outcomes is possible if the banks were in fact lying to everyone. Either they owe back the insurance dollars they received and kept instead of passing it on to investor/lenders; or they owe the investor/lenders the money from insurance, credit default swaps etc. And THAT would reduce the loan receivable on the books of the investor/lenders. This in turn would reduce the amount due under the loan to homeowners, which in turn would flip the situation from homeowners being underwater to homeowners having equity.

Insurers and counter-parties in credit default swaps might have an unsecured claim for contribution from homeowners, but more likely they would be blocked by their own waiver of subrogation or extinguished in bankruptcy. The rest would be subject to negotiations on a level playing field whereby the investors could mitigate their damages while they recover the balance stolen from them by the banks.

It is difficult to imagine the banks reporting themselves for mistakes or criminal misbehavior. The regulators must know that. So there must be some plan working whereby the banks get further umbrella coverage from the Feds or where the Feds go into action against the banks. Only time will tell.

Feds to Banks: Double-Check Your Foreclosures for Errors

Independent review not working, so comptrollers go straight to banks

By Mark Russell,  Newser Staff

(Newser) – In the quest to right wrongful foreclosures, government regulators are turning to the last people on Earth one might expect—the unscrupulous lenders who did the foreclosing in the first place. An attempt to distribute billions of dollars in aid by independent consultants was shut down after it was found to be rife with delays and inefficiencies—consultants charged the government $2 billion in fees for 14 months of review, despite examining only a small number of the 500,000 complaints filed. So instead the Office of the Comptroller of the Currency is tapping the banks to re-evaluate their own foreclosures for errors, reports the New York Times.

Banks are to sort improper foreclosures according to degree of error, with the seriousness of the foreclosure error determining how much aid a homeowner might get. But critics say the new process is full of conflicts of interest and many loan files are in disarray. “The whole process has been a slap in the face to homeowners and a slap on the wrist to banks,” said one homeowner advocate. On the other hand, the federal comptroller’s office has asked the banks to self-regulate their foreclosure practices before.

Deny and Discover — Where the Rubber Meets the Road

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Analysis: The banks are broke and this rule properly applied will reveal exactly how badly they fall short of capital requirements. It can be found at Volume 77, No. 169 of the Federal Register dated, Thursday, August 30, 2012 2012-16759 Capital Risk Disclosure Requirements Under Dodd Frank.

Admittedly this is not for the feint of heart or those with limited literacy in economics, accounting and finance; but if you find yourself in the position of not understanding, then go to any economist or banker or finance specialist or accountant  and they will explain it to you.

Lewtan which produces ABSnet is offering a service to banks that will give the banks and plausible deniability when the figures come up all rosy for the banks. Lewtan should be careful in view of the action being taken against the ratings companies, which is the start of an assault on the citadel of evil intent on Wall Street.

The fundamental aspect of these new rules are that the bank must report on the degree of risk it has taken on in any activity or holding. They must also  show how they arrived at that assessment and under the Freedom of Information Act (FOIA) you might be able to get copies of their filing whether they do it themselves (doubtful) or hire someone like Lewtan which is obviously going to do the bidding of its paying clients.

The main problem for the banks is that they are holding overvalued assets and some non-existent assets on their balance sheet. A review to assess risk if properly conducted, will definitely turn up both kinds of assets reported on the balance sheet of the banks, which in turn will reduce their reported capital reserves, which in turn will result in changing the ratio between capital and risk.

This might sound like gumbo to you. But here is the bottom line: the banks were using investor money. We all know that. In baby language, the question is if they were using someone else’s money how did the banks lose any money?

They did receive the money from investors like pension funds, and other managed funds for retirement or contingencies. But they diverted the money and the documents to make it appear that the bank owned the assets that were intended to be purchased for the REMIC trusts. The Banks then purchased and claimed to be an insured or a party who had sustained a loss when in fact the loss was incurred by the investors and the mortgage bonds and loans were owned collectively by the investors.

By doing that the insurance proceeds were paid to the banks creating an instant liability to the investors to whom they owed a common law and contractual duty to provide an accounting and distribution based upon the insurance recovery. At no time did the banks ever have a risk of loss nor an insurable interest in their own name. And at not time were they bound by the REMIC documents because they ignored the REMICs and conducted transactions through an entirely different superstructure.

As agents of the investors they should have followed the REMIC documents and purchased the insurance and CDS protection for the benefit of the investors. But they didn’t do that. They kept the money for the bank who never had any proof of loss, proof of payment and was a mere intermediary claiming the rights of the principal. The same thing happened with Credit Default Swaps and Federal bailouts.

That is why the definition of toxic assets changed over a weekend when TARP was started. It was thought that the mortgages had gone bad for the banks.

Then they realized that the mortgages weren’t going bad to the extent reported and that the bank was suffering no loss because they were using investor money to create the funding of loans and the funding of proprietary trading in which they masked the theft of trillions from investors.

So the government quietly changed the definition of toxic assets to mortgage bonds — but that ran into the same problem, to wit: the mortgage bonds were underwritten by the banks but purchased by the investors (pension funds etc.).

Now the rubber meets the road. The claim that somehow the banks got stuck with mortgage bonds is patently absurd. If they have mortgage bonds it is not because they bought them, it is because they created them but were unable to sell them because the market collapsed and the PONZI scheme fails whenever the suckers stop buying.

The actual proceeds from theft from the investors and the borrowers is parked off shore around the world. The Banks having been feeding the money back in very slowly because they want to create the appearance of an increasingly profitable bank, when in fact, their revenues sand earnings are slipping away quickly — except for the bolstering they get from repatriating stolen money from investors and borrowers and calling them “proprietary trades.”

Nobody on Wall Street is making that kind of money on trades, proprietary or otherwise, but the banks are claiming ever increasing profits, raising their stock price, defrauding their stockholders. So against each overvalued and non-existent asset claimed by the mega banks on their balance sheet is a liability of far exceeding the assets or even the combined assets of the banks. Treasury knows, this, the Fed knows this and central bankers around the world know it. But they have been drinking the Kool-Aid believing that if they call out the mega banks on this fake accounting, the entire financial system will collapse.

So yes there is a consensus between those who pull the levers of power that they will allow the banks to pretend to have assets, that their liabilities are fairly low, and that the risks associated with their business activities, assets and liabilities are minimal even while knowing the converse is true. The system’s foundation is a loose amalgamation of lies that will eventually collapse anyway but everyone likes to kick the can down the road.

You are getting in this article a sneak peek into why the banks all rushed to foreclose rather than modify or settle on better terms. What is important from the practice point of view is that (1) the “Consideration” mandated by HAMP is not happening and you can prove it with the right allegations and discovery and (2) the reports tendered to OCC and the Fed under this rule will reveal that the issue of proof of loss, risk of loss, proof of payment and ownership is completely muddled — unless you follow the money trail (see yesterday’s article). You can subpoena the reports given by the banks from both the bank itself or the agency. My opinion is that you fill find a treasure trove of information very damaging to the banks and the Treasury Department.

There will be caveats in the notes that express the risk of inaccuracy and which reveal the possibility that the banks neither own nor control the mortgages except as agents for the investors, that the liability to the investors is equal to the money received from insurance, CDS, and bailouts, and that the borrower’s loan payable balance was corresponding reduced as to the investor and increased to entities that are not or cannot press any claims against the borrowers. Educate yourself and persist — the tide is turning.

Excerpt from attached section of Federal Register:

The bank’s primary federal supervisor may rescind its approval, in whole or in part, of the use of any internal model and determine an appropriate regulatory capital requirement for the covered positions to which the model would apply, if it determines that the model no longer

complies with the market risk capital rule or fails to reflect accurately the risks of the bank’s covered positions. For example, if adverse market events or other developments reveal that a material assumption in an approved model is flawed, the bank’s primary federal supervisor may require the bank to revise its model assumptions and resubmit the model specifications for review. In the final rule, the agencies made minor modifications to this provision in section 3(c)(3) to improve clarity and correct a cross-reference.

Financial markets evolve rapidly, and internal models that were state-of-the- art at the time they were approved for use in risk-based capital calculations can become less effective as the risks of covered positions evolve and as the industry develops more sophisticated modeling techniques that better capture material risks. Therefore, under the final rule, as under the January 2011 proposal, a bank must review its internal models periodically, but no less frequently than annually, in light of developments in financial markets and modeling technologies, and to enhance those models as appropriate to ensure that they continue to meet the agencies’ standards for model approval and employ risk measurement methodologies that are, in the bank’s judgment, most appropriate for the bank’s covered positions. It is essential that a bank continually review, and as appropriate, make adjustments to its models to help ensure that its market risk capital requirement reflects the risk of the bank’s covered positions. A bank’s primary federal supervisor will closely review the bank’s model review practices as a matter of safety and soundness. The agencies are adopting these requirements in the final rule.

Risks Reflected in Models. The final rule requires a bank to incorporate its internal models into its risk management process and integrate the internal models used for calculating its VaR-based measure into its daily risk management process. The level of sophistication of a bank’s models must be commensurate with the complexity and amount of its covered positions.

Foreclosure Review Process Handed Over to the Banks

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What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: Along with members of Congress and millions of homeowners I remain deeply disappointed in the failure of the Obama administration to grapple with the mortgage meltdown. The current path will lead to more of the same and it never does anything but escalate when somebody gets away with theft, fraud and PONZI schemes.

The prior so-called “review” process involved people who were neither independent nor skilled nor trained to find wrongful practices and the damage caused by those wrongful practices. They were given inadequate information by the banks who continue to hide the fake securitization scheme and PONZI scheme.

The agencies are complaining that it takes too long to process the review. Let’s see. If John Jones was foreclosed by somebody who had no right to do so on a loan that was unsecured and paid down to zero, and then he was evicted, just how long is too long for the agency to slam the offending bank? Are you kidding? What kind of double-standard are we setting up here? If I do it, I go to jail. But if a bank does it then it is an error and here is $2,000 for your trouble. Now under the new settlement agreement, if I do it, the agency is telling me to determine whether I committed a crime or civil theft. Yeah, I’ll get right back to you on that.

Obama and his administration continue to buy into the bank myth that these were bad lending practices instead of being intentional acts of fraud, theft, forgery and fabrication. They still think the loan receivables are “out there” somewhere but they have no evidence to substantiate that belief because there isn’t any. Those loan balances were paid down long ago.

The plain truth is right in front of them and there is no good reason to say that this task is too onerous for the regulators so we are just going to turn it over to the banks that were guilty of the wrong-doing. Does ANYONE really think that a bank is going to review its files and declare that a terrible injustice has been done?

Everything is tied to this mortgage mess. Consumers have been slammed with most of their wealth siphoned off by banks who were acting intentionally to screw the pension funds and the people who rely on those pension funds. The loan balances, if adjusted to reflect payments by insurance, credit default swaps and bailouts — all promised to the investors — are far less than anything demanded and in many cases are zero.

Nobody wants to give a windfall to the homeowner and nobody wants to give a windfall to the banks. But our government has decided that between the two, the banks ought to get it in order to preserve stability in the financial system. The stability of the financial system is, in my opinion, secondary to the stability of our economy. Our debt and deficits collectively and individually are all tied to the wrongdoing of about 2 dozen banks.

And I strongly disagree with the notion that the break-up of the mega banks will destabilize the financial system. When the dust clears, we simply won’t have banks that are too big to regulate, as shown in this review process. There is no evidence that clawing back the money for the pension funds that invested in fake mortgage bonds issued by fake investment pools will destabilize anything except the lives of some people who really need to go to jail.

Quite the contrary, putting the money back where it belongs with the pension funds and doing an accounting for the money in and the money out related to these mortgages will produce mortgage balances, without “forgiveness” that are far lower than demanded in foreclosure or end of month statements. Underwater homes will be a thing of the past, and mortgage payments can be adjusted to the real balances enabling the consumers in a consumer driven economy to spend.

Justice is more in this case than simply doing the right thing. It is a fiscal stimulus that does not cost one dime. If we can spend a trillion dollars on a war for the security interests of our country, then why can’t we spend 1/10 of 1% of that amount on following the money trail and determining the identity of the stakeholders, the amount of their stake and the terms of repayment?

The precedent here is dangerous. If “I am too important to go to jail” actually works as a defense, then we have changed the rule of law in ways that will haunt us for hundreds of years.

Agencies Give Up and hand the Mortgage Mess Over to the Banks to Resolve

OCC Says Bank Losses Mounting on Defective Foreclosures and Loans

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Editor’s Comment:  

This has been my point, although the article below only covers a small part of the losses that will eventually befall the banks and servicers. The banks are carrying assets on their balance sheet that do not exist — especially, as this article points, out home equity lines of credit that are second in priority to the first mortgage. We already know that those home equity loans are worthless. But even the first mortgages are claimed as assets despite the fact that the bank didn’t put up one dime to fund the mortgage or purchase it. How the big accounting firms are permitting this, why the SEC is not objecting to it, is amystery only if you believe in the tooth fairy. They are missing it because they have been told not to bring down the banks — at least not yet. Eventually though, the true figures will emerge and the so-called large or mega banks will be shown for what they are — the same sham that was created in the origination of the loans.

Regulator Warns of Mortgage Losses for U.S. Banks

by Alan Zibel

WASHINGTON–U.S. banks may be hit with a new round of mortgage losses over the next five years as borrowers who took out home-equity loans a decade earlier face increased monthly payments, a regulator warned Thursday.The Office of the Comptroller of the Currency warned that more than half the amount borrowed on equity lines at national banks, or $221 billion out of $380 billion, will face higher payments from 2014 to 2017, exposing banks to the possibility of losses if some equity-line borrowers default.

Home-equity lines extended during the mid-2000s housing-market-boom years typically had a 10-year period in which the borrower made only interest payments. When that period ends, borrowers must start to pay back the principal balance as well, increasing monthly payments for some homeowners who have seen their incomes and property values decline.

Darrin Benhart, deputy comptroller for credit and market risk at the OCC, said “banks are going to have to be thinking about ways that they’re going to address” the problem, including debt restructuring. Analysts have been voicing similar concerns. In a May report, Deutsche Bank identified First Horizon National Corp. (FHN), PNC Financial Services Group Inc. (PNC), TCF Financial Corp. (TCB) and Huntington Bancshares Inc. (HBAN) as institutions that are most exposed to losses from home-equity lines.

The OCC report, the first in a series of semi-annual reports on financial risks in the banking system, also said banks have shifted to higher-risk investments to boost interest-rate returns, a development that could create future losses for banks.

The OCC separately is studying which banks could be hit the hardest if interest rates rise. For larger banks the regulator said it will focus on problems with mortgage servicing as well as underwriting standards for business loans and exposure to European institutions. The agency also will scrutinize smaller banks to look at loss exposure from commercial real-estate loans and new types of auto and other lending products

The report said banks still face a huge overhang of delinquent and foreclosed properties stemming from the nationwide housing bust. And the nation’s largest banks “continue to face profitability challenges” from deficiencies in their foreclosure-processing operations, which bank regulators are forcing the nation’s largest mortgage servicers to overhaul.

The report, however, said that banks are in a far stronger financial position than before the recession of 2007-2009, with higher levels of capital around the industry, particularly at the largest banks.


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Foreclosure Strategists: OCC & Federal Reserve Bank: Foreclosure Review Process

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Editor’s Comment:

Contact: Darrell Blomberg  Darrell@ForeclosureStrategists.com  602-686-7355

Meeting: Tuesday, June 26th, 2012, 7pm to 9pm

OCC & FRB have finally established dollar amounts for
”errors, misrepresentations, and other deficiencies in the 
foreclosure process” for the Independent Foreclosure Reviews!

Complaint filing date extended to September, 30, 2012!

As we are all aware the OCC (Office of the Comptroller of the Currency) has been inviting homeowners / dispossessed homeowners with a personal link to foreclosures that were in process or completed in 2009 or 2010 to file complaints.  Many people have been loathe to go through the complaint process because of the lackluster prospect of receiving a paltry $2,000.  Well, that has officially changed in writing!  The OCC and the FRB (Federal Reserve Bank) have now established dollar amounts for the remedies of errors, misrepresentations, and other deficiencies in the foreclosure process.

YOU WILL BE PLEASANTLY SURPRISED!!

If you know any homeowners who were foreclosed or dispossessed of their home after January 1, 2009 or they were alleged to be in default of their note prior to before December 31, 2010 this is a must attend meeting.  (I believe you could even make a valid argument for anybody that received a 1099A or 1099C anytime in 2009 or 2010 even if their sale / dispossession was long before January 1, 2009.)

PLEASE SPREAD THE WORD AND INVITE OTHER HOMEOWNERS WHO MAY BE ABLE TO CAPITALIZE ON FINANCIAL AND OTHER REMEDIES WHICH ARE NOW PUBLISHED.

…………………………………………._/)

Hogan Decision & Subsequent Actions

We will review the Hogan v Washington Mutual Bank, N.A. decision and explore the Motions for Reconsideration submitted by both the Appellants and the Appellees.

…………………………………………._/)

Ninth Circuit Appeals Court Audio – Beth Findsen

Local foreclosure defense attorney Beth Findsen argued in front of the Ninth Circuit Appeals Court in San Francisco in the Mariusz Buchna, et al. v. Bank of America NA, et al. ( No. 10-17651) case last Friday.  Here is a link to the audio of that proceeding.

http://www.ca9.uscourts.gov/media/view_subpage.php?pk_id=0000009303

…………………………………………._/)

$50 Million Sweep is ON HOLD!

On Tuesday, 2012-06-12, the plaintiffs and defendants in the Morones – Hernandez v Horn (Az AG) & Ducey (Az Treasurer) case stipulated that the $50 Million Sweep from the Attorneys’ General Settlement Funds will not be transferred to the State of Arizona General Fund until at least 2012-12-31!  The Minute Entry can be found at this link:
            http://www.courtminutes.maricopa.gov/docs/Civil/062012/m5283139.pdf

See “COURT WATCHERS – Upcoming Hearings” section below for next hearing information.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)

FACEBOOK PAGE FOR “FORECLOSURE STRATEGIST”

I have set up a Facebook page. (I can’t believe it but it is necessary.) The page can be viewed at www.Facebook.com, look for and “friend” “Foreclosure Strategist.”

I’ll do my best to keep it updated with all of our events.

Please get the word out and send your friends and other homeowners the link.

MEETUP PAGE FOR FORECLOSURE STRATEGISTS:

I have set up a MeetUp page. The page can be viewed at www.MeetUp.com/ForeclosureStrategists. Please get the word out and send your friends and other homeowners the link.

Home Defenders League

The Home Defender’s League supported the Lilly Washington event.  They are building a nationwide coalition to support underwater and distressed homeowners.  Here is a link to their website:
 http://www.homedefendersleague.org/

They have a feature story about Lilly Washington at this link:
 http://www.homedefendersleague.org/2012/06/02/hdl-member-lilly-washington-fights-bofa-for-illegal-eviction-and-trashing-her-sons-purple-heart/

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg

602-686-7355

Darrell@ForeclosureStrategists.com

DON’T Leave Your Money on the Table

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Editor’s Comment:

The number of people passing up the administrative review process is appallingly low, considering the fact that many if not most homeowners are leaving money on the table — money that should rightfully be paid to them from wrongful foreclosure activity (from robo-signing to outright fraud by having non-creditors take title and possession).

The reason is simple: nobody understands the process including lawyers who have been notoriously deficient in their knowledge of administrative procedures, preferring to stick with the more common judicial context of the courtroom in which many lawyers have demonstrated an appalling lack of skill and preparation, resulting in huge losses to their clients.

The fact is, administrative procedures are easier than court procedures especially where you have mandates like this one. The forms of complaints and evidence are much more informal. It is much harder for the offending party to escape on a procedural technicality without the cause having been heard on the merits. 

The banks were betting on two thngs when they agreed to this review process — that people wouldn’t use it and that even if they used it they would fail to state the obvious: that the money wasn’t due or in default, that it was paid and that only a complete accounting from all parties in the securitization chain could determine whether the original debt was (a) ever secured and (b) still existence. They knew and understood that most people would assume the claim was valid because they knew that the loan was funded and that they had executed papers that called for payments that were not made by the borrower.

But what if the claim isn’t valid? What if the loan was funded entirely outside the papers they signed at closing? What if the payments were not due? What if the payments were not due to this creditor? And what if the payments actually were made on the account and the supposed creditor doesn’t exist any more? Why are you assuming that the paperwork at closing was any more real than the fraudulent paperwork they submitted during foreclosure?

People tend to think that if money exchanged hands that the new creditor would simply slip on the shoes of a secured creditor. Not so. If the secured debt is paid and not purchased then the new debt is unsecured even if the old was secured. But I repeat here that in my opinion the original debt was probably not secured which is to say there was no valid mortgage, note and could be no valid foreclosure without a valid mortgage and default.

Wrongful foreclosure activity includes by definition wrongful auctions and results. Here are some probable pointers about that part of the foreclosure process that were wrongful:

1. Use the fraudulent, forged robosigned documents as corroboration to your case, not the point of the case itself.

2. Deny that the debt was due, that there was any default, that the party iniating the foreclosure was the creditor, that the party iniating the foreclosure had no right to represent the creditor and didn’t represnet the creditor, etc.

3. State that the subsitution of trustee was an unauthorized document if you are in a nonjudicial state.

4. State that the substituted trustee, even if the substitution of trustee was deemed properly executed, named trustees that were not qualified to serve in that they were controlled or owned entities of the new stranger showing up on the scene as a purported “creditor.”

5. State that even if the state deemed that the right to intiate a foreclosure existed with obscure rights to enforce, the pretender lender failed to establish that it was either the lender or the creditor when it submitted the credit bid.

6. State that the credit bid was unsupported by consideration.

7. State that you still own the property legally.

8. State that if the only bid was a credit bid and the credit bid was invalid, accepted perhaps because the auctioneer was a controlled or paid or owned party of the pretender lender, then there was no bid and the house is still yours with full rights of possession.

9. The deed issued from the sale is a nullity known by both the auctioneer and the party submitting the “credit bid.”

10. Demand to see all proof submitted by the other side and all demands for proof by the agency, and whether the agency independently investigated the allegations you made. 

 If you lose, appeal to the lowest possible court with jurisdiction.

Many Eligible Borrowers Passing up Foreclosure Reviews

By Julie Schmit

Months after the first invitations were mailed, only a small percentage of eligible borrowers have accepted a chance to have their foreclosure cases checked for errors and maybe win restitution.

By April 30, fewer than 165,000 people had applied to have their foreclosures checked for mistakes — about 4% of the 4.1 million who received letters about the free reviews late last year, according to the Office of the Comptroller of the Currency. The reviews were agreed to by 14 major mortgage servicers and federal banking regulators in a settlement last year over alleged foreclosure abuses.

So few people have responded that another mailing to almost 4 million households will go out in early June, reminding them of the July 31 deadline to request a review, OCC spokesman Bryan Hubbard says.

If errors occurred, restitution could run from several hundred dollars to more than $100,000.

The reviews are separate from the $25 billion mortgage-servicing settlement that state and federal officials reached this year.

Anyone who requests a review will get one if they meet certain criteria. Mortgages had to be in the foreclosure process in 2009 or 2010, on a primary residence, and serviced by one of the 14 servicers or their affiliates, including Bank of America, JPMorgan Chase, Citibank and Wells Fargo.

More information is at independentforeclosurereview.com.

Even though letters went to more than 4 million households, consumer advocates say follow-up advertising has been ineffective, leading to the low response rate.

Many consumers have also grown wary of foreclosure scams and government foreclosure programs, says Deborah Goldberg of the National Fair Housing Alliance.

“The effort is being made” to reach people, says Paul Leonard, the mortgage servicers’ representative at the Financial Services Roundtable, a trade group. “It’s hard to say why people aren’t responding.”

With this settlement, foreclosure cases will be reviewed one by one by consultants hired by the servicers but monitored by regulators.

With the $25 billion mortgage settlement, borrowers who lost homes to foreclosure will be eligible for payouts from a $1.5 billion fund.

That could mean 750,000 borrowers getting about $2,000 each, federal officials have said.

For more information on that, go to nationalmortgagesettlement.com.

OCC Review Getting Few Takers

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Demand an Administrative Hearing

Very few people have asked for a review of their wrongful foreclosures. Maybe it is because we are all war-weary from this constant barrage of illegal activity from the banks. But there are avenues to travel, whether your foreclosure is past, present or even future. While the OCC review process has some restrictions announced, it nonetheless allies to all foreclosures whether they like it or not. They are the regulatory agency for certain types of banks and servicers, just like OTS, and the Federal Reserve. If one of their chartered and regulated members commits an atrocity, the agency is required by law to do something about it.

And one more thing. The OCC should be setting up review panels and administrative hearing processes because you can be sure that homeowners are not going to agree with the “review” that is conducted by the bank that is accused of committing the error, which is what the “review process” is all about. Why not ask a rapist to investigate whether he did it or if she was just asking for it?

This stuff is not just made up out of my head. It comes from the Administrative Procedures Act and its likeness in the federal, state and even local systems where any government agency is involved.

So if you are alleging wrongdoing in ANY foreclosure — past, present or future — you should be making your allegations. What do you allege? That is where the COMBO product linked next to my picture comes in and there are other people who do similar work although it is true that the title companies are trying their best to obscure the searches for title information. Getting a loan specific title analysis and a loan specific securitization analysis should provide you with enough information to allege wrongful foreclosure. Getting a Forensic Analysis and loan level analysis might also be helpful in rounding out the allegations.

Here are just a few items to get you going:

  • The debt wasn’t due
  • The debt wasn’t due to the party who  foreclosed
  • The party who foreclosed misrepresented itself as the owner of the debt
  • The debt was paid in full by insurance, credit default swaps or federal bailouts
  • The monthly payment was paid by the servicer to the creditor (or the party they claim is the creditor) at the same time that the servicer was declaring a default to the borrower. If the creditor was getting paid, where is the default?
  • The credit bid was submitted by a party who was not a creditor and therefore should have paid cash at the auction
  • The auction was conducted by an employee or agent of the party seeking to foreclose
  • Payments were improperly applied or were not applied
  • Charges were illegal and unfair and were the reason for the foreclosure
  • You were tricked into foreclosure by the pretender lender’s agent telling you had to skip payments before you could be considered for modification. (known in the industry as dual tracking)
  • The “lender” failed to comply with Reg Z on rescission
  • The loan violated TILA, RESPA
  • The “lender” failed to comply with RESPA

 

Foreclosure Strategists: Meeting Tuesday in Phoenix AZ

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CUSTOMER SERVICE 520-405-1688

Meeting: Tuesday, April 10, 2012

Pro Se Homeowner Defense Tool Kit!

To supplement your foreclosure defense efforts, I’ll be digging out my Pro Se homeowner defense Tool Kit.  We will discuss all aspects of what you need to assemble and assimilate to increase your chances of getting closer to the result you want.

This meeting will prepare you with a solid understanding of what you need to archive, document and learn.

If you know someone just starting their foreclosure defense, this will be an excellent opportunity for them to get up to speed.  Please invite them.

We’ll also be joined by Jo from South Dakota this week!

Tuesday, April 17, 2012

Special guest speaker:  Arizona Secretary of State Ken Bennett

We will be discussing notarizations and oaths of office.

Please send me your thoughts and questions on anything else you’d like to ask Ken Bennett.  More details for this meeting will follow.

Tuesday, Early May, 2012

Special guest speaker:  Arizona Attorney General Tom Horne

We will be discussing among other things:

Arizona v Countrywide / Bank of America lawsuit
National Attorneys General Mortgage Settlement
Attorney General Legislative Efforts (Vasquez?)
OCC Complaints notarizations and all that is associated with that.

Please send me your thoughts and questions you’d like to ask Tom Horne.  More details for this meeting will follow.

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)

MEETUP PAGE FOR FORECLOSURE STRATEGISTS:

I have set up a MeetUp page. The page can be viewed at www.MeetUp.com/ForeclosureStrategists. Please get the word out and send your friends and other homeowners the link.

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg

602-686-7355

Darrell@ForeclosureStrategists.com



OCC Issuing Alert to Consumers About Independent Foreclosure Reviews

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The OCC is rolling out its first public service announcements to alert consumers about the Independent Foreclosure Review announced by it, the Fed, and the OTS in early November.  The campaign follows the distribution of over 4 million letters to potentially eligible borrowers which include forms for submitting requests and instructions on how to use them.

The public service materials include a feature story and two 30-second radio spots in English and Spanish.  These will be distributed to 7,000 small newspapers and 6,500 radio stations throughout the U.S. The announcements inform consumers of the specifics of the program which lets borrowers who faced foreclosure during 2009 or 2010 request reviews of their cases if they believe errors in the procedures used by servicers pursuing foreclosure actions caused them to suffer financial loss. 

The parameters for determining eligibility are explained and borrowers are directed to a starting point for their requests.  Over 20 of the largest servicing companies are mandated to offer and process the reviews:  America’s Servicing Company, Aurora Loan Services, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, Citi Mortgage, Country-Wide, EMC, EverBank/Everhome, Freedom Financial, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Ser vices, MetLife Bank, National City, PNC, Sovereign Bank, Sun-Trust Mortgage, U.S. Bank, Wachovia, Washington Mutual, and Wells Fargo.

REGULATION C FILING WITH OCC MAY HAVE JUST WHAT YOU ARE LOOKING FOR

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EDITOR’S NOTE: This article corroborates something I have been saying since October, 2007. If you get a chance to do discovery on any of the originating lenders you will see the same thing over and over again for nearly all the loans made 2000-2009: the loans were not booked on the balance sheet, they were instead booked on the income statement.

This seemingly innocuous statement tells the whole story from start to finish. If the originator was the lender, as it said it was at the closing with the homeowner, then it would have shown a loan receivable on its balance sheet, a reserve for default on its balance sheet, and some income items in originating the loan. As is reported below, under Regulation C, the originating lender would also report to the regulator that it had loaned you money. But that isn’t what happened.

In terms of booking the transaction for purposes of reporting in their SEC filings and the regulator filings, they only show the transaction as income and only booked it on their income statement, with no entries on the balance sheet. That means they performed a “service” for which they received a fee. Based on that they might just as well have slipped in the name of the mortgage broker, the title agent, the closing agent on the note and mortgage or Donald Duck. It really doesn’t matter. The fact is that for all purposes OTHER than closing they did not report the transaction as THEIR LOAN. BUT SOMEBODY ELSE DID — SOMEBODY NOT DISCLOSED OR SHOWN ON ANY CLOSING DOCUMENTS.

In my opinion that means something. The Banks who control the narrative have the regulators all flustered about it being just a paperwork problem. But the law says otherwise and common sense says otherwise. And this isn’t rocket science. They lied about the identity of the lender and recorded it in the property records of the country in which the property was located. Remember we are talking about the documents here, not the actual obligation, which I agree exists with or without proper documentation.

False documents that contain false statements about the transaction are subject to various levels of enforcement against the perpetrators under Federal (TILA) and state (deceptive lending practices etc.) law. But that is not what I am talking about here. I’m talking about the fact that if the documents were false, the “best case” scenario for the banks is that they must sue to reform those documents to have them correctly state the lender’s identity and request that the Court issue an order that does in fact change the documents so that a real lender and a real borrower are shown BEFORE any enforcement action can be undertaken. That IS the law in every state as far as I can see.

In the “best case” scenario for the Banks, the order from the Judge would relate back to the date of the funding of the loan. And in that scenario the loan would then be documented by the promissory note — if it contained all required disclosures of the securitization process, which would be a whole addition to the the terms of the note. So that would “cure” the note problem which at the present time is unenforceable. Then in the “best case” scenario for the Banks, the order of the Judge would relate back to the time of closing WITH all the new terms and identification of parties.

That still leaves the mortgage, which is a separate agreement that is recognized as neither the note nor the obligation, but an instrument that is incident to the note. That too would need to be reformed with reference to either the note or the obligation as amended by the Court’s order and that too would need to relate back to the time of the funding. But here is a catch. Recording the mortgage, as amended by court order would take place whenever the court order was entered. AND THAT is why the mortgage could not be enforced against the homeowner for any acts that took place or any “breaches” that took place before the second time the mortgage was recorded with all the court-ordered changes.

The worst case scenario for the Banks is what most jurisdictions already follow: you cannot re-write history to suit you and correct fraud by later disclosure in most instances. THAT would leave the investor/lenders with a bare claim for money loaned without documentation or a secured lien on the property.  Investors have universally steered away from getting involved in foreclosures because it would subject them to claims of predatory lending and fraud. So they have effectively abandoned claims against homeowners in favor of suing the banksters. But the banksters are foreclosing as if they are following the direction of the investors when in fact they are only doing it for themselves. And THAT, my friends, is the whole story.

BY ANONYMOUS

One of the key issues I have been scratching my head about my loan is that Annual Reports filed by First Union in 2002, 2001 brag about the fact they exited the subprime lending market loan, but my loan was definitely subprime because of its adjustable rate features.   Having an accounting degree, I am always seeking to verify, match, etc.  (I get frustrated with attorneys who just believe everyone will be honest in depositions/testimony and never verify) so I sought how to independently verify the lender.

Come to find out that there is a little known item known as Regulation C that exists to assure lenders comply with fair credit reporting.  Banks are required to submit to their regulator, Wachovia’s case (2002) the OCC a data file of ALL loan applications, including amount, dates, application number, refinance, etc and even now if the loan is being sold.  The public data file than can be purchased from the FFEIC redacts the application number and date but leaves enough information so if you know your address, you can see if a loan in your amount, to a white male, with x income, was made for refinance, in your census tract by your lender.

Funny thing, Wachovia did not report any loan in my amount in my census track in 2002.  However, Lehman and Equity One reported such a loan. [editor's note: with money they had from investor/lenders who remain undisclosed]

Because I know the date of my loan application, date of closing and the loan/application number is on my application, HUD and closing documents, I attempted a FOIA request to with the OCC to identify my lender.

The first response from the OCC was that no such information was collected.  After I wrote them back and supplied them with Regulation C and their own instructions for what/how to transmit data, I was told that I could not have access to the information because it was not ‘public’ and therefore would not be disclosed under Exemption 5 of the FOIA.

My immediate thoughts are how in the world would the OCC or any auditor know that banks were simply not making this shit up?  The bank  could open a fake file under the under any name and as long as they transmitted the false data, the OCC would be none the wiser.  The regulator is not even attempting the kick the tires.

This may be the easiest way to find for a person to find their true lender and hammer a bank for reporting false information to regulators, but the regulators believe they should not have to disclose this information to the applicant.  This is another great example of the regulators not doing their job.

ADAM LEVITIN: HOUSING MARKET IS TOO BIG TO FAIL

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EDITOR’S COMMENT: Adam Levitin has nailed it again. From politics to practicality to legality.

The Multistate Foreclosure Settlement

posted by Adam Levitin
The New York Times came out with a strong editorial urging state AGs and the Administration not to rush into the proposed multi-state settlement deal. I think it’s worthwhile reviewing what we know about the deal and the arguments for and against it.  Let’s start with the facts that we know.  There aren’t many that are publicly confirmed; the Administration, the AGs leading the multi-state settlement, and the banks very much want to avoid public comment on the deal–they want to present it as a fait accompli.  As a result, there hasn’t been definitive reporting on the contents of the term sheet currently circulating among AGs.  It appears, however, the the deal has the following features.

Some 16 banks that do mortgage servicing will:

contribute a total of $5 billion in cash;
contribute total of mortgage assets with a face value of $20 billion, but a market value considerably lower;
agree to uniform servicing standards.
In exchange, the state and federal authorities signing on would give the banks:

  • a release of all servicing claims;
  • a release of all origination claims, including discriminatory lending claims;
  • a release of all MERS claims against the banks, leaving MERS Inc. as a potential defendant for MERS related issues (MERS Inc. has no financial assets of note.)
  • Perhaps $20B of the money would be used for principal write-downs and for interest rate reductions (via refinancings, which have the added benefit of relieving the banks of rep and warranty problems on the old loan) on the loans owned by these banks, which is less than 10% of the first lien loans in the U.S.

Let’s start with the argument for this deal and then consider why it is wrong.

The defenders of the deal make no bones that it is perfect.  Instead, they make two related arguments for the deal:  Too-Big-to-Fail and Exigency.

  • The Too-Big-to-Fail argument is that the US housing market is too fragile and can’t afford anything upsetting status quo; it is necessary to close some sort of deal for stability’s sake.
  • The Exigency argument is that every day of delay means more foreclosures, so it’s imperative to close the deal fast to get help to homeowners.

So what’s wrong with these arguments?

What’s Wrong with the Too-Big-to-Fail Argument

The housing market is too-big-to-fail. It’s true. The problem is that it has failed, and the proposed multi-state deal doesn’t fix the market. The deal simply isn’t broad enough to put all the housing market concerns to rest. The deal doesn’t buy peace for the banks or stability for the US housing market.  It just blows the government’s last wad on a sideshow issue, robosigning. Consider all the critical issues the settlement does not (and cannot) address:

  • The $700B in negative equity in the US.
  • Clouded title from MERS
  • Clouded title from wrongful foreclosrues
  • Billions in investor putback and securities fraud claims
  • Investor suits against trustee banks
  • Disposal of the REO inventory and the shadow REO inventory
  • Foreclosures
  • If the deal is to help the US housing market on a macro-scale, it has to take a major bite out of negative equity. $20B isn’t even a scratch.

The Too-Big-to-Fail argument, like all TBTF arguments, also grates against the rule of law.  In this case, it elevates housing market stability over the rule of law.  Ignoring banking law like prompt corrective action and source of strength doctrine and perverting section 13 of the Federal Reserve Act are all problematic, but the law being violated there is law designed to protect the banking system.  That means it is at least susceptible to the argument that its violation actually furthers its purpose.

The same cannot be said about robosigning and fair lending and securities laws.  Those laws are not enacting to protect the banking system.  They are enacted to protect the citizens for whose benefit the government suffers the banking system to exist.  Ignoring the rule of law in these contexts deeply undermines the legitimacy of the US legal system.  It starts to look like the only rule of decision is “banks win.”  That’s a recipe for social disaster. But that seems to be the message that is going out now.  If you’re a bank, you get bailed out and then get a get out of jail free card to boot.  If you’re a homeowner you get some empty promises of help, some more empty promises, and then you lose your home.  The fate of an $11 trillion market is hardly trivial, but when compared to the importance of rule of law in society, it looks like 30 silver shekels.

Now I recognize that there is a seeming tension between saying that robosigning is a sideshow issue and that it goes to the heart of the rule of law.  My point is this:  if the goal here is macroeconomic stability, who gives a fig about robosigning and why is the multistate settlement wasting its time on the issue?  But if our goal is to be a society of laws, not banks, then robosigning is a hugely important and symbolic issue.

If one takes the Too-Big-to-Fail argument seriously, then this is simply the wrong settlement.  Instead, we need a global settlement that addresses negative equity and makes the market clear, that clears MERS title, that compensates for wrongful foreclosures and for the harm to society via robosigning.  We need a settlement that can put investor claims to rest too.

Alternative, if this is about robosigning, then there shouldn’t be any settlement, much less any rush. Instead, we should just see prosecutions, fines, and jail time.

What’s Wrong with the Exigency Argument

The exigency argument REALLY galls me. It’s got all the chutzpah of the patricide pleading for mercy because he’s an orphan. Where the fuck was the exigency for the past three years?  The Administration wasted years dicking around with HAMP and HARP programs that were patently flawed from the get-go.  Look at the Congressional Oversight Panels’ original reports of HAMP.  All of the problems were obvious to anyone who wasn’t willfully blind.

And what of the AGs?  It’s not like servicing is a brand new issue to many AGs–some of them have been dealing with servicing since 2003 or so.  If there was some exigency, the AGs inclined to sign onto the settlement should have been putting resources on investigation years ago, and they should have closed this deal months ago.

Now, it is true that every day of delay means more foreclosures.  But rushing a crappy deal doesn’t serve homeowners’ interests.  A quickie deal that gives token relief won’t prevent any foreclosures.  Better to take a little more time and have a serious deal that gives serious relief.

If we want to prevent foreclosures, we need to see something more than a token attack on negative equity.  We need major principal reductions (remember, however, that principal reductions are a GAAP accounting write-down, not hard cash).  We also need serious hands-on involvement with borrowers.  It is time-consuming, and expensive, but these are our neighbors, our friends, our family, our countrymen.  Their fate affects us all.  And the evidence is clear that hands-on involvement works.  It saves money and homes in the end.  A recent HUD door-knocking program for FHA loans cost $17 million and saved taxpayers $1 billion. Fortunately HUD insisted on the program, because the bank that services those loans had no interest in it.

The two arguments for the multi-state deal, Too-Big-to-Fail and Exigency don’t hold any water.  But pointing out the flaws in these arguments are not an affirmative argument against the deal. So here they are:

The Multi-State Deal Gives Too Much Away.

The settling AGs and federal government would be giving away claims that they have not investigated and therefore cannot possibly value, something the NY and DE AGs noted in a recent op-ed.  The Huffington Post has previously reported that the AGs have done virtually no investigation of robosigning (excluding now NY, DE, and NV).  And there has been even less investigation of origination claims.  Many of the origination claims have statutes of limitations are will expire soon, but these are serious fraud and civil rights claims.  They are much, much more serious issues than the mass perjury of robosigning in terms of harms to individuals.

The Multi-State Deal Accomplishes Too Little.

If the goal of the settlement is to bring stability to the housing market, this won’t do it.  Consider all the issues left unresolved.  Investor claims, including putbacks and trustee suits are left untouched.  Homeowner claims for wrongful foreclosure and wrongful denial of modifications are left untouched.  Homeowner claims for discriminatory lending are left untouched.  Servicing standards will, hopefully, reduce servicer abuses, but that requires real enforcement.  It’s hard to imagine the AGs who sign this deal ever cracking the whip on compliance.  We know the OCC won’t.  And the CFPB can’t yet.  Critically, NOTHING in the settlement will stop the unending parade of foreclosures or get rid of the $700 billion in negative equity that is dragging down the US economy.  Indeed, it’s laughable to think that $25 billion of nominal assets would possibly cover these liabilities.

To put hard numbers on this, what does $20 billion buy?  At $65,000 negative equity per mortgage, it doesn’t buy very much.  It puts 307,692 homeowners back to zero equity. That less than 3% of the 10.9 million homeowners with negative equity. Or what about in terms of interest rate reductions over 5 years?  Let’s assume an average mortgage balance of $150,000.  That means a 1% (100bps) reduction in the interest rate on that mortgage would be $1,500.  How many homeowners does $25 billion over 5 years help?  $20b/$1500/5=2.6 million.  So $20 billion gets 2.6 billion homeowners a 1% (100bp) reduction in their interest rate.  These homeowners save $125/month for 5 years.  At the end of which the homeowner will still have deep negative equity. And it would still be helping less than a quarter of underwater homeowners.

Here’s my proposal:  let’s just call this HAMP 2.0.  It’s like a sequel to a bad movie.  We know how it is going to end. Let’s just stop wasting everyone’s time here. If this is the best the Administration can do, we might as well adopt the Mitt Romney foreclosure plan–stand aside and let the system do its work. (Gosh, that sounds an awful lot like the Geithner non-plan…) Even if one thinks of the settlement as a one-two punch with HARP 2.0, it’s a wishful featherweight in a heavyweight bout.

Here’s the question you should be asking the AGs and the Administration:  is this going to matter on the macro level?  And if not, is it doing justice?  A settlement better be doing one or the other, if not both. If it’s neither, all this is a little gravy to a handful of random homeowners and some unconvincing political C.Y.A.

The Administration Only Gets One More Bite at the Apple

A final thought.  Yves Smith made a trenchant political observation at the AmeriCatalyst mortgage conference yesterday:  the Administration only gets one more bite at the apple in terms of getting the housing market right. If the Administration flubs this, as they have consistently flubbed the housing issue, by going small bore and trying to sweep problems under the rug, rather than addressing them, there are serious political implications. It doesn’t take a lot to connect the dots between the multistate settlement and the deep national demand for accountability for the financial crisis that is manifesting itself in OWS and the need to take real action to deal with the housing market problems that are at the core of the US’s economic woes.

I’m not sure where the Administration’s political team is on this one, but imho, it seems like they are letting Treasury drive the 2012 campaign off the cliff via this settlement that will confirm the perception that the Administration works for Wall Street, not Main Street. And if you think I’m nuts on this, just read the first line of the NYT editorial:  “The banks want California, and the Obama administration hopes they can get it.”  In a country craving accountability for the financial crisis and its aftermath, being cozy with the banks is the wrong place to be when approaching a general election.

November 9, 2011 at 10:40 PM in Financial Institutions, Mortgage Debt & Home Equity, Too Big to Fail (TBTF)–

OCC REVIEW: COMPENSATION TO VICTIMS OF FORECLOSURE “ERRORS”

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EDITOR’S NOTE: The next step — compensating those who lost homes to pretender lenders. Who would have thought?

It was already happening on a small scale as the price for the “cash for keys” program rose steadily and then dropped and then started increasing again. There the bank got a quick release and the keys from a cooperating homeowner that didn’t know or care that the home they were giving up was still theirs to keep.

Now there are private deals being made all over the place by entrepreneurs who will help finance or assist homeowners in fighting off the bank or who will do their own cash for keys version where the entrepreneur pays the homeowner for a real signature on real documents, including a deed, assignment of rights etc. The homeowner usually gets to stay another couple of months for free in addition to the payment received (usually around $1,000-$5,000).

Now the OCC is completing a process that has long been in the works — figuring out how to compensate victims of wrongful foreclosure.

It all comes down to this: without the signature of the homeowners in the chain of title, there can be no “asset” on the books of the bank that is worth anything. And most homeowners have not signed anything —- yet. Nobody can buy anything and get clear title where there is a claim of securitization and the original homeowners in that chain have not released their rights or, better yet, signed a quitclaim deed.

Livinglies and the American Homeowners Cooperative is preparing to launch two programs directed at providing compensation to  victims of wrongful foreclosure transferring the risk of the fight with the banks to entities better financed and better resourced than any individual homeowner.

My opinion? Stand and fight. The equity in your home might be, and probably is equal to its value — because there is no valid mortgage against it. The obligation you signed for is probably unsecured and probably paid in full already by the exotic maneuvering of Wall Street bankers, who want to keep the money AND take your house. When somebody on Wall Street makes a lot of money making a “smart” move, everyone applauds even though he didn’t really work for it. I’d say homeowners’ smart move is to stay and fight. If you win, you get the house free and clear or something close to that. If you lose, you don’t seem to be any the worse for wear. Let the Bankers feel what it is like to be under water.

Check with a licensed attorney before acting on anything you read on this blog.

October 4, 2011

Review of Foreclosure Mistakes Is Set By OCC

Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators.

The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.

John Walsh, acting head of the OCC, unveiled some aspects of the plan in a speech last month to banking executives, when he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief,” when they were harmed by lender improprieties.

The process will include a broad public-outreach campaign, including direct mail to eligible borrowers and a single website and toll-free number. The reviews will be conducted by independent third-party companies that were hired earlier this year by 14 banks that signed consent orders in April with the OCC and the Federal Reserve. The regulators had to sign off on the selection of these companies.

“It’s a substantial undertaking at great expense to the banks,” said Tim Rood, a partner at Collingwood Group, a housing-finance consulting firm.

EXAMPLE OF NEW TOOLS PROVIDED BY LIVINGLIES: OCC CEASE AND DESIST ORDER V US BANK

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SEE US BANK OCC ORDER AND COMMENTARY

It will be up on the store soon and on the American Homeowners Cooperative at http://www.Americanhomeownerscoop.com. Based upon an in depth analysis of our title and securitization combo and our expert declaration we found that there was a gap between the report issued by the COMBO, which most people find sufficient to go to court, and the expert declaration, which has some, but not much traction. There is nothing like a live witness.

So I created a template which is still under construction, but I wanted to share it with those of you who might have a use for it. You may remember that last April all the agencies issued cease and desist orders against all the banks and servicers including MERS. I’ll be working on a template for each bank and each servicer that can be used, combining the findings of the combo into a report that adds the traction of the agency orders that apply in court as well as a request for information from the bank, servicer or agency (freedom of information act or on line inquiry).

UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY COMPTROLLER OF THE CURRENCY
) In the Matter of:    ) ) U.S. Bank National Association    ) Cincinnati, Ohio    ) and    ) U.S. Bank National Association ND    ) Fargo, North Dakota    ) )
CONSENT ORDER
AA-EC-11-18
The Comptroller of the Currency of the United States of America (“Comptroller”), through his national bank examiners and other staff of the Office of the Comptroller of the Currency (“OCC”), as part of an interagency horizontal review of major residential mortgage servicers, has conducted an examination of the residential real estate mortgage foreclosure processes of U.S. Bank National Association, Cincinnati, Ohio and U.S. Bank National Association ND, Fargo, North Dakota (collectively, “Bank”). The OCC has identified certain deficiencies and unsafe or unsound practices in residential mortgage servicing and in the Bank’s initiation and handling of foreclosure proceedings. The OCC has informed the Bank of the findings resulting from the examination.
The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a “Stipulation and Consent to the Issuance of a Consent Order,” dated April 13, 2011 (“Stipulation and Consent”), that is accepted by the Comptroller. By this Stipulation and Consent, which is incorporated by reference, the Bank has consented to the issuance of this Consent Cease and Desist Order (“Order”) by the Comptroller. The Bank has committed to taking all necessary and appropriate steps to remedy the deficiencies and unsafe or unsound
practices identified by the OCC, and to enhance the Bank’s residential mortgage servicing and foreclosure processes. The Bank has begun implementing procedures to remediate the practices addressed in this Order.
ARTICLE I COMPTROLLER’S FINDINGS
The Comptroller finds, and the Bank neither admits nor denies, the following:
(1) The Bank is among the largest servicers of residential mortgages in the United States and services a portfolio of 1,400,000 residential mortgage loans. During the recent housing crisis, a large number of residential mortgage loans serviced by the Bank became delinquent and resulted in foreclosure actions. The Bank’s foreclosure inventory grew substantially from 2008 through 2010.
(2) In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank:
(a) filed or caused to be filed in state and federal courts affidavits executed by its employees making various assertions, such as the amount of the principal and interest due or the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits that were not properly notarized, including those not signed or affirmed in the presence of a notary;
2
(c) failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and
(d) failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.
(3) By reason of the conduct set forth above, the Bank engaged in unsafe or unsound banking practices.
Pursuant to the authority vested in him by the Federal Deposit Insurance Act, as amended, 12 U.S.C. § 1818(b), the Comptroller hereby ORDERS that:
ARTICLE II COMPLIANCE COMMITTEE
(1) The Board shall maintain a Compliance Committee of at least three (3) Bank or Holding Company directors, of which at least two (2) may not be employees or officers of the Bank or any of its subsidiaries or affiliates. In the event of a change of the membership, the name of any new member shall be submitted to the Examiner-in-Charge for Large Bank Supervision at the Bank (“Examiner-in-Charge”). The Compliance Committee shall be responsible for monitoring and coordinating the Bank’s compliance with the provisions of this Order. The Compliance Committee shall meet at least monthly and maintain minutes of its meetings.
(2) Within ninety (90) days of this Order, and within thirty (30) days after the end of each quarter thereafter, the Compliance Committee shall submit a written progress report to the
3
Board setting forth in detail actions taken to comply with each Article of this order, and the results and status of those actions.
(3) The Board shall forward a copy of the Compliance Committee’s report, with any additional comments by the Board, to the Deputy Comptroller for Large Bank Supervision (“Deputy Comptroller”) and the Examiner-in-Charge within ten (10) days of receiving such report.
ARTICLE III COMPREHENSIVE ACTION PLAN
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable plan containing a complete description of the actions that are necessary and appropriate to achieve compliance with Articles IV through XII of this Order (“Action Plan”). In the event the Deputy Comptroller asks the Bank to revise the Action Plan, the Bank shall promptly make the requested revisions and resubmit the Action Plan to the Deputy Comptroller and the Examiner-in-Charge. Following acceptance of the Action Plan by the Deputy Comptroller, the Bank shall not take any action that would constitute a significant deviation from, or material change to, the requirements of the Action Plan or this Order, unless and until the Bank has received a prior written determination of no supervisory objection from the Deputy Comptroller.
(2) The Board shall ensure that the Bank achieves and thereafter maintains compliance with this Order, including, without limitation, successful implementation of the Action Plan. The Board shall further ensure that, upon implementation of the Action Plan, the Bank achieves and maintains effective mortgage servicing, foreclosure, and loss mitigation activities (as used
4
herein, the phrase “loss mitigation” shall include, but not be limited to, activities related to special forbearances, modifications, short refinances, short sales, cash-for-keys, and deeds-in- lieu of foreclosure and be referred to as either “Loss Mitigation” or “Loss Mitigation Activities”), as well as associated risk management, compliance, quality control, audit, training, staffing, and related functions. In order to comply with these requirements, the Board shall:
(a) require the timely reporting by Bank management of such actions directed by the Board to be taken under this Order;
(b) follow-up on any non-compliance with such actions in a timely and appropriate manner; and
(c) require corrective action be taken in a timely manner for any non-compliance with such actions.
(3) The Action Plan shall address, at a minimum: (a) financial resources to develop and implement an adequate infrastructure to
support existing and/or future Loss Mitigation and foreclosure activities and ensure compliance with this Order;
(b) organizational structure, managerial resources, and staffing to support existing and/or future Loss Mitigation and foreclosure activities and ensure compliance with this Order;
(c) metrics to measure and ensure the adequacy of staffing levels relative to existing and/or future Loss Mitigation and foreclosure activities, such as limits for the number of loans assigned to a Loss Mitigation employee, including the single point of contact as hereinafter defined, and deadlines to review loan modification documentation, make loan modification decisions, and provide responses to borrowers;
5
(d) governance and controls to ensure compliance with all applicable federal and state laws (including the U.S. Bankruptcy Code and the Servicemembers Civil Relief Act (“SCRA”)), rules, regulations, and court orders and requirements, as well as the Membership Rules of MERSCORP, servicing guides of the Government Sponsored Enterprises (“GSEs”) or investors, including those with the Federal Housing Administration and those required by the Home Affordable Modification Program (“HAMP”), and loss share agreements with the Federal Deposit Insurance Corporation (collectively “Legal Requirements”), and the requirements of this Order.
(4) The Action Plan shall specify timelines for completion of each of the requirements of Articles IV through XII of this Order. The timelines in the Action Plan shall be consistent with any deadlines set forth in this Order.
ARTICLE IV COMPLIANCE PROGRAM
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable compliance program to ensure that the mortgage servicing and foreclosure operations, including Loss Mitigation and loan modification, comply with all applicable Legal Requirements, OCC supervisory guidance, and the requirements of this Order and are conducted in a safe and sound manner (“Compliance Program”). The Compliance Program shall be implemented within one hundred twenty (120) days of this Order. Any corrective action timeframe in the Compliance Program that is in excess of one hundred twenty (120) days must be approved by the Examiner-in-Charge. The Compliance Program shall include, at a minimum:
6
(a) appropriate written policies and procedures to conduct, oversee, and monitor mortgage servicing, Loss Mitigation, and foreclosure operations;
(b) processes to ensure that all factual assertions made in pleadings, declarations, affidavits, or other sworn statements filed by or on behalf of the Bank are accurate, complete, and reliable; and that affidavits and declarations are based on personal knowledge or a review of the Bank’s books and records when the affidavit or declaration so states;
(c) processes to ensure that affidavits filed in foreclosure proceedings are executed and notarized in accordance with state legal requirements and applicable guidelines, including jurat requirements;
(d) processes to review and approve standardized affidavits and declarations for each jurisdiction in which the Bank files foreclosure actions to ensure compliance with applicable laws, rules and court procedures;
(e) processes to ensure that the Bank has properly documented ownership of the promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a proper party to the action (as a result of agency or other similar status) at all stages of foreclosure and bankruptcy litigation, including appropriate transfer and delivery of endorsed notes and assigned mortgages or deeds of trust at the formation of a residential mortgage-backed security, and lawful and verifiable endorsement and successive assignment of the note and mortgage or deed of trust to reflect all changes of ownership;
(f) processes to ensure that a clear and auditable trail exists for all factual information contained in each affidavit or declaration, in support of each of the charges that are listed, including whether the amount is chargeable to the borrower and/or claimable by the investor;
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(g) processes to ensure that foreclosure sales (including the calculation of the default period, the amounts due, and compliance with notice requirements) and post-sale confirmations are in accordance with the terms of the mortgage loan and applicable state and federal law requirements;
(h) processes to ensure that all fees, expenses, and other charges imposed on the borrower are assessed in accordance with the terms of the underlying mortgage note, mortgage, or other customer authorization with respect to the imposition of fees, charges, and expenses, and in compliance with all applicable Legal Requirements and OCC supervisory guidance;
(i) processes to ensure that the Bank has the ability to locate and secure all documents, including the original promissory notes if required, necessary to perform mortgage servicing, foreclosure and Loss Mitigation, or loan modification functions;
(j) ongoing testing for compliance with applicable Legal Requirements and OCC supervisory guidance that is completed by qualified persons with requisite knowledge and ability (which may include internal audit) who are independent of the Bank’s business lines;
(k) measures to ensure that policies, procedures, and processes are updated on an ongoing basis as necessary to incorporate any changes in applicable Legal Requirements and OCC supervisory guidance;
(l) processes to ensure the qualifications of current management and supervisory personnel responsible for mortgage servicing and foreclosure processes and operations, including collections, Loss Mitigation and loan modification, are appropriate and a determination of whether any staffing changes or additions are needed;
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(m) processes to ensure that staffing levels devoted to mortgage servicing and foreclosure processes and operations, including collections, Loss Mitigation, and loan modification, are adequate to meet current and expected workload demands;
(n) processes to ensure that workloads of mortgage servicing, foreclosure and Loss Mitigation, and loan modification personnel, including single point of contact personnel as hereinafter defined, are reviewed and managed. Such processes, at a minimum, shall assess whether the workload levels are appropriate to ensure compliance with the requirements of Article IX of this Order, and necessary adjustments to workloads shall promptly follow the completion of the reviews. An initial review shall be completed within ninety (90) days of this Order, and subsequent reviews shall be conducted semi-annually;
(o) processes to ensure that the risk management, quality control, audit, and compliance programs have the requisite authority and status within the organization so that appropriate reviews of the Bank’s mortgage servicing, Loss Mitigation, and foreclosure activities and operations may occur and deficiencies are identified and promptly remedied;
(p) appropriate training programs for personnel involved in mortgage servicing and foreclosure processes and operations, including collections, Loss Mitigation, and loan modification, to ensure compliance with applicable Legal Requirements and supervisory guidance; and
(q) appropriate procedures for customers in bankruptcy, including a prohibition on collection of fees in violation of bankruptcy’s automatic stay (11 U.S.C. § 362), the discharge injunction (11 U.S.C. § 524), or any applicable court order.
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ARTICLE V THIRD PARTY MANAGEMENT
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge acceptable policies and procedures for outsourcing foreclosure or related functions, including Loss Mitigation and loan modification, and property management functions for residential real estate acquired through or in lieu of foreclosure, to any agent, independent contractor, consulting firm, law firm (including local counsel in foreclosure or bankruptcy proceedings retained to represent the interests of the owners of mortgages), property management firm, or other third-party (including any affiliate of the Bank) (“Third- Party Providers”). Third-party management policies and procedures shall be implemented within one hundred twenty (120) days of this Order. Any corrective action timetable that is in excess of one hundred twenty (120) days must be approved by the Examiner-in-Charge. The policies and procedures shall include, at a minimum:
(a) appropriate oversight to ensure that Third-Party Providers comply with all applicable Legal Requirements, OCC supervisory guidance (including applicable portions of OCC Bulletin 2001-47), and the Bank’s policies and procedures;
(b) measures to ensure that all original records transferred from the Bank to Third-Party Providers (including the originals of promissory notes and mortgage documents) remain within the custody and control of the Third-Party Provider (unless filed with the appropriate court or the loan is otherwise transferred to another party), and are returned to the Bank or designated custodians at the conclusion of the performed service, along with all other documents necessary for the Bank’s files, and that the Bank retains imaged copies of significant documents sent to Third-Party Providers;
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(c) measures to ensure the accuracy of all documents filed or otherwise utilized on behalf of the Bank or the owners of mortgages in any judicial or non-judicial foreclosure proceeding, related bankruptcy proceeding, or in other foreclosure-related litigation, including, but not limited to, documentation sufficient to establish ownership of the promissory note and/or right to foreclose at the time the foreclosure action is commenced;
(d) processes to perform appropriate due diligence on potential and current Third- Party Provider qualifications, expertise, capacity, reputation, complaints, information security, document custody practices, business continuity, and financial viability, and to ensure adequacy of Third-Party Provider staffing levels, training, work quality, and workload balance;
(e) processes to ensure that contracts provide for adequate oversight, including requiring Third-Party Provider adherence to Bank foreclosure processing standards, measures to enforce Third-Party Provider contractual obligations, and processes to ensure timely action with respect to Third-Party Provider performance failures;
(f) processes to ensure periodic reviews of Third-Party Provider work for timeliness, competence, completeness, and compliance with all applicable Legal Requirements and supervisory guidance, and to ensure that foreclosures are conducted in a safe and sound manner;
(g) processes to review customer complaints about Third-Party Provider services;
(h) processes to prepare contingency and business continuity plans that ensure the continuing availability of critical third-party services and business continuity of the Bank, consistent with federal banking agency guidance, both to address short-term and long-term service disruptions and to ensure an orderly transition to new service providers should that become necessary;
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(i) a review of fee structures for Third-Party Providers to ensure that the method of compensation considers the accuracy, completeness, and legal compliance of foreclosure filings and is not based solely on increased foreclosure volume and/or meeting processing timelines; and
(j) a certification process for law firms (and recertification of existing law firm providers) that provide residential mortgage foreclosure and bankruptcy services for the Bank, on a periodic basis, as qualified to serve as Third-Party Providers to the Bank including that attorneys are licensed to practice in the relevant jurisdiction and have the experience and competence necessary to perform the services requested.
ARTICLE VI MORTGAGE ELECTRONIC REGISTRATION SYSTEM
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable plan to ensure appropriate controls and oversight of the Bank’s activities with respect to the Mortgage Electronic Registration System (“MERS”) and compliance with MERSCORP’s membership rules, terms, and conditions (“MERS Requirements”) (“MERS Plan”). The MERS Plan shall be implemented within one hundred twenty (120) days of this Order. Any corrective action timetable that is in excess of one hundred twenty (120) days must be approved by the Examiner-in-Charge. The MERS Plan shall include, at a minimum:
(a) processes to ensure that all mortgage assignments and endorsements with respect to mortgage loans serviced or owned by the Bank out of MERS’ name are executed only by a certifying officer authorized by MERS and approved by the Bank;
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(b) processes to ensure that all other actions that may be taken by MERS certifying officers (with respect to mortgage loans serviced or owned by the Bank) are executed by a certifying officer authorized by MERS and approved by the Bank;
(c) processes to ensure that the Bank maintains up-to-date corporate resolutions from MERS for all Bank employees and third-parties who are certifying officers authorized by MERS, and up-to-date lists of MERS certifying officers;
(d) processes to ensure compliance with all MERS Requirements and with the requirements of the MERS Corporate Resolution Management System (“CRMS”);
(e) processes to ensure the accuracy and reliability of data reported to MERSCORP and MERS, including monthly system-to-system reconciliations for all MERS mandatory reporting fields, and daily capture of all rejects/warnings reports associated with registrations, transfers, and status updates on open-item aging reports. Unresolved items must be maintained on open-item aging reports and tracked until resolution. The Bank shall determine and report whether the foreclosures for loans serviced by the Bank that are currently pending in MERS’ name are accurate and how many are listed in error, and describe how and by when the data on the MERSCORP system will be corrected; and
(f) an appropriate MERS quality assurance workplan, which clearly describes all tests, test frequency, sampling methods, responsible parties, and the expected process for open- item follow-up, and includes an annual independent test of the control structure of the system-to- system reconciliation process, the reject/warning error correction process, and adherence to the Bank’s MERS Plan.
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(2) The Bank shall include MERS and MERSCORP in its third-party vendor management process, which shall include a detailed analysis of potential vulnerabilities, including information security, business continuity, and vendor viability assessments.
ARTICLE VII FORECLOSURE REVIEW (1) Within forty-five (45) days of this Order, the Bank shall retain an independent
consultant acceptable to the Deputy Comptroller and the Examiner-in-Charge to conduct an independent review of certain residential foreclosure actions regarding individual borrowers with respect to the Bank’s mortgage servicing portfolio. The review shall include residential foreclosure actions or proceedings (including foreclosures that were in process or completed) for loans serviced by the Bank, whether brought in the name of the Bank, the investor, the mortgage note holder, or any agent for the mortgage note holder (including MERS), that have been pending at any time from January 1, 2009 to December 31, 2010, as well as residential foreclosure sales that occurred during this time period (“Foreclosure Review”).
(2) Within fifteen (15) days of the engagement of the independent consultant described in this Article, but prior to the commencement of the Foreclosure Review, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge for approval an engagement letter that sets forth:
(a) the methodology for conducting the Foreclosure Review, including: (i) a description of the information systems and documents to be reviewed, including the selection of criteria for cases to be reviewed; (ii) the criteria for evaluating the reasonableness of fees and penalties; (iii) other procedures necessary to make the required determinations (such as through
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interviews of employees and third parties and a process for submission and review of borrower claims and complaints); and (iv) any proposed sampling techniques. In setting the scope and review methodology under clause (i) of this sub-paragraph, the independent consultant may consider any work already done by the Bank or other third-parties on behalf of the Bank. The engagement letter shall contain a full description of the statistical basis for the sampling methods chosen, as well as procedures to increase the size of the sample depending on results of the initial sampling;
(b) expertise and resources to be dedicated to the Foreclosure Review;
(c) completion of the Foreclosure Review within one hundred twenty (120) days from approval of the engagement letter; and
(d) a written commitment that any workpapers associated with the Foreclosure Review shall be made available to the OCC immediately upon request.
(3) The purpose of the Foreclosure Review shall be to determine, at a minimum: (a) whether at the time the foreclosure action was initiated or the pleading or
affidavit filed (including in bankruptcy proceedings and in defending suits brought by borrowers), the foreclosing party or agent of the party had properly documented ownership of the promissory note and mortgage (or deed of trust) under relevant state law, or was otherwise a proper party to the action as a result of agency or similar status;
(b) whether the foreclosure was in accordance with applicable state and federal law, including but not limited to the SCRA and the U.S. Bankruptcy Code;
(c) whether a foreclosure sale occurred when an application for a loan modification or other Loss Mitigation was under consideration; when the loan was performing in accordance with a trial or permanent loan modification; or when the loan had not been in default
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for a sufficient period of time to authorize foreclosure pursuant to the terms of the mortgage loan documents and related agreements;
(d) whether, with respect to non-judicial foreclosures, the procedures followed with respect to the foreclosure sale (including the calculation of the default period, the amounts due, and compliance with notice periods) and post-sale confirmations were in accordance with the terms of the mortgage loan and state law requirements;
(e) whether a delinquent borrower’s account was only charged fees and/or penalties that were permissible under the terms of the borrower’s loan documents, applicable state and federal law, and were reasonable and customary;
(f) whether the frequency that fees were assessed to any delinquent borrower’s account (including broker price opinions) was excessive under the terms of the borrower’s loan documents, and applicable state and federal law;
(g) whether Loss Mitigation Activities with respect to foreclosed loans were handled in accordance with the requirements of the HAMP, and consistent with the policies and procedures applicable to the Bank’s proprietary loan modifications or other loss mitigation programs, such that each borrower had an adequate opportunity to apply for a Loss Mitigation option or program, any such application was handled properly, a final decision was made on a reasonable basis, and was communicated to the borrower before the foreclosure sale; and
(h) whether any errors, misrepresentations, or other deficiencies identified in the Foreclosure Review resulted in financial injury to the borrower or the mortgagee.
(4) The independent consultant shall prepare a written report detailing the findings of the Foreclosure Review (“Foreclosure Report”), which shall be completed within thirty (30) days of
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completion of the Foreclosure Review. Immediately upon completion, the Foreclosure Report shall be submitted to the Deputy Comptroller, Examiner-in-Charge, and the Board.
(5) Within forty-five (45) days of submission of the Foreclosure Report to the Deputy Comptroller, Examiner-in-Charge, and the Board, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge a plan, acceptable to the OCC, to remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies identified in the Foreclosure Report, by:
(a) reimbursing or otherwise appropriately remediating borrowers for impermissible or excessive penalties, fees, or expenses, or for other financial injury identified in accordance with this Article; and
(b) taking appropriate steps to remediate any foreclosure sale where the foreclosure was not authorized as described in this Article.
(6) Within sixty (60) days after the OCC provides supervisory non-objection to the plan set forth in paragraph (5) above, the Bank shall make all reimbursement and remediation payments and provide all credits required by such plan, and provide the OCC with a report detailing such payments and credits.
ARTICLE VIII MANAGEMENT INFORMATION SYSTEMS
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable plan for operation of its management information systems (“MIS”) for foreclosure and Loss Mitigation or loan modification activities to ensure the timely delivery of complete and accurate information to permit effective decision-
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making. The MIS plan shall be implemented within one hundred twenty (120) days of this Order. Any corrective action timeframe that is in excess of one hundred twenty (120) days must be approved by the Examiner-in-Charge. The plan shall include, at a minimum:
(a) a description of the various components of MIS used by the Bank for foreclosure and Loss Mitigation or loan modification activities;
(b) a description of and timetable for any needed changes or upgrades to: (i) monitor compliance with all applicable Legal Requirements and
supervisory guidance, and the requirements of this Order; (ii) ensure the ongoing accuracy of records for all serviced mortgages,
including, but not limited to, records necessary to establish ownership and the right to foreclose by the appropriate party for all serviced mortgages, outstanding balances, and fees assessed to the borrower; and
(iii) measures to ensure that Loss Mitigation, loan foreclosure, and modification staffs have sufficient and timely access to information provided by the borrower regarding loan foreclosure and modification activities;
(c) testing the integrity and accuracy of the new or enhanced MIS to ensure that reports generated by the system provide necessary information for adequate monitoring and quality controls.
ARTICLE IX MORTGAGE SERVICING
(1) Within sixty (60) days of this Order, the Bank shall submit to the Deputy Comptroller and the Examiner-in-Charge an acceptable plan, along with a timeline for ensuring
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effective coordination of communications with borrowers, both oral and written, related to Loss Mitigation or loan modification and foreclosure activities: (i) to ensure that communications are timely and effective and are designed to avoid confusion to borrowers; (ii) to ensure continuity in the handling of borrowers’ loan files during the Loss Mitigation, loan modification, and foreclosure process by personnel knowledgeable about a specific borrower’s situation; (iii) to ensure reasonable and good faith efforts, consistent with applicable Legal Requirements, are engaged in Loss Mitigation and foreclosure prevention for delinquent loans, where appropriate; and (iv) to ensure that decisions concerning Loss Mitigation or loan modifications continue to be made and communicated in a timely fashion. Prior to submitting the plan, the Bank shall conduct a review to determine whether processes involving past due mortgage loans or foreclosures overlap in such a way that they may impair or impede a borrower’s efforts to effectively pursue a loan modification, and whether Bank employee compensation practices discourage Loss Mitigation or loan modifications. The plan shall be implemented within one hundred twenty (120) days of this Order. Any corrective action timeframe that is in excess of one hundred twenty (120) days must be approved by the Examiner-in-Charge. The plan shall include, at a minimum:
(a) measures to ensure that staff handling Loss Mitigation and loan modification requests routinely communicate and coordinate with staff processing the foreclosure on the borrower’s property;
(b) appropriate deadlines for responses to borrower communications and requests for consideration of Loss Mitigation, including deadlines for decision-making on Loss Mitigation Activities, with the metrics established not being less responsive than the timelines in the HAMP program;
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(c) establishment of an easily accessible and reliable single point of contact for each borrower so that the borrower has access to an employee of the Bank to obtain information throughout the Loss Mitigation, loan modification, and foreclosure processes;
(d) a requirement that written communications with the borrower identify such single point of contact along with one or more direct means of communication with the contact;
(e) measures to ensure that the single point of contact has access to current information and personnel (in-house or third-party) sufficient to timely, accurately, and adequately inform the borrower of the current status of the Loss Mitigation, loan modification, and foreclosure activities;
(f) measures to ensure that staff are trained specifically in handling mortgage delinquencies, Loss Mitigation, and loan modifications;
(g) procedures and controls to ensure that a final decision regarding a borrower’s loan modification request (whether on a trial or permanent basis) is made and communicated to the borrower in writing, including the reason(s) why the borrower did not qualify for the trial or permanent modification (including the net present value calculations utilized by the Bank, if applicable) by the single point of contact within a reasonable period of time before any foreclosure sale occurs;
(h) procedures and controls to ensure that when the borrower’s loan has been approved for modification on a trial or permanent basis that: (i) no foreclosure or further legal action predicate to foreclosure occurs, unless the borrower is deemed in default on the terms of the trial or permanent modification; and (ii) the single point of contact remains available to the borrower and continues to be referenced on all written communications with the borrower;
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(i) policies and procedures to enable borrowers to make complaints regarding the Loss Mitigation or modification process, denial of modification requests, the foreclosure process, or foreclosure activities which prevent a borrower from pursuing Loss Mitigation or modification options, and a process for making borrowers aware of the complaint procedures;
(j) procedures for the prompt review, escalation, and resolution of borrower complaints, including a process to communicate the results of the review to the borrower on a timely basis;
(k) policies and procedures to ensure that payments are credited in a prompt and timely manner; that payments, including partial payments to the extent permissible under the terms of applicable legal instruments, are applied to scheduled principal, interest, and/or escrow before fees, and that any misapplication of borrower funds is corrected in a prompt and timely manner;
(l) policies and procedures to ensure that timely information about Loss Mitigation options is sent to the borrower in the event of a delinquency or default, including plain language notices about loan modification and the pendency of foreclosure proceedings;
(m) policies and procedures to ensure that foreclosure, Loss Mitigation, and loan modification documents provided to borrowers and third parties are appropriately maintained and tracked, and that borrowers generally will not be required to resubmit the same documented information that has already been provided, and that borrowers are notified promptly of the need for additional information; and
(n) policies and procedures to consider loan modifications or other Loss Mitigation Activities with respect to junior lien loans owned by the Bank, and to factor the risks associated with such junior lien loans into loan loss reserving practices, where the Bank services
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the associated first lien mortgage and becomes aware that such first lien mortgage is delinquent or has been modified. Such policies and procedures shall require the ongoing maintenance of appropriate loss reserves for junior lien mortgages owned by the Bank and the charge-off of such junior lien loans in accordance with FFIEC retail credit classification guidelines.
ARTICLE X RISK ASSESSMENT AND RISK MANAGEMENT PLAN
(1) Within ninety (90) days of this Order, the Bank shall conduct a written, comprehensive assessment of the Bank’s risks in mortgage servicing operations, particularly in the areas of Loss Mitigation, foreclosure, and the administration and disposition of other real estate owned, including, but not limited to, operational, compliance, transaction, legal, and reputational risks.
(2) The Bank shall develop an acceptable plan to effectively manage or mitigate identified risks on an ongoing basis, with oversight by the Bank’s senior risk managers, senior management, and the Board. The assessment and plan shall be provided to the Deputy Comptroller and the Examiner-in-Charge within one hundred twenty (120) days of this Order.
ARTICLE XI APPROVAL, IMPLEMENTATION AND REPORTS
(1) The Bank shall submit the written plans, programs, policies, and procedures required by this Order for review and determination of no supervisory objection to the Deputy Comptroller and the Examiner-in-Charge within the applicable time periods set forth in Articles II through X. The Bank shall adopt the plans, programs, policies, and procedures required by
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this Order upon submission to the OCC, and shall immediately make any revisions requested by the Deputy Comptroller or the Examiner-in-Charge. Upon adoption, the Bank shall immediately implement the plans, programs, policies, and procedures required by this Order and thereafter fully comply with them.
(2) During the term of this Order, the required plans, programs, policies, and procedures shall not be amended or rescinded in any material respect without the prior written approval of the Deputy Comptroller or the Examiner-in-Charge (except as otherwise provided in this Order).
(3) During the term of this Order, the Bank shall revise the required plans, programs, policies, and procedures as necessary to incorporate new or changes to applicable Legal Requirements and supervisory guidelines.
(4) The Board shall ensure that the Bank has processes, personnel, and control systems to ensure implementation of and adherence to the plans, programs, policies, and procedures required by this Order.
(5) Within thirty (30) days after the end of each calendar quarter following the date of this Order, the Bank shall submit to the OCC a written progress report detailing the form and manner of all actions taken to secure compliance with the provisions of this Order and the results thereof. The progress report shall include information sufficient to validate compliance with this Order, based on a testing program acceptable to the OCC that includes, if required by the OCC, validation by third-party independent consultants acceptable to the OCC. The OCC may, in writing, discontinue the requirement for progress reports or modify the reporting schedule.
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(6) All communication regarding this Order shall be sent to:
(a) Sally G. Belshaw Deputy Comptroller for Large Bank Supervision Office of the Comptroller of the Currency 250 E Street SW Washington, DC 20219
(b) Grace E. Dailey Examiner-in-Charge National Bank Examiners 800 Nicollet Mall, BC-MN-H17O Minneapolis, MN 55402
ARTICLE XII COMPLIANCE AND EXTENSIONS OF TIME
(1) IftheBankcontendsthatcompliancewithanyprovisionofthisOrderwouldnotbe feasible or legally permissible for the Bank, or requires an extension of any timeframe within this Order, the Board shall submit a written request to the Deputy Comptroller asking for relief. Any written requests submitted pursuant to this Article shall include a statement setting forth in detail the special circumstances that prevent the Bank from complying with a provision, that require the Deputy Comptroller to exempt the Bank from a provision, or that require an extension of a timeframe within this Order.
(2) Allsuchrequestsshallbeaccompaniedbyrelevantsupportingdocumentation,andto the extent requested by the Deputy Comptroller, a sworn affidavit or affidavits setting forth any other facts upon which the Bank relies. The Deputy Comptroller’s decision concerning a request is final and not subject to further review.
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ARTICLE XIII OTHER PROVISIONS
(1) Although this Order requires the Bank to submit certain actions, plans, programs, policies, and procedures for the review or prior written determination of no supervisory objection by the Deputy Comptroller or the Examiner-in-Charge, the Board has the ultimate responsibility for proper and sound management of the Bank.
(2) In each instance in this Order in which the Board is required to ensure adherence to, and undertake to perform certain obligations of the Bank, it is intended to mean that the Board shall:
(a) authorize and adopt such actions on behalf of the Bank as may be necessary for the Bank to perform its obligations and undertakings under the terms of this Order;
(b) require the timely reporting by Bank management of such actions directed by the Board to be taken under the terms of this Order;
(c) follow-up on any material non-compliance with such actions in a timely and appropriate manner; and
(d) require corrective action be taken in a timely manner of any material non- compliance with such actions.
(3) If, at any time, the Comptroller deems it appropriate in fulfilling the responsibilities placed upon him by the several laws of the United States to undertake any action affecting the Bank, nothing in this Order shall in any way inhibit, estop, bar, or otherwise prevent the Comptroller from so doing.
(4) This Order constitutes a settlement of the cease and desist proceeding against the Bank contemplated by the Comptroller, based on the unsafe or unsound practices described in
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the Comptroller’s Findings set forth in Article I of this Order. Provided, however, that nothing in this Order shall prevent the Comptroller from instituting other enforcement actions against the Bank or any of its institution-affiliated parties, including, without limitation, assessment of civil money penalties, based on the findings set forth in this Order, or any other findings.
(5) This Order is and shall become effective upon its execution by the Comptroller, through his authorized representative whose hand appears below. The Order shall remain effective and enforceable, except to the extent that, and until such time as, any provision of this Order shall be amended, suspended, waived, or terminated in writing by the Comptroller.
(6) Any time limitations imposed by this Order shall begin to run from the effective date of this Order, as shown below, unless the Order specifies otherwise.
(7) The terms and provisions of this Order apply to the Bank and its subsidiaries, even though those subsidiaries are not named as parties to this Order. The Bank shall integrate any foreclosure or mortgage servicing activities done by a subsidiary into its plans, policies, programs, and processes required by this Order. The Bank shall ensure that its subsidiaries comply with all terms and provisions of this Order.
(8) This Order is intended to be, and shall be construed to be, a final order issued pursuant to 12 U.S.C. § 1818(b), and expressly does not form, and may not be construed to form, a contract binding the Comptroller or the United States. Nothing in this Order shall affect any action against the Bank or its institution-affiliated parties by a bank regulatory agency, the United States Department of Justice, or any other law enforcement agency, to the extent permitted under applicable law.
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(9) The terms of this Order, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements, or prior arrangements between the parties, whether oral or written.
(10) Nothing in the Stipulation and Consent or this Order, express or implied, shall give to any person or entity, other than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under the Stipulation and Consent or this Order.
(11) The Bank consents to the issuance of this Order before the filing of any notices, or taking of any testimony or adjudication, and solely for the purpose of settling this matter without a formal proceeding being filed.
IT IS SO ORDERED, this 13th day of April, 2011.
__/s/________________ Sally G. Belshaw Deputy Comptroller Large Bank Supervision
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UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY COMPTROLLER OF THE CURRENCY
) In the Matter of:    ) U.S. Bank National Association    )
Cincinnati, Ohio and    ) U.S. Bank National Association ND    ) Fargo, North Dakota    )
)    AA-EC-11-18
)
STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER
The Comptroller of the Currency of the United States of America (“Comptroller”) intends to impose a cease and desist order on U.S. Bank National Association, Cincinnati, Ohio and U.S. Bank National Association ND, Fargo, North Dakota (collectively, “Bank”) pursuant to 12 U.S.C. § § 1818(b), for unsafe or unsound banking practices relating to mortgage servicing and the initiation and handling of foreclosure proceedings.
The Bank, in the interest of compliance and cooperation, enters into this Stipulation and Consent to the Issuance of a Consent Order (“Stipulation”) and consents to the issuance of a Consent Order, dated April 13, 2011 (“Consent Order”);
In consideration of the above premises, the Comptroller, through his authorized representative, and the Bank, through its duly elected and acting Board of Directors, stipulate and agree to the following:
ARTICLE I JURISDICTION
(1)    The Bank is a national banking association chartered and examined by the Comptroller pursuant to the National Bank Act of 1864, as amended, 12 U.S.C. § 1 et seq.
(2)    The Comptroller is “the appropriate Federal banking agency” regarding the Bank pursuant to 12 U.S.C. §§ 1813(q) and 1818(b).
(3)    The Bank is an “insured depository institution” within the meaning of 12 U.S.C. § 1818(b)(1).
(4)    For the purposes of, and within the meaning of 12 C.F.R. §§ 5.3(g)(4), 5.51(c)(6), and 24.2(e)(4), this Consent Order shall not be construed to be a “cease and desist order” or “consent order”, unless the OCC informs the Bank otherwise.
ARTICLE II AGREEMENT
(1)    The Bank, without admitting or denying any wrongdoing, consents and agrees to issuance of the Consent Order by the Comptroller.
(2)    The Bank consents and agrees that the Consent Order shall (a) be deemed an “order issued with the consent of the depository institution” pursuant to 12 U.S.C. § 1818(h)(2), (b) become effective upon its execution by the Comptroller through his authorized representative, and (c) be fully enforceable by the Comptroller pursuant to 12 U.S.C. § 1818(i).
(3)    Notwithstanding the absence of mutuality of obligation, or of consideration, or of a contract, the Comptroller may enforce any of the commitments or
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obligations herein undertaken by the Bank under his supervisory powers, including 12 U.S.C. § 1818(i), and not as a matter of contract law. The Bank expressly acknowledges that neither the Bank nor the Comptroller has any intention to enter into a contract.
(4)    The Bank declares that no separate promise or inducement of any kind has been made by the Comptroller, or by his agents or employees, to cause or induce the Bank to consent to the issuance of the Consent Order and/or execute the Consent Order.
(5)    The Bank expressly acknowledges that no officer or employee of the Comptroller has statutory or other authority to bind the United States, the United States Treasury Department, the Comptroller, or any other federal bank regulatory agency or entity, or any officer or employee of any of those entities to a contract affecting the Comptroller’s exercise of his supervisory responsibilities.
(6)    The OCC releases and discharges the Bank from all potential liability for a cease and desist order that has been or might have been asserted by the OCC based on the banking practices described in the Comptroller’s Findings set forth in Article I of the Consent Order, to the extent known to the OCC as of the effective date of the Consent Order. However, the banking practices alleged in Article I of the Consent Order may be utilized by the OCC in other future enforcement actions against the Bank or its institution-affiliated parties, including, without limitation, to assess civil money penalties or to establish a pattern or practice of violations or the continuation of a pattern or practice of violations. This release shall not preclude or affect any right of the OCC to determine and ensure compliance with the terms and provisions of this Stipulation or the Consent Order.
3
(7)    The terms and provisions of the Stipulation and the Consent Order shall be binding upon, and inure to the benefit of, the parties hereto and their successors in interest. Nothing in this Stipulation or the Consent Order, express or implied, shall give to any person or entity, other than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Stipulation or the Consent Order.
ARTICLE III WAIVERS
(1)    The Bank, by consenting to this Stipulation, waives: (a)    the issuance of a Notice of Charges pursuant to
12 U.S.C. § 1818(b); (b)    any and all procedural rights available in connection with the
issuance of the Consent Order; (c)    all rights to a hearing and a final agency decision pursuant to
12 U.S.C. §§ 1818(b) and (h), 12 C.F.R. Part 19; (d)    all rights to seek any type of administrative or judicial review of
the Consent Order; (e)    any and all claims for fees, costs, or expenses against the
Comptroller, or any of his agents or employees, related in any way to this enforcement matter or this Consent Order, whether arising under common law or under the terms of any statute, including, but not limited to, the Equal Access to Justice Act, 5 U.S.C. § 504 and 28 U.S.C. § 2412; and
(f)    any and all rights to challenge or contest the validity of the Consent Order.
4
ARTICLE IV OTHER PROVISIONS
(1)    The provisions of this Stipulation shall not inhibit, estop, bar, or otherwise prevent the Comptroller from taking any other action affecting the Bank if, at any time, it deems it appropriate to do so to fulfill the responsibilities placed upon it by the several laws of the United States of America.
(2)    Nothing in this Stipulation shall preclude any proceedings brought by the Comptroller to enforce the terms of this Consent Order, and nothing in this Stipulation constitutes, nor shall the Bank contend that it constitutes, a waiver of any right, power, or authority of any other representative of the United States or an agency thereof, including, without limitation, the United States Department of Justice, to bring other actions deemed appropriate.
(3)    The terms of the Stipulation and the Consent Order are not subject to amendment or modification by any extraneous expression, prior agreements or prior arrangements between the parties, whether oral or written.
IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller as his representative, has hereunto set her hand on behalf of the Comptroller.
/s/
Sally G. Belshaw Deputy Comptroller Large Bank Supervision
April 13, 2011
Date
5
IN TESTIMONY Board of Directors of the
__/s/________________ Richard K. Davis
__/s/________________ Andrew Cecere
__/s/________________ Terrance R. Dolan
__/s/________________ Richard C. Hartnack
__/s/________________ Joseph C. Hoesley
__/s/________________ Pamela A. Joseph
__/s/________________ Richard B. Payne, Jr.
__/s/________________ Jeffry H. von Gillern
WHEREOF, the undersigned, as the duly elected and acting Bank, have hereunto set their hands on behalf of the Bank.
__3/31/11____________ Date
__3/30/11____________ Date
__3/30/11____________ Date
__3/31/2011__________ Date
__3/31/11____________ Date
__March 30, 2011_____ Date
__3/30/11____________ Date
__3/30/11____________ Date
6

OCC MIGHT BE GETTING MORE PROACTIVE: FILE COMPLAINTS NOW

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EDITOR’S NOTE: It is time to start filing complaints with every agency regulating banks, notaries, servicers and lawyers. Consumer complaints to the Attorney general’s office would also be advisable. If you have good grounds (speak to a lawyer in the jurisdiction in which your property is located, then get the complaint form and file it. There is a growing concern in these agencies that their do-nothing policy is backfiring on them and endangering their jobs.

FROM NANCY DREW

OCC ENFORCEMENT ACTIONS 1/1/2000 – 8/2011

Bank of America, National Association Charlotte, NC C&D 4/13/2011
OCC: 2011-048 DOCKET NUMBER AA-EC-11-12

2 Bank of America, National Association Charlotte, NC FA 2/9/2005
2005-10 2/27/2007 OCC: 2007-012 DOCKET NUMBER AA-EC-04-35

3 Bank of America, National Association Charlotte, NC FA 12/7/2010
OCC: 2010-239 NO DOCKET#

4 First National Bank Of America East Lansing, MI FA 8/13/2001
2001-57 8/28/2003 OCC: 2003-133 NO DOCKET#

OCC ‘ENFORCEMENT ACTIONS SEARCH TOOL FOR WELL FARGO:

1 Wells Fargo Bank, National Association Sioux Falls, SD BCMP
$115,000 6/27/2005 OCC: 2005-77
DOCKET NUMBER: AA-EC-05-43

2 Wells Fargo Bank, National Association Sioux Falls, SD BCMP
$51,205 5/8/2009 OCC: 2009-063
DOCKET NUMBER: AA-EC-09-18

3 Wells Fargo Bank, National Association Sioux Falls, SD C&D 4/13/2011 OCC: 2011-051 DOCKET NUMBER: AA-EC-11-19

OCC ENFORCEMENT 8/19/2011

Civil Money Penalty Orders; Formal Agreements, Restitution Orders

2011-105
JPMorgan Chase Bank, National Association, Columbus OH 7/6/2011

2011-108 JP Morgan Chase Bank, National Association, Columbus OH 7/6/2011

Searched OCC Enforcement Actions Against JPM 1/1/2000 – 8/2000

OCC PROMISES “These lists are NOT guaranteed to be comprehensive ”

1 JPMorgan Chase Bank, National Association Columbus, OH BCMP
$2,000,000 6/14/2011 OCC: 2011-094 Docket Number: AA-EC-11-57

2 JPMorgan Chase Bank, National Association Columbus, OH BCMP
$22,000,000 7/6/2011 OCC: 2011-105 No DocketNumber

3 JPMorgan Chase Bank, National Association Columbus, OH C&D
Cease & Desist 4/13/2011 OCC: 2011-050 DOCKET# AA-EC-11-15

4 JPMorgan Chase Bank, National Association Columbus, OH FA 7/6/2011 OCC:2011-108 No Docket #

Enforcement Action Types:

C&D Cease & Desist Order
Banking organizations subject to cease and desist orders are required to take actions or follow proscriptions in the orders. 12 U.S.C. § 1818(b).

BCMP Civil Money Penalty Order
Banking organizations subject to civil money penalties must pay fines. 12 U.S.C. § 1818(i)(2)

FA Formal Agreements
Banking organizations that are subject to formal agreements agree to take actions or follow proscriptions in the written agreement. 12 U.S.C. § 1818(b).

QUESTION: WHY WERE NO ‘FORMAL AGREEMENTS’ Executed?
Banking organizations that are subject to formal agreements agree to take actions or follow proscriptions in the written agreement. 12 U.S.C. § 1818(b).

QUESTION: WHY WERE NO ‘NOTICES FILE?’
Notices Filed (NFB): Banking organizations against whom an “OCC Complaint” (in the form of a Notice of Charges and/or Notice of Civil Money Penalty Assessment) is filed have an opportunity to litigate the matter before an Administrative Law Judge. 12 USC § 1818(b) (Notice of Charges) and 12 USC 1818(i) (Notice of Civil Money Penalty Assessment)

QUESTIONS: WHY WERE NO PROMPT CORRECTION ACTION DIRECTIVES ISSUED: PCAD:
Banking organizations that are subject to prompt corrective action directives are required to take actions or to follow proscriptions that are required or imposed by the OCC, under section 38 of the FDI Act. 12 U.S.C. §1831o.

QUESTION: WHY WERE NO SAFETY & SOUNDNESS ORDERS (SASO) ISSUED:?
(SASO): Banking organizations that are subject to safety and soundness orders are required to take actions or to follow proscriptions that are imposed by the OCC under section 39 of the FDI Act. 12 U.S.C. §1831p-1.

QUESTION: WHY WERE NO SECURITIES ENFORCMENT ACTIONS ISSUED? SEB:
Banking organizations that are engaged in securities activities, such as municipal securities dealers, government securities dealers, or transfer agents, can be subject to various OCC sanctions, including censures, suspensions, bars and/or restitution, pursuant to the federal securities laws

QUESTION: WHY WERE NO INSTITUTIONAL AFFILIATED PARTEIS (IAP’S) (INCLUDES INDIVIDUALS AND ENTITEIS AS DEFINED IN 12 U.S.C. § 1813(u))
•1829 Notifications (1829): IAPs who have been convicted of, or entered into a pretrial diversion or similar program for certain criminal offenses are notified by letter that they are prohibited from participating in the affairs of any insured depository institution without prior regulatory or judicial approval by operation of law. 12 U.S.C. § 1829.

•Cease & Desist Orders against Individuals (PC&D): IAPs who are subject to cease and desist orders are required to take actions or follow proscriptions in the orders. 12 U.S.C. § 1818(b).

•Civil Money Penalty Orders against Individuals (CMP): IAPs who are subject to civil money penalties must pay fines. 12 U.S.C. § 1818(i)(2).

•Formal Agreements (FA): IAPs that are subject to formal agreements agree to take actions or follow proscriptions in the written agreement. 12 U.S.C. § 1818(b).

•Notices Filed (NFI): IAPs against whom an “OCC Complaint” (in the form of a Notice of Charges, Notice of Intent to Prohibit/Remove, and/or Notice of Civil Money Penalty Assessment) is filed have an opportunity to litigate the matter before an Administrative Law Judge. 12 USC 1818(b) (Notice of Charges); 12 USC 1818(e) (Notice of intent to Prohibit/Remove); and 12 USC § 1818(i) (Notice of Civil Money Penalty Assessment).

•Removal/Prohibition Orders (REM): IAPs who are subject to prohibition orders are prohibited from participating in the affairs of any insured depository institution without prior regulatory approval. 12 U.S.C. §§ 1818(e) or 1818(g).

•Restitution Orders (REST): IAPs who are subject to restitution orders are required to reimburse banking organizations or the Federal Deposit Insurance Corporation for losses caused or for unjust enrichment. 12 U.S.C. §1818(b).

•Securities Enforcement Actions against Individuals (SEI): IAPs who are affiliated with banking organizations engaged in securities activities, such as municipal securities dealers, government securities dealers or transfer agents, can be subject to various OCC sanctions, including censures, suspensions, bars and/or restitution, pursuant to the federal securities laws.

Another Failed Bank: 45th this Year — MegaBank Failure on the Way

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“MEGABANKS IN STATE OF UNDISCLOSED FAILURE

Fortune has examined dozens of court records that corroborate the
employee’s testimony. And if Countrywide’s mortgage securitizations
systematically failed as it appears they did, Bank of America’s
potential liability dwarfs its shareholder equity, as the
Congressional Oversight Panel points out.

Field is referencing Countrywide v. Kemp, and the sworn testimony of
Linda DeMartini, a top official at BofA. She acknowledged on the
record in a deposition that Countrywide never conveyed the mortgages
to the trusts, and that Countrywide notes “weren’t endorsed except on
a case-by-case basis generally long after securitization ostensibly
occurred.” This would mean that the mortgage-backed securities
composed of Countrywide loans are, in fact, non-mortgage-backed
securities. And Field did the grunt work of looking at the court
records, which back up DeMartini’s claim. None of the 104 Countrywide
notes she looked at in two New York counties were endorsed originally.
Read the whole story, it’s a good one.  [cont'd.]

EDITOR’S NOTE: 45 BANKS HAVE BEEN SEIZED BY THE FDIC. BUT THAT IS ONLY 1% OF THE STORY. THE REST OF THE STORY IS THAT ANY BANK HOLDING “MORTGAGE-BASED ASSETS” HAS ALREADY FAILED BUT IT ISN’T DECLARED. And with the Federal Reserve getting ready to raise reserve requirements, the situation is going to get worse for the MegaBanks until their auditors can’t stand the suspense any more.

Just as the GDP is misstated by the reports of the megabanks with their trading activity being the largest source of “revenue” and the trading being a cover for repatriating money stolen during the mortgage meltdown, the illusion of activity, revenue and profits is being dispelled by questions among auditors as to how to treat the mortgage-based assets. The auditing firms stand to lose a lot if they don’t  take action in a way that  shields them from potential liability. When these Mega Banks finally tumble, they will take the auditing firms and potentially others with them.

By my reckoning and the analysis offered by others who are recognized experts, BOA, Citi, Chase, Morgan, Wells Fargo and others are already failed banks. A large part of their balance sheet is based upon assets that do not exist, never existed, and cannot be brought to life, much less onto a balance sheet as a true asset. Title analysis and securitization analysis shows clearly that each closing of each of more than 80 million residential real estate transactions shows the following, for each loan that was claimed to be part of a securitized transaction:

  1. The party identified as “lender,” “mortgagee”, or beneficiary was either a non-lending institution or an institution who could have loaned the money but didn’t. The pattern of conduct was table-funded transactions, which according to the Truth in Lending Act and Reg Z are presumptively predatory loans. They are considered predatory because by depriving the borrower of important information concerning the identity of the actual lender/creditor, the borrower was prevented from knowing facts that went into the decision about whether to execute the documents. It was fraud in the inducement. The failure to disclose the table-funded nature of the transaction, hidden fees paid to the party identified as the originating lender were withheld from the disclosure statements given to the borrower. Thus, by not knowing who he/she was dealing with and by not knowing about all the extra fees distributed in the feeding frenzy, the borrower was not alerted to the fact that excessive fees were being paid to everyone concerned, including the mortgage broker and the appraiser. Failing to know this, the borrower was unaware that by shopping further, the truth about the price of the loan, the loan appraisal, and the viability of the loan were not only withheld from the borrower, but were used against him/her. This in turn gives rise to rights of rescission which have been often declared by the borrower but ignored by the servicer and the securitizers, as well as causes of action for fraud that could easily exceed the nominal balance of the mortgage stated on the closing documents.
  2. Each documented transaction then creates an unresolvable defect: the party identified on the closing documents was neither the source of funding nor the creditor in any sense of the word. They were acting in most cases as an unregistered unregulated mortgage broker and straw-man for an undisclosed creditor. The effect of this is that the note names a payee based upon a loan from that payee that the payee never funded. The note therefore while appearing real on its face is actually a nullity (void) because it describes a transaction that never in fact took place. Like wise, the mortgage purports to secure the named lender for collection of the balance due on the note. The balance due under the note is zero because the transaction described never took place. While it is possible to reconstitute the mortgage and maybe even the note, it would take a lawsuit filed in a court of competent jurisdiction, in which the Plaintiff pleads and proves a case that there was a scrivener’s error in the identification of the lender and payee. This is why the notes were never actually transferred and why it is necessary for the Banks to fabricate and forge documents to make it appear that their was a transfer of the note and mortgage when the underlying transaction did not exist. While the courts have largely fallen for this ploy, more and more Judges are realizing that the paperwork does not add up.
  3. Each monetary transaction dubbed “mortgage loan”  is undocumented and unsecured. The investor-lender was the source of funds and either the investors lenders should have been described, as they are now, as “certificate holders” (a euphemism because the certificates were never issued either) or if the pool was actually created and a trustee or manager appointed as authorized agent, the Trustee or agent should have been named as a payee on a note and the secured party on a mortgage. The presence and identity of the presumed creditor was already known (but withheld from borrower)  at closing, although possibly not known by the title agent or escrow agent. The proper parties were not named in the closing documentation and even if they were, the money trail shows that the funds taken from the investor were not used in the manner expected or desired by the investor, with special emphasis on those instances in which the investment bank took as much as 50% or more of the investor funds and claimed them as profits, which were secreted off-shore, and which are gradually being repatriated  to create the illusion of trading profits when in fact the profits are not real nor legal. The absence of documentation for the actual monetary transaction means that none of these transaction are secured.
  4. While the true source of the funds for the loan were the investor-lenders, the only documentation received by the true creditors was executed by parties other than the homeowner-borrower. Those documents refer to the documented transaction with the straw-man lender and not the actual monetary transaction. Hence the investor-lender does not have a signed note, mortgage or any agreement with the homeowner-borrower. In all cases in which a different agreement with different parties is attempted to be used as evidence of the obligation, the case fails. Thus the assets claimed by any alleged “owner” of the mortgage documentation are worthless because the documents describe a transaction that is fictitious while those same documents scrupulously avoid describing the real transaction. 
  5. While every state has a procedure to correct, modify or reform documentation that is prepared in error, the facts show that these documents were intentionally prepared with defects. The party to bring such an action to straighten out the paperwork is the investor-lender or the authorized agent who brings such a lawsuit naming the disclosed principal(s) for whom the action is filed. 
  6. The investor lenders have chosen NOT to file such actions and NOT to pursue the homeowners for collection. There are economic and legal reasons for the investors avoiding any attempt to collect from the homeowners. The economic reason is that the best the investor can hope for is that out of the money that was advanced by the investor only part was used to fund mortgages, and the only part of the advance that could ever be claimed against a homeowner is not the larger amount advanced to the investment banker but the smaller amount advanced to the homeowner or on the homeowner’s behalf. Thus in order to make the claim and recover theoretically in full, the investor would have to name BOTH the homeowner and the securitizers (including the investment banks, whom the investors ARE suing for payment in full) to reach all the potential claims for all the money advanced. The investors in short have elected their remedy and have sued the investment bank. The second economic reason for the investors’ decision to not pursue the homeowner is that they are looking at collateral  that was overstated at the time of closing, and now obviously showing its true value at a fraction of the amount that was funded for the loan, which fraction is lower than the amount allocatable as advanced by the investor for making the loan. Thus for every $1 originally advanced to the investment bank, the investor is, for the most part, looking at a maximum recovery of at best 30 cents. But by suing the investment bank, the investor gets the benefit of claiming 100 cents on the dollar because it includes all money advanced to the securitizers, whether deployed for mortgage funding or not, and incorporates the appraisal fraud at closing.
  7. The legal reason why the investors do not want to pursue homeowners, is that they would be “owning” the homeowners’ affirmative defenses and counterclaims which if fully adjudicated could easily exceed the balance due under the loan, which is unsecured as described above. 
  8. Since none of the securitizers were the actual source of funding for any of the loans, the only theoretical asset they hold is a mortgage bond they are holding because they got stuck with it before they could sell it off to unsuspecting clients. But the mortgage bond is based upon (a) a transaction that did not exist (see above) and (b) even if the transaction did exist, the transfer into the pool never occurred, thus rendering the mortgage bond worthless or less than worthless if the bond was subject to tranche counterparty indebtedness. 

Hence the asset on the books of the securitizers related to mortgage “interests” is an illusion. And the failure of the auditors to make a statement regarding the questionable nature of these assets is actionable. But more importantly, the assets claimed on the securitizers balance sheets constitutes a large portion of their total assets. Wipe those out and the bank is suddenly smaller and out of compliance with the reserve requirements of the Federal Reserve and any other agency regulating the activities of a lending institution. Unless they suddenly repatriate the hidden fees from the mortgage meltdown which I estimate to be around $2 trillion, the bank is in the state of undeclared failure. And if they do repatriate the money all at once, they will have a lot of questions to answer including why they needed a bailout.

Failed Bank Tally Reaches 45 in 2011

By THE ASSOCIATED PRESS

WASHINGTON (AP) — Regulators on Friday shut a small bank in South Carolina, the 45th bank failure this year.

The Federal Deposit Insurance Corporation seized Atlantic Bank and Trust, based in Charleston, S.C., with $208.2 million in assets and $191.6 million in deposits. First Citizens Bank and Trust, based in Columbia, S.C., agreed to assume its assets and deposits.

The F.D.I.C. and First Citizens Bank agreed to share losses on $141.8 million of Atlantic Bank’s assets. The bank’s failure is expected to cost the deposit insurance fund $36.4 million.

WAKE UP CALL: COMPTROLLER OF THE CURRENCY STOPS MERS DEAD

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“We’re a nation of laws. Everyone knew that MERS didn’t have the right to appear as a beneficiary, but it would have been inconvenient to act on this because MERS was in widespread use throughout the banking industry. It was wrong, wrong, wrong, but everyone was doing it. Just like they were doing ‘no-doc’ loans and other sleights of hand. Just like the banks were doing so many bad things to homeowners. All they wanted to do was increase their profits – no matter who it hurt or how wrong their practices might be.” — Philip Kramer

BANKS THOUGHT THEY HAD IT FIXED, BUT AGENCY GOES FORWARD ANYWAY

Editorial Note: The agencies are starting to realize that MERS is like a cancer that spread throughout the mortgage markets and spilled over onto the balance sheets of banks who were “members.” The banks that are regulated by OCC now must deal with the fact that their balance sheet assets, many of which are considered to be tier 1 assets are not just downgraded to Tier 3, but in actuality are wiped off completely.

The effect of this action, is to cast doubt, at a minimum, on a substantial amount of the assets on the balance sheets of such banks. This in turn reduces the reserve that banks must keep against lending and other activities. The net effect is going to be a reduction in the size of many banks as they crank down to reflect the reality that has been true all along: the mortgage, notes and obligations claimed on the balance sheet neither existed, nor were they ever assets of the bank.

In turn, the effect on the marketplace and the cases that have gone through the court system and the cases that are going through the court system, is that any MERS mortgage or Deed of Trust is obviously flawed, defective, unenforceable just as we have been saying all along. The effect of naming MERS was the same as naming Donald Duck as Mortgagee or Beneficiary. There was, in effect, no Mortgagee or beneficiary, which means that (a) the loan specified in the promissory note executed by the borrower was never secured by a perfected lien and the Mortgage Deed or Deed of Trust, can now be attacked in a quiet title action, and (b) any foreclosure based upon a MERS deed should be dismissed. This would reduce the “asset” to an unsecured claim against a homeowner who is probably broke, and without any collateral on which to they can rely to mitigate “damages.”

But there are no damages. The effect also includes a probable consequence with respect to the obligation itself. As the agencies unravel this scheme of the illusion of securitization, they are coming to realize that the note itself does not describe the actual transaction that occurred. At a minimum this would allow in parole evidence, but beyond that it creates the presumption that the note was invalid to begin with and was merely a sham instrument used as an excuse for the feeding frenzy that followed the sale of mortgage bonds to investors. Thus not only is the “asset” unsecured, it obviously does not even exist. The real asset is the obligation that arose as a result of the Borrower accepting the benefits of funding of the loan, and that was and remains undocumented, because the real creditors are the investors — no matter how you split hairs.

Since the real creditors are the investors, the asset, if it belongs to anyone, is held strictly for the benefit of the investors who can use said asset as a derivative asset on THEIR balance sheet. In fact, this is what they do. But the investors have marked down the value of their “asset” to whatever claim they have for being tricked into buying empty defective bogus mortgage bonds. The investors, who now know of all the fraud perpetrated against themselves find no difficulty in accepting the fact that the homeowners were deceived as well by the same fraud. Thus the investors, who are the creditors, have chosen NOT to pursue the collection of the obligation against homeowners who have all sorts of affirmative defenses and counterclaims for fraud, violations of statute and a long list of other torts and breaches of contract.

Instead the investors, who are the real creditors in the actual cash transaction, since the money came from them, have elected to sue the investment bankers for 100 cents on the dollar rather than bring a claim against the homeowner for pennies on the dollar, which could morph into a net loss if the damages owed to the homeowner exceed the putative damages owed to the investor for advancing the funds.

Philip Kramer Weighs in on latest settlement agreement between the U.S. government and MERS Corp.Kramer Kaslow: Office of Comptroller of the Currency signs Cease and Desist Order with MERS Corp.

Calabasas, CA (PRWEB) June 03, 2011

The Office of the Comptroller of the Currency has just signed a Cease and Desist settlement agreement with MERS Corp (Mortgage Electronic Registration Systems). Among other things, the Cease and Desist order finds, “We have identified certain deficiencies and unsafe or unsound practices by MERS and MERSCORP that present financial, operational, compliance, legal and reputational risks to MERSCORP and MERS, and to the participating Members.” (OCC No. AA-EC-11-20; Board of Governors; Docket Nos. 11-051-B-SC-1,11-051-B-SC-2; FDIC-11-194bOTS No. 11-040; FHFA No. EAP-11-01)

Noted attorney Philip Kramer, a senior partner at the law firm of Kramer & Kaslow provides insight, “MERS Corp is the owner of Mortgage Electronic Registration Systems (MERS), one of the cornerstones of the current banking crisis. In order to cut up loans and move the pieces around the world at the speed of electronics again and again and again, until no one is sure who owns what, financial institutions have been using MERS as the “beneficiary”, a legal term which in practical terms means they are entitled to foreclose on behalf of the lender – except MERS is nothing more than an electronic database. They are often named as beneficiary. However in order to legally be named as beneficiary they would have had to put up funds on the loan. Not to mention the fact that the recordation itself is not even official. BUT most importantly, MERS is never a Holder in Due Course.”

Philip Kramer goes on to observe that, “We’re a nation of laws. Everyone knew that MERS didn’t have the right to appear as a beneficiary, but it would have been inconvenient to act on this because MERS was in widespread use throughout the banking industry. It was wrong, wrong, wrong, but everyone was doing it. Just like they were doing ‘no-doc’ loans and other sleights of hand. Just like the banks were doing so many bad things to homeowners. All they wanted to do was increase their profits – no matter who it hurt or how wrong their practices might be.”

The full text of the consent decree can be found at the following URL:

http://www.scribd.com/doc/52972728/MERS-AND-MERSCORP-AGREE-TO-A-CEASE-AND-DESIST-ORDER-OCC-INVOLVED-4-13-2011

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