David Dayen via The Intercept: Stealth Attack on Wall Street Bank Reform foams the runway for the next Financial Crisis

Editor’s Note:  S.2155 is known in Washington as the Crapo bill.  A fitting name.  Even Georgetown Law professor and former CFPB adviser Adam Levitin in a blog post warns the dangers of further bank deregulation.  This bill functionally exempts 85% of US banks and credit unions from fair lending laws in the mortgage market

By David Dayen/The Intercept

https://theintercept.com/2018/03/02/crapo-instead-of-taking-on-gun-control-democrats-are-teaming-with-republicans-for-a-stealth-attack-on-wall-street-reform/

In mid-January, Citigroup executives held a conference call with reporters about the bank’s fourth-quarter 2017 earnings. The discussion turned to an obscure congressional bill, S.2155, pitched by its bipartisan supporters mainly as a vehicle to deliver regulatory relief to community banks and, 10 years after the financial crisis, to make needed technical fixes to the landmark Wall Street reform law, Dodd-Frank.

But Citi’s Chief Financial Officer John Gerspach told the trade reporters he thought that some bigger banks — like, say, Citigroup — should get taken care of in the bill as well. He wanted Congress to loosen rules around how the bank could go about lending and investing. The specific mechanism to do that was to fiddle with what’s known as the supplementary leverage ratio, or SLR, a key capital requirement for the nation’s largest banks. This simple ratio sets how much equity banks must carry compared to total assets like loans.

S.2155 did, at the time, weaken the leverage ratio, but only for so-called custodial banks, which do not primarily make loans but instead safeguard assets for rich individuals and companies like mutual funds. As written, the measure would have assisted just two U.S. banks, State Street and Bank of New York Mellon. This offended Gerspach. “We obviously don’t think that is fair, so we would like to see that be altered,” he told reporters.

Republicans and Democrats who pushed S.2155 through the Senate Banking Committee must have heard Citi’s call. (They changed the definition of a custodial bank in a subsequent version of the bill. It used to stipulate that only a bank with a high level of custodial assets would qualify, but now it defines a custodial bank as “any depository institution or holding company predominantly engaged in custody, safekeeping, and asset servicing activities.”) The change could allow virtually any big bank to take advantage of the new rule.

Multiple bank lobbyists told The Intercept that Citi has been pressing lawmakers to loosen the language even further, ensuring that they can take advantage of reduced leverage and ramp up risk. “Citi is making a very aggressive effort,” said one bank lobbyist who asked not to be named because he’s working on the bill. “It’s a game changer and that’s why they’re pushing hard.” A Citigroup spokesperson declined to comment.

A bill that began as a well-intentioned effort to satisfy some perhaps legitimate community bank grievances has instead mushroomed, sparking fears that Washington is paving the way for the next financial meltdown. Congress is unlikely to pass much significant legislation in 2018, so lobbyists have rushed to stuff the trunk of the vehicle full. “There are many different interests in financial services that are looking at this and saying, ‘Oh my God, there’s finally going to be reform to Dodd-Frank that may move, let me throw in this issue and this issue,’” said Sen. Chris Coons, D-Del., in an interview. “There are a dozen different players who decided this is the last bus out of town.”

And Coons is a co-sponsor of the bill.

A hopeful nation — and the president himself — expected that the Senate would begin debate on major gun policy reform next week, but instead a confounding scenario has emerged: In the typically gridlocked Congress, with the Trump legislative agenda mostly stalled, members of both parties will come together to roll back financial rules, during the 10th anniversary of the biggest banking crisis in nearly a century. And it’s happening with virtually no media attention whatsoever.

Aside from the gifts to Citigroup and other big banks, the bill undermines fair lending rules that work to counter racial discrimination and rolls back regulation and oversight on large regional banks that aren’t big enough to be global names, but have enough cash to get a stadium named after themselves. In the name of mild relief for community banks, these institutions — which have been christened “stadium banks” by congressional staff opposing the legislation — are punching a gaping hole through Wall Street reform. Twenty-five of the 38 biggest domestic banks in the country, and globally significant foreign banks that have engaged in rampant misconduct, would get freed from enhanced supervision. There are even goodies for dominant financial services firms, such as Promontory and a division of Warren Buffett’s conglomerate Berkshire Hathaway. The bill goes so far as to punish buyers of mobile homes, among the most vulnerable people in the country, whose oft-stated economic anxiety drives so much of the discourse in American politics (just not when there might be something to do about it).

“Community banks are the human shields for the giant banks to get the deregulation they want,” said Sen. Elizabeth Warren, D-Mass., who is waging a last-minute, uphill fight to stop the bill. “The Citigroup carve-out is one more example of how in Washington, money talks and Congress listens.”

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Royal Bank of Scotland Trained Employees on How to Forge Signatures

Fraud for the first time in history has been institutionalized into law.

It is foolishness to believe that the banking industry is trustworthy and that they have the right to claim legal presumptions that their fabricated documents, and the forged documents are valid, leaving consumers, borrowers and in particular, homeowners to formulate a defense where the banks are holding all the information necessary to show that the current foreclosing parties are anything but sham conduits.

Here we have confirmation of a practice that is customary in the banking industry today — fabricating and forging instruments that sometimes irreparably damage consumers and borrowers in particular. Wells Fargo Bank did not accidentally create millions of “new accounts” to fictitiously report income from those accounts and growth in their customer base.

Let us help you plan your narrative : 202-838-6345. Ask for a Consult.

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Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Across the pond the signs all point to the fact that the custom and practice of the financial industry is to practice fraud. In fact, with the courts rubber stamping the fraudulent representations made by attorneys and robo-witnesses, fraud for the first time in history has been institutionalized into law.

RBS here is shown in one case to have forged a customer’s signature to a financial product she said she didn’t want —not because of some rogue branch manager but because of a sustained institutionalized business plan based solidly on forgery and fabrication in which employees were literally trained to execute the forgeries.

The information is in the public domain — fabrication, robo-signing and robo-winesses testifying in court — and yet government and the courts not only look the other way, but are complicit in the pandemic fraud that has overtaken our financial industries.

Here are notable quotes from an article written by J. Guggenheim.

Once upon a time, in a land far, far away- forgery, fabrication of monetary instruments, and creating fake securities were crimes that would land you in prison.  If you forged the name of your spouse on a check it was a punishable crime.  The Big Banks now forge signatures and fabricate financial instruments on a routine basis to foreclose on homes they can’t prove they own, open accounts in unsuspecting customer’s names, and sign them up for services they don’t want.  If this isn’t the definition of a criminal racketeering enterprise- what is?

RBS, following the Wells Fargo Forgery model, conceded that a fake signature had been used on an official document, which means a customer was signed up to a financial product she did not want.  RBS’s confession comes only two weeks after whistle-blowers came forward claiming that bank staff had been trained to forge customer signatures. [e.s.]

The confession comes only two weeks after The Scottish Mail on Sunday published claims by whistle-blowers that bank staff had been trained to forge signatures.

At first, RBS strenuously denied the allegations, but was forced to publicly acknowledge this was likely a widespread practice. [e.s.]  The bank was forced to apologize publicly after retired teacher Jean Mackay came forward with paperwork that clearly showed her signature was faked on a bank document.  The great-grandmother was charged for payment protection insurance (PPI) back in 2008 even though she had declined to sign up for the optional product.

At first the bank refunded her fees but refused to admit the document was forged.  [e.s.]A forensic graphologist confirmed the signatures were ‘not a match’, forcing the bank to concede and offered her a mere £500 in compensation for their fraudulent act.

Forensic Graphologist Emma Bache, who has almost 30 years’ experience as a handwriting expert, examined the document and said the fundamental handwriting characteristics do not match.

The Banks in Britain, Australia, New Zealand and Canada, along with the United States include forgery and fabrication in their business models to increase profits.  Why shouldn’t they?  There is NO THREAT because they know they will not be held accountable by law enforcement or the courts- so they continue to fleece, defraud, and steal from their customers.

Homeowners must force an urgent investigation into claims of illegal practices by the banks.  Wells Fargo is not doing anything that CitiBank, JPMorgan Chase, Bank of America and others aren’t doing.  To remain competitive in an unethical marketplace, you almost have to resort to the same fraudulent tactics.[e.s.]

However, whistle-blowers have now revealed that managers were coached on how to fake names on key papers.  Whistle-blowers said that staff members had received ‘guidance’ on how to download genuine signatures from the bank’s online system, trace them on to new documents then photocopy the altered paperwork to prevent detection.  When in fact the bank taught its employees how to engage in criminal conduct.

Although clearly against the law, the whistle-blowers claim it was “commonly done to speed up administration and complete files.”  Just like American banks forge notes and assignments to ‘speed up foreclosures and complete files.’  They claim the technique was also used to sign account opening forms – and even loan documents. [e.s.]

Forgery

According to Justia.com, the “criminal offense of forgery consists of creating or changing something with the intent of passing it off as genuine, usually for financial gain or to gain something else of value.” This often involves creation of false financial instruments, such as mortgage notes, assignments, checks, or official documents. It can also include signing another person’s name to a document without his or her consent or faking the individual’s handwriting.  Forgery often occurs in connection with one or more fraud offenses. 

The Mains Event: Demand that Attorney Generals Nationwide comply with LPS/Black Knight Consent Judgement

 

Please listen to the West Coast Foreclosure Show.  Attorney Charles Marshall interviews former FDIC team leader Eric Mains about his foreclosure battle and FOIA strategy.

By K.K. MacKinstry

Anyone who knows former FDIC Team Leader Eric Mains knows he is one tenacious ex-banker.  In eight years of litigation, every court he has approached for relief has stonewalled his efforts to discover who owns his mortgage loan.  Mains is still in his home despite Chase’s most recent Motion to Dismiss that was granted by the United States District Court based on Rooker-Feldman doctrine that shouldn’t have applied due to the fact neither the parties or subject matter of his federal complaint was covered in his State foreclosure action.

It is astonishing that Mains has not prevailed in his lawsuit against CitiBank and Chase.  In his lawsuits, he has variously provided evidence of the following:

– His Note was “endorsed” in blank and undated with stamp of one Cynthia Riley, a former WAMU employee laid off from her job at WAMU before his note was endorsed, and whose FL deposition in 2013 revealed she never worked at the SC facility his loan documents were sent to, never personally endorsed any notes herself, and her stamps were not located at the SC facility.

-Whistleblower Lynn Syzmoniak’s qui tam lawsuit revealed that one Jodi Sobotta (alleged “attorney in fact” for Chase who signed another of his Note assignments) was in fact a LPS employee in MN who alleged in the qui tam suit to have been involved in unauthorized robosigning and forgery at that facility. Christine Sauerer, notary on the assignment, filed an official notary card with MN which contains her signature, but it does not match her alleged signature on his assignment. Even more damningly, she supposedly notarized the assignment over 1 year before it was recorded in the county recorder’s office. This is an amazing feat as the assignment, ANY loan assignment, would have been sent to the local recorder’s office for recordation directly after execution as a normal course of business to ensure timely recording and priority- as any competent attorney could attest. This is direct evidence the assignment had been back dated as well as forged.

-While the above is incredible enough, it doesn’t end there. The above assignment was one of the assignments that was the subject of a $125 million 2013 multi-state consent judgment with LPS. LPS and its agents, which would have included the attorneys it contracted and retained to instigate the very foreclosures its forged assignments were used in, was required by the CJ to have reached out to consumers affected by their forgeries and remediated their forged assignments executed from 2008-2010, of which Mains was one. Mains foreclosure judgment occurred months after the signing of the CJ, and the foreclosure mill law firm in that case, Nelson & Frankenberger, never disclosed LPS as a material party in discovery, and never disclosed to the court the forgery activity it was aware of.  To this day, they have still proceeded to try multiple times to move forward with sheriffs sales on Mains property using the same forged documents, in violation of the CJ, and while the Indiana AG’s office remains mute.

Mains has appealed to the Supreme Court of the United States his 2017 federal appellate court ruling that their jurisdiction to hear his complaint was barred by the Rooker-Feldman doctrine.  Meanwhile, Mains has continued to seek information in his case, notably through a Freedom of Information Act request, in which he demanded that the Indiana Attorney General’s office provide information regarding the 2013 consent judgement with LPS/Black Knight, and their stated compliance with its terms, which is required to be documented in quarterly reports to the AG’s of all 50 states who were signatories to the settlement.

He requested copies of all the information relevant to the consent judgement, and he specifically requested copies of the all compliance reports the AG’s office held and was to have received from LPS/Black Knight. Mains wanted to know what LPS/Black Knight was doing to comply with the consent judgement to stop its stipulated to unauthorized signing of loan documents, the use of those documents, and most basically what their compliance activities consisted of. This is just common sense, as any Indiana consumer, homeowner, legislator, or attorney would expect to be apprised of the what, where, when, and how of LPS/Black Knight’s compliance with the CJ…. especially after paying the IN AG’s office $1.6 million to settle it violations!

After Mains sent his FOIA to the AG’s office he received a pathetically anemic response.  The AG ignored most of his request and were only willing to disclose 19 pages of documents. The 7 page CJ itself, and 12 supposed cover letters to the compliance reports and the original complaint.  That is it!!!!  Mains has indicated his suspicion that the compliance reports either don’t exist, or they fail to address the requirements of the consent judgements.

The IN AG has generally claimed that everything in relation to the settlement and information related to it is attorney work product or is somehow privileged/confidential.  This is patently ridiculous and violates the Indiana Public Records Act.  The various state AG’s offices are required to follow up on the consent judgement until January of 2018.  Mains wants to know what the state AG’s have done to protect consumers and ensure the compliance with the terms of the 2013 CJ, especially after taking millions of dollars of LPS money for that privilege. He encourages consumers and the media to do the same in each of their respective states given the danger that state AG’s are still knowingly and negligently allowing these fraudulent documents to be used in foreclosures in their states despite the 2013 CJ specifically prohibiting this conduct.

Look for Part II on Monday regarding how you can benefit from your own FOIAs, what you can do to help others, and why it matters.

Citi continues moving away from mortgages as originations plummet

By Ben Lane at Housingwire

Citigroup continues moving away from mortgages as originations plummet

Nearly finished with exit from mortgage servicing

Citigroup first-quarter earnings show that the bank is continuing to move further and further away from mortgages and into other lines of business (The bigger question is why is Citi moving away from originating and servicing consumer mortgages).

According to information released Thursday by the bank, Citi’s residential first mortgage originations plummeted in the first quarter, dropping from $5.6 billion in the fourth quarter of 2016 to $3.8 billion in the first quarter of 2017.

That’s a drop of 32% in one quarter, and a drop of 31% from the same time period last year, when Citi originated $5.5 billion in first mortgages.

Citi’s mortgage servicing rights portfolio is also dwindling, as the bank continues to shed mortgage servicing rights (Citi is vulnerable to litigation for foreclosing on homes it didn’t own, revoking loan modifications and other servicing improprieties).

Earlier this year, CitiMortgage announced that it agreed to a massive mortgage servicing rights deal with New Residential Investment and Nationstar Mortgage that will transfer the servicing rights for approximately 780,000 mortgages away from CitiMortgage.

That deal is part of a larger play for Citi to get out of the servicing business altogether.

In addition to selling the mortgage servicing rights on approximately $97 billion in unpaid principal balance to New Residential, Citi also earlier this year that it entered into a separate subservicing agreement with Cenlar that will effectively end Citi’s mortgage servicing business.

And Citi’s latest earnings show just how close Citi already is to exiting the servicing business.

According to Citi’s report, the bank claims $567 million in mortgage servicing rights as assets in the first quarter. That’s down a whopping 64% from the fourth quarter of 2016, when the bank claimed $1.564 billion in MSR assets.

So in just one quarter, Citi sold off nearly $1 billion in mortgage servicing rights.

While the bank’s mortgage portfolio is clearly down, the bank’s overall earnings didn’t take a hit.

The bank said Thursday that its net income for the first quarter of 2017 was $4.1 billion, or $1.35 per diluted share, on revenues of $18.1 billion. That’s up from the same time period last year, when the bank reported net income of $3.5 billion or $1.10 per diluted share, on revenues of $17.6 billion.

The bank said that its revenues increased 3% from the prior year period, “driven by growth in both the Institutional Clients Group and Global Consumer Banking, partially offset by lower revenues in Corporate/Other primarily due to the continued wind down of legacy assets.”

The bank also said that its net income of $4.1 billion increased 17%, “driven by the higher revenues and lower cost of credit.”

The lower revenue in the “Corporate/Other” segment of Citi’s business is partially mortgage related.

Here’s how Citi breaks it down (emphasis added by HousingWire):

Corporate/Other revenues of $1.2 billion decreased 40% from the prior year period, driven by legacy asset runoff and divestiture activity, as well as lower revenue from treasury-related hedging activity. The current quarter revenue included approximately $750 million of gains on asset sales which more than offset a roughly $300 million charge related to the previously announced exit of Citigroup’s U.S. mortgage servicing operations. As of the end of the first quarter 2017, Corporate/Other assets were $96 billion, 23% below the prior year period and 7% below the prior quarter, primarily reflecting the continued wind down of legacy assets.

Corporate/Other net income was $92 million, compared to $450 million in the prior year period, reflecting the lower revenue, partially offset by lower operating expenses and lower cost of credit. Corporate/Other operating expenses declined 11% to $1.1 billion, primarily driven by the wind-down of legacy assets, partially offset by approximately $100 million of episodic expenses related to the exit of Citigroup’s U.S. mortgage servicing operations.

Corporate/Other cost of credit was $52 million compared to $170 million in the prior year period. Net credit losses declined 43% to $81 million, reflecting the impact of ongoing divestiture activity as well as continued improvement in the North America mortgage portfolio, and the provision for benefits and claims declined by $59 million to $1 million reflecting lower insurance-related assets. The net loan loss reserve release was largely unchanged.

While the mortgage revenue is down, Citi’s revenue in other areas is up.

Here’s how Citi breaks that down (emphasis again added by HousingWire):

North America Global Consumer Banking revenues of $4.9 billion increased 2%, with higher revenues in Citi-branded cards partially offset by declines in retail services and retail banking. Citi-branded cards revenues of $2.1 billion increased 13%, reflecting the addition of the Costco portfolio and modest organic growth, offset by the impact of day count. Citi retail services revenues of $1.6 billion were down 5% driven by the absence of gains on the sales of two portfolios sold in first quarter 2016. Retail banking revenues declined 3% mainly due to lower mortgage revenues partially offset by growth in average loans, deposits and assets under management.

“The momentum we saw across many of our businesses towards the end of last year carried into the first quarter, resulting in significantly better overall performance than a year ago,” Citi CEO Michael Corbat said.

“Revenues increased in both our consumer and institutional lines of business, most notably in areas where we have been investing such as Equities, U.S. Cards and Mexico,” Corbat continued.

“We grew loans and deposits and achieved an efficiency ratio of just under 58%, an ROA of 91bps and a ROTCE ex-DTA of over 10%, showing good progress towards achieving our near-term financial targets,” Corbat added.

“Through our earnings and the utilization of $800 million in Deferred Tax Assets, we generated $5.5 billion of total regulatory capital before returning $2.2 billion to our shareholders,” Corbat concluded. “Our CET 1 Capital ratio rose to 12.8% and we could not be more committed to continuing to increase the capital we return to our shareholders.”

Breaking News: Mains v. Citibank N.A is Dismissed despite new findings of Fraud

Editor’s Note:  Please look for follow up article on this tragic and unlawful Indiana court decision by Neil Garfield.  Rooker-Feldman doctrine was applied despite the fact that Mains raised new issues and findings of fraud that were not present in his original complaint.

http://www.theindianalawyer.com/th-circuit-affirms-dismissal-of-foreclosure-fraud-case/PARAMS/article/43243

An Indiana man’s various federal claims against his former mortgage holders cannot proceed because federal district courts do not have jurisdiction to vacate state court decisions, the 7th Circuit Court of Appeals ruled Wednesday.

In Eric Mains v. Citibank, N.A., et al., 16-1985, Eric Mains executed a mortgage on his home with Washington Mutual in December 2006 and made payments for two years. When Washington Mutual failed in 2008, Chase Bank purchasing Main’s mortgage and note, then assigned the mortgage and note to Citibank in 2010.

Mains began falling behind on his mortgage payments and discontinued them in March 2009, prompting Nelson & Frankenberger P.C. to send him a default and acceleration notice. In 2010, Citibank filed a foreclosure action against Mains in Clark Circuit Court.

The state court eventually granted summary judgment to Citibank in May 2013, and after failing to get a decision in his favor in the Indiana appellate courts, Mains filed a complaint in the U.S. District Court for the Southern District of Indiana in March 2015. In his federal complaint, Mains alleged that he had discovered new evidence of fraud that could not have been presented to the state court and included alleged violations of state and federal law.

The district court dismissed Mains’ complaint for lack of subject matter jurisdiction, finding that his claims would nullify the state court judgment if resolved in his favor. Mains then appealed to the 7th Circuit Court of Appeals, but the appellate court affirmed, though with a modification to a dismissal without prejudice.

In his appeal, Mains argued that the district court erred in dismissing his claim on the basis of the Rooker-Feldman doctrine, which “prevents lower federal courts from exercising jurisdiction over cases brought by state-court losers challenging state-court judgments rendered before the district court proceedings commenced.” But Chief Judge Diane Wood wrote in the appellate court’s Wednesday opinion that federal claims not raised in state court can trigger Rooker-Feldman if they are closely enough related a state-court judgment.

“Reading through the verbiage of Mains’ filings, we are left with the impression that the foundation of the present suit is his allegation that the state court’s foreclosure judgment was in error because it rested on a fraud perpetrated by the defendants,” Wood wrote. “Mains wants the federal courts to redress that wrong. That is precisely what Rooker-Feldman prohibits, however.”

Instead, Wood said Indiana law allows a party to file for relief from judgment based on newly discovered evidence or based on fraud or misrepresentation under Indiana Trial Rule 60(B).

Mains further claimed that Chase and Citibank violated the Truth in Lending Act by misrepresenting payments due and his related obligations, and by failing to respond to his rescission, but Wood said that issue is also barred by Rooker-Feldman because it would require the 7th Circuit to vacate the state court decision on the issue.

Mains made additional claims, including injuries in the form of attorney fees, a RICO conspiracy and further violations of federal law, but Wood wrote each issue was either barred by the Rooker-Feldman doctrine or by issue preclusion.

Finally, Mains attempted to bring a federal fraud claim against Cynthia Riley in her former capacity as vice president of Washington Mutual. But Woods wrote the proper party to sue would have been Washington Mutual itself, and such a suit would have been blocked by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Download opinion here: 2017 03 29 Mains v CitiBank United States Court of Appeals

Ocwen: Investors and Borrowers Move toward Unity of Purpose!

For further information please call 954-495-9867 or 520-405-1688

Please consult an attorney who is licensed in your jurisdiction before acting upon anything you read on this blog.

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Anyone following this blog knows that I have been saying that unity of investors and borrowers is the ultimate solution to the falsely dubbed “Foreclosure crisis” (a term that avoids Wall Street corruption). Many have asked what i have based that on and the answer was my own analysis and interviews with Wall Street insiders who have insisted on remaining anonymous. But it was only a matter of time where the creditors (investors who bought mortgage backed securities) came to realize that nobody acting in the capacity of underwriter, servicer or Master Servicer was acting in the best interests of the investors or the borrowers.

The only thing they have tentatively held back on is an outright allegation that their money was NOT used by the Trustee for the Trust and their money never made it into the Trust and that the loans never made it into the Trust. That too will come because when investors realize that homeowners are not going to walk away, investors as creditors will come to agreements to salvage far more of the debts created during the mortgage meltdown than the money salvaged by pushing cases to foreclosure instead of the centuries’ proven method of resolving troubled loans — workouts. Nearly all homeowners would execute a new clean mortgage and note in a heartbeat to give investors the benefits of a workout that reflects economic reality.

Practice hint: If you are dealing with Ocwen Discovery should include information about Altisource and Home Loan Servicing Solutions, investors, and borrowers as it relates to the subject loan.

Investors announced complaints against Ocwen for mishandling the initial money, the paperwork and the subsequent money and servicing on loans created and a acquired with their money. The investors, who are the actual creditors (albeit unsecured) are getting close to the point where they state outright what everyone already knows: there is no collateral for these loans and every disclosure statement involving nearly all the loans violated disclosure requirements under TILA, RESPA, and Federal and state regulations.
The fact that (1) the loan was not funded by the payee on the note and mortgagee on the mortgage and (2) that the money from creditors were never properly channeled through the REMIC trusts because the trusts never received the proceeds of sale of mortgage backed securities is getting closer and closer to the surface.
What was unthinkable and the subject of ridicule 8 years ago has become the REAL reality. The plain truth is that the Trust never owned the loans even as a pass through because they never had had the money to originate or acquire loans. That leaves an uncalculated unsecured debt that is being diminished every day that servicers continue to push foreclosure for the protection of the broker dealers who created worthless mortgage bonds which have been purchased by the Federal reserve under the guise of propping up the banks’ balance sheets.

“HOUSTON, January 23, 2015 – Today, the Holders of 25% Voting Rights in 119 Residential Mortgage Backed Securities Trusts (RMBS) with an original balance of more than $82 billion issued a Notice of Non-Performance (Notice) to BNY Mellon, Citibank, Deutsche Bank, HSBC, US Bank, and Wells Fargo, as Trustees, Securities Administrators, and/or Master Servicers, regarding the material failures of Ocwen Financial Corporation (Ocwen) as Servicer and/or Master Servicer, to comply with its covenants and agreements under governing Pooling and Servicing Agreements (PSAs).”
  • Use of Trust funds to “pay” Ocwen’s required “borrower relief” obligations under a regulatory settlement, through implementation of modifications on Trust- owned mortgages that have shifted the costs of the settlement to the Trusts and enriched Ocwen unjustly;
  • Employing conflicted servicing practices that enriched Ocwen’s corporate affiliates, including Altisource and Home Loan Servicing Solutions, to the detriment of the Trusts, investors, and borrowers;
  • Engaging in imprudent and wholly improper loan modification, advancing, and advance recovery practices;
  • Failure to maintain adequate records,  communicate effectively with borrowers, or comply with applicable laws, including consumer protection and foreclosure laws; and,

 

  • Failure to account for and remit accurately to the Trusts cash flows from, and amounts realized on, Trust-owned mortgages.

As a result of the imprudent and improper servicing practices alleged in the Notice, the Holders further allege that their experts’ analyses demonstrate that Trusts serviced by Ocwen have performed materially worse than Trusts serviced by other servicers.  The Holders further allege that these claimed defaults and deficiencies in Ocwen’s performance have materially affected the rights of the Holders and constitute an ongoing Event of Default under the applicable PSAs.  The Holders intend to take further action to recover these losses and protect the Trusts’ assets and mortgages.

The Notice was issued on behalf of Holders in the following Ocwen-serviced RMBS: see link The fact that the investors — who by all accounts are the real parties in interest disavow the actions of Ocwen gives rise to an issue of fact as to whether Ocwen was or is operating under the scope of services supposedly to be performed by the servicer or Master Servicer.
I would argue that the fact that the apparent real creditors are stating that Ocwen is misbehaving with respect to adequate records means that they are not entitled to the presumption of a business records exception under the hearsay rule.
The fact that the creditors are saying that servicing practices damaged not only the investors but also borrowers gives rise to a factual issue which denies Ocwen the presumption of validity on any record including the original loan documents that have been shown in many cases to have been mechanically reproduced.
The fact that the creditors are alleging imprudent and wholly improper loan modification practices, servicer advances (which are not properly credited to the account of either the creditor or the borrower), and the recovery of advances means that the creditors are saying that Ocwen was acting on its own behalf instead of the creditors. This puts Ocwen in the position of being either outside the scope of its authority or more likely simply an interloper claiming to be a servicer for trusts that were never actually used to acquire or originate loans, this negating the effect of the Pooling and Servicing Agreement.  Hence the “servicer” for the trust is NOT the servicer for the subject loan because the loan never arrived in the trust portfolio.
The fact that the creditors admit against interest that Ocwen was pursuing practices and goals that violate laws and proper procedure means that no foreclosure can be supported by “clean hands.” The underlying theme here being that contrary to centuries of practice, instead of producing workouts in which the loan is saved and thus the investment of the creditors, Ocwen pursued foreclosure which was in its interest and not the creditors. The creditors are saying they don’t want the foreclosures but Ocwen did them anyway.
The fact that the creditors are saying they didn’t get the money that was supposed to go to them means that the money received from lost sharing with FDIC, guarantees, insurance, credit default swaps that should have paid off the creditors were not paid to them and would have reduced the damage to the creditors. By reducing the amount of damages to the creditors the borrower would have owed less, making the principal amounts claimed in foreclosures all wrong. The parties who paid such amounts either have or do not have separate unsecured actions against the borrower. In most cases they have no such claim because they explicitly waived it.
This is the first time investors have even partially aligned themselves with Borrowers. I hope it will lead to a stampede, because the salvation of investors and borrowers alike requires a pincer like attack on the intermediaries who have been pretending to be the principal parties in interest but who lacked the authority from the start and violated every fiduciary duty and contractual duty in dealing with creditors and borrowers. Peal the onion: the reason that their initial money is at stake is that these servicers are either acting as Master Servicers who are actually the underwriters and sellers of the mortgage backed securities,
I would argue that the fact that the apparent real creditors are stating the Ocwen is misbehaving with respect to adequate records means that they are not entitled to the presumption of a business records exception under the hearsay rule.
The fact that the creditors are saying that servicing practices damaged not only the investors but also borrowers gives rise to a factual issue which denies Ocwen the presumption of validity on any record including the original loan documents that have been shown in many cases to have been mechanically reproduced.
The fact that the creditors are alleging imprudent and wholly improper loan modification practices, servicer advances (which are not properly credited to the account of either the creditor or the borrower), and the recovery of advances means that the creditors are saying that Ocwen was acting on tis own behalf instead of the creditors. This puts Ocwen in the position of being either outside the scope of its authority or more likely simply an interloper claiming to be a servicer for trusts that were never actually used to acquire or originate loans, this negating the effect of the Pooling and Servicing Agreement.
The fact that the creditors admit against interest that Ocwen was pursuing practices and goals that violate laws and proper procedure means that no foreclosure can be supported by “clean hands.” The underlying theme here being that contrary to centuries of practice, instead of producing workouts in which the loan is saved and thus the investment of the creditors, Ocwen pursued foreclosure which was in its interest and not the creditors. The creditors are saying they don’t want the foreclosures but Ocwen did them anyway.
The fact that the creditors are saying they didn’t get the money that was supposed to go to them means that the money received from lost sharing with FDIC, guarantees, insurance, credit default swaps that should have paid off the creditors were not paid to them and would have reduced the damage to the creditors. By reducing the amount of damages to the creditors the borrower would have owed less, making the principals claimed in foreclosures all wrong. The parties who paid such amounts either have or do not have separate unsecured actions against eh borrower. In most cases they have no such claim because they explicitly waived it.
This is the first time investors have even partially aligned themselves with Borrowers. I hope it will lead to a stampede, because the salvation of investors and borrowers alike requires a pincer like attack on the intermediaries who have been pretending to be the principal parties in interest but who lacked the authority from the start and violated every fiduciary duty and contractual duty in dealing with creditors and borrowers.
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