FED Opens Investigation Into Mortgages and Improper Foreclosures

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Foreclosure May Cost Security Clearance, Jobs

10.24.2010 CITI BOWEN CONGRESSIONAL TESTIMONY(2)

Bondholders-Letter-to-Bofa-Over-Country-Wide-Loans-Inc-Ny-Fed

Editor’s Comment: Whether they stick to it or not is another story. But in a sharp break with the Obama administration’s efforts to avoid the inevitable crash of the mega banks, Bernanke has made it clear that there is something rotten in Denmark. Bernanke’s concern is whether we can reach an equilibrium where asset values are properly reported and the workings of the finance industry reflect reality — so that the economy that depends upon the ability of the finance industry to provide much needed capital does the job instead of the reverse — consuming the capital it creates.

This development is another step toward reality. If the FED continues down this road, the illusory assets of the mega banks will be revealed and the stark truth of our condition will be admitted. Bernanke seems to understand what the Obama advisers do not get — the entire world knows the truth. If we want to maintain our high moral ground and our status on the world stage, we need to take the lead on this instead of pretending the explorer’s clothes are real. The snickering is getting increasing louder amongst central bankers and it isn’t going to be long before the IMF, G-20, and EU, along with the Asian associations decide that they had enough of using the dollar as the reserve currency of the world. Our 15 minutes are up. Either we fess up or lose our position entirely.

MEMO TO OBAMA: You don’t need a degree in economics to understand the reality of this situation. Ask most people on the street and you’ll get the correct diagnosis and prognosis. Stop listening to advisers who are stuck in serial ideological ineptitude and start using your own prodigious brain power. You’ll get it right if you figure it out for yourself.

The anger is not about TARP. It’s about the continuing effort to “save” the mega banks at the expense of the rest of the country while ignoring an extremely obvious available alternative. We don’t need the Mega banks. They are an obstacle to our success. We have a perfectly intact and workable infrastructure with more than 7,000 community banks and credit unions and a EFT (electronic funds transfer) backbone that can do anything the large banks do, if you let it. We have passed the point where people care about whether some homeowner gets an over-sized benefit from this mess. People want relief, they want jobs, they want their country back to the way it was when innovation, job creation and economic leadership was oozing from our core.

October 25, 2010

Mortgage Lenders Under Review, Bernanke Says

By THE ASSOCIATED PRESS

WASHINGTON (AP) — Federal banking regulators are examining whether mortgage companies cut corners on their procedures when they moved to foreclose on people’s homes, the Federal Reserve chairman, Ben S. Bernanke, said Monday.

Preliminary results of the in-depth review into the practices of the nation’s largest mortgage companies are expected to be released next month, Mr. Bernanke said in remarks prepared for delivery to a housing finance conference in Arlington, Va.

“We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Mr. Bernanke said in remarks that echoed those made last week by several administration officials.

Mr. Bernanke’s remarks come as attorneys general in all 50 states plus the District of Columbia are jointly investigating whether mortgage companies improperly evicted people from their homes. They are looking into whether paperwork and legal procedures were handled properly.

At the same time, staff members at the Fed and other federal agencies are evaluating the potential effects of the foreclosure debacle on the real-estate market and on financial institutions, he said. Federal officials said last week that several agencies were investigating mortgage lenders, but Shaun Donovan, the secretary of housing and urban development. said that the government had found no evidence of “systemic issues in the underlying legal documents.”

Bank of America and Ally Financial Inc.’s GMAC Mortgage have resumed processing foreclosures, after halting them temporarily to review documents. Both lenders face allegations that employees signed but didn’t read foreclosure documents that may have contained errors. Other companies, including PNC Financial Services and JPMorgan, have halted tens of thousands of foreclosures after similar practices became public.

Dubious mortgage practices and lax lending standards were blamed for contributing to a housing bubble that eventually burst and thrust the economy beginning in 2007 into the worst recession since the 1930s. Many Americans took out home loans that they did not understand and bought homes that they could not afford.

As a result, foreclosures have soared to record highs, and remain one of the negative forces restraining the economy’s ability to get back on sounder footing.

Now more than 20 percent of borrowers owe more than their home is worth, and an additional 33 percent have equity cushions of 10 percent of less, putting them at risk should house prices decline much further, Mr. Bernanke said.

“With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” Mr. Bernanke warned.

9 Responses

  1. DyingTruth

    You make a good point. The Public Private Investment Program is a joint venture between the Treasury/Federal Reserve and Distressed Debt Buyers – to remove toxic assets from financial institution balance sheets and sell to distressed debt buyers – who hope to generate a profit.

    The PPIP distressed debt Fund Managers are all debt buyers.
    Alliance Bernstein
    Angelo Gordon
    BlackRock
    Invesco (WL Ross and American Home Mortgage)
    Marathon Asset
    Oaktree Capital
    RLJ Western Asse
    The TCW Group
    Wellington Management Company

    The program is generating profit – and IT IS NOT by making loan modifications. Clearly, the path of the toxic assets is gone from the original trust – and in the form of mezzanine and default tranches and credit swaps – now under the Legacy portfolio.

    And, we will get an honest investigation by Mr. Ben Bernanke???? DO NOT THINK SO. Appears he may have condoned the foreclosure fraud practice.

    Dying Truth – Really IMPORTANT POINT – if that is what you mean by “Conflict of Interest.” More need to be said about this – right now – while this in the spotlight.

    Thanks.

  2. Still nothing on the Conflict of Interest. You disapoint me Neil.

  3. Neil is right – he writes “We have a perfectly intact and workable infrastructure with more than 7,000 community banks and credit unions ” These community banks and credit unions were left out of the “loop” for mega-profits during the mortgage solicitation by the controlling big banks. The community banks and credit unions could no longer compete.

    In any other industry – this would be be called a monopoly – and addressed by appropriate authorities. This was not done – it was allowed to continue – and continue- and continue.

  4. They are focusing on whether the documents were in order when in reality that is just a tip of the iceberg!, What they are doing to homeowners is giving them the old-fashioned run-around! They delay and put you off using any means to make sure you get behind on payments. They are telling familes they have not made payments when they did! They will not allow you to just put payments on the back of the note and carry on when you have been unemployed and get back on your feet! They say you dont make enough money then tell you you make too much when trying to apply for Hamp then if you DO get the documents, they are telling the families they NEVER RECEIVED THE DOCUMENTS! They tell you to pay them x amount of dollars to get your payments caught up then you never hear from them for weeks when you call they tell you they are considering if they are going to accept your money, then when you DO hear from them, they thank you for paying ONE payment!! They are blatently lieing and STEALING homes and our “government” is in on it!! We had over 30,000 dollars equity in our home and those SOB’s (BOA) STOLE IT and there is not anyone in a position of authority willing to do anything to stop it!

  5. The FED is in the bed with big banks so I do not anticipate much of a “looking into” whatever that means anyway. We need an independent and responsible commission to investigate because I know for an objective reality there is fraud in these hills. Consumers beware !

  6. It is about time that the goverment steps in and does something about BAC. Our company buys defaulted 2nd mortgages so I get to hear all about the first mortgages. Regarding short sales, modifications, foreclosures and so on. I do not care who I am talking with whether or not is it closer, title company , attorney, realtor or other lenders, one thing everyone agrees with is BAC is the worst bank. They have zero negotiation skills, time is of the essence means nothing to them, a rule of thumb for BAC-if it makes sense DO NOT DO IT. If it does not make sense DO IT. They want to give the 2nd mortgage 1,000 to 2,500 in a short sale, yet when they have the second they want a least 50% of there balance. The new thing in Florida they will foreclose or get close then they realize no equity and just stop, or they get a judgment which in Florida you have to execute within 60 days. So all that time and money spent for nothing. I guess that is ok we bailed them out and if they need more we will probably give it to them. It was a Countrywide loan that I saw in California. The customer was approved for an 800,000 house, of course it went to foreclosure. Do you know what line of work the customer was in —this was 100% financing –He was a vegetable picker. There was never a payment made–
    I have another story-A property in Florida the first is owed 1,000,000.. The first is Deustch bank – not spelled right -they do not deserve to be spelled right. The bank has an appraisal , current appraisal for 550,000. An offer comes in at 550,000. the buyer is already approved and ready to close. the bank counters the deal at 670,000. What buyer would pay more than the appraised value in Florida. It will be in the banks inventory. they are not the brighest bulb in the package. I email the white house about every stupid thing I see these lenders do so I am emailing everyday- I ask for response- not once have I ever got a response. Is this the way he handles everything???? The banks an lenders are running “”””AMUCK”””” They do what they want to do and answer to no one. Usually it take 17 months, six different represenatives, 3 to 4 applications and then if you still have your job, not passed on, maybe you will get approved for a modification. Do not ever think that anything will be deducted. the house maybe worth 100,000 but with all the cost and fees you owe 140,000. You do not have to worry about refinancing as you will never see that value, let alone the 80%, you will never be able to sell either and you will never get close to the paying on the principal. How is what lendrs are doing now any different then what they were doing before????????

  7. Woops wrong post but I do agree with Bruce. When is the curtain gonna come down

  8. Did the culprits sign in a capacity that they knew was outside their legal right did they know they were misleading the court system if they have lied under oath once they will lie under oath again. Once a schiaster always a sciasters

  9. Oh please. Bernanke, the FED is not going to do anything. All this crap is just grandstanding for show. First the FED buys all their fraudulent mortgage crap at undisclosed amounts (probably 100 cents on the dollar) and now they grandstands good guys demanding they buy them back, probably at 20 cents on the dollar. Anything out of the FED or banks is pure total B.S. and lies. They know exactly what’s going on and made sure it was all easy as pie for the banksters from start to finish.

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