Reuters: BOA Paid Bonuses of Target Gift Cards To Modification Employees For Steering Cases Into Foreclosure, Fired Them If They Didn’t Go After the Foreclosure

SIX FORMER BOA EMPLOYEES TESTIFY THAT BOA MODIFICATION AND FORECLOSURE SPECIALISTS WERE PAID AND INSTRUCTED TO LIE TO HOMEOWNERS, PAID WITH GIFT CARDS IF THEY SUCCESSFULLY THREW THE HOMEOWNER INTO FORECLOSURE AND WERE DISCIPLINED OR FIRED IF THEY FAILED TO TURN OVER THE REQUESTS FOR MODIFICATION INTO THE RIGHT NUMBER OF FORECLOSURES.

IF YOU WANT A MODIFICATION, YOU NEED A LAWYER TO CHALLENGE THE REPRESENTATIONS OF LOST DOCUMENTS AND INCOMPLETE APPLICATIONS FOR MODIFICATION. AND YOU ESPECIALLY NEED A LAWYER OR HUD COUNSELOR TO SUBMIT THE COVER LETTER AND THE SPECIFIC PROPOSAL FOR MODIFICATION WITH AFFIDAVITS FROM EXPERTS — (usually absent because the bank doesn’t request it). LIVINGLIES PROVIDES SUPPORT TO ANY ATTORNEY NEEDING ASSISTANCE IN DRAFTING THE COVER LETTER, AFFIDAVITS AND PROPOSAL. CALL CUSTOMER SUPPORT EAST COAST 954-495-9867 OR CUSTOMER SERVICE WEST COAST 520-405-1688 FOR PRICE QUOTES AND REQUIREMENTS. GGKW PROVIDES LEGAL SERVICES ONLY IN FLORIDA.

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 PROVIDE ACTIVE LITIGATION SUPPORT 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. Garfield is a partner of Garfield, Gwaltney, Kelley and White

Danielle Kelley, Esq. is a partner in the firm of Garfield, Gwaltney, Kelley and White (GGKW) in Tallahassee, Florida 850-765-1236

Our very own Danielle Kelley was quoted in a Reuters article yesterday that laid out in exquisite detail the endemic practice of lying, layering, laddering and forcing homeowners into foreclosure when a modification was better for both the homeowner and the investor. The article is by Michelle Conlin and Peter Rudegeair, Reuters, News Agency. Article carried in New York Times and other periodicals. Story picked up by several investigative reporters for in depth reports on TV, radio and other news media.

Since BOA might be successful in killing story, we produce most of it here:

The full article can be found at: FORMER BANK OF AMERICA WORKERS ALLEGE IT LIED TO HOMEOWNERS

EDITOR’S NOTE:  As we have been saying for 6 years, sometimes alone in the wilderness, this is not a conspiracy theory, it is a fact. The entire securitization scheme was a lie, a Ponzi scheme to steal trillions of dollars from the U.S. Economy, and trillions of dollars from other countries around the world.

In order to make it work, the big banks had to set up an infrastructure in which they would lie, cheat and steal, sending the profits off to other jurisdictions and covering up the crimes by using companies at each layer of the scheme who channeled a large portion of investor funds and most of the recovery from insurance, credit default swaps, and government bailouts away from the investors and away from the borrowers.

The essential capstone of the strategy was the foreclosure sale and the expiration of the right of redemption. Without it, the banks could owe as much as $25 trillion back to insurers, credit default swap counterparties, government agencies, government sponsored entities (Fannie and Freddie) and the investors who provided all the money that was used to create the largest liquidity boom in history. And then there were the extra fees for servicing a loan that was deemed non-performing (even though it was the bank who lied to homeowners telling them to stop paying). So far it has been the perfect crime.

And the underpinning of the strategy was that the banks could control the narrative — that it was about borrowers who were intentionally getting into deals they could not afford — when it was just the opposite, to wit: it was the banks acting through many layers of nominees, conduits and intermediaries whose goal was to rid themselves of the money on deposit from investors (money that should have been entirely into a REMIC trust account and never was). Much of the money successfully stolen was in the form of a second tier yield spread premium that was created in the spread between the loans that were promised to investors and the actual loans made to borrowers.

It was all a lie. The borrowers believed the lender was the lender and that the lender would not assume a high risk on a loan that was doomed to fail. The investors believed that since most of them were managed funds who were required to invest only in triple A rated securities that were insured and guaranteed that industry standard underwriting was under way. Nothing could have been further from the truth.

The Banks were lying and paying for others to lie about the property valuation, the safety of the collateral, the existence of the collateral for investors, and the existence of insurance and hedge products for the investors. They lied to investors, they lied to the press, they lied to the government agencies, they lied to the two presidents that were caught in the web of deceit, and they lied to the secretaries of the treasury.

And now, as predicted the tsunami is going the other way as the truth sloshes over all the lies they told. We start with the story of modification of loans which could have resulted on most of the foreclosed homes being modified. Now we have strong evidence from the actual people who worked for BOA and other large financial institutions that their strategy was to use the promise of modification to lure homeowners into default on loans owned by unidentified parties, and stretch out the time so that the hole dug for the homeowner was too deep to get out of, and eventually put a cap on the well that could spray liability all over the mega banks and end their existence.

PRACTICE HINT: WITHOUT EXPERTS IN E-DISCOVERY, YOU WILL BE UNABLE TO WIN YOUR CASES OR GET ENOUGH TRACTION TO FORCE MODIFICATION ON THE TERMS OFFERED BY THE BORROWER. GGKW, IN WHICH DANIELLE KELLEY IS  PARTNER, IS DEVELOPING RELATIONSHIPS WITH PRIVATE INVESTIGATORS AND FORENSIC  COMPUTER SPECIALISTS WHO ASSIST US ON MOST OF OUR CASES. WHEN YOUR GOAL IS TO WIN RATHER THAN DELAY, IT COSTS MONEY. ANTI-FORECLOSURE MILLS CHARGING LOW MONTHLY PAYMENTS ARE EFFECTIVE AT DELAYING THE FORECLOSURE BUT USUALLY INEFFECTIVE AT STOPPING IT OR EVEN WINNING THE CASE. YOU GET WHAT YOU PAY FOR.

 FOLLOW DANIELLE KELLEY, ESQ. ON HER BLOG

Significant quotes from Reuters article:

Borrowers filed the civil case against Bank of America in 2010 and are now seeking class certification. The affidavits, dated June 7, are the latest accusations over the mishandling of mortgage modifications by some top U.S. banks.

Six former Bank of America Corp (BAC.N) employees have alleged that the bank deliberately denied eligible home owners loan modifications and lied to them about the status of their mortgage payments and documents.

The bank allegedly used these tactics to shepherd homeowners into foreclosure, as well as in-house loan modifications. Both yielded the bank more profits than the government-sponsored Home Affordable Modification Program, according to documents recently filed as part of a lawsuit in Massachusetts federal court.

The former employees, who worked at Bank of America centers throughout the United States, said the bank rewarded customer service representatives who foreclosed on homes with cash bonuses and gift cards to retail stores such as Target Corp (TGT.N) and Bed Bath & Beyond Inc (BBBY.O).

For example, an employee who placed 10 or more accounts into foreclosure a month could get a $500 bonus. At the same time, the bank punished those who did not make the numbers or objected to its tactics with discipline, including firing.

About twice a month, the bank cleaned out its HAMP backlog in an operation called “blitz,” where it declined thousands of loan modification requests just because the documents were more than 60 months old, the court documents say.

The testimony from the former employees also alleges the bank falsified information it gave the government, saying it had given out HAMP loan modifications when it had not.

Mortgage problems have dogged Bank of America since its disastrous purchase of Countrywide Financial in 2008. The bank paid $42 billion to settle credit crisis and mortgage-related litigation between 2010 and 2012, according to SNL Financial.

Bank of America and four other banks reached a $25 billion landmark settlement with regulators in 2012, following a scandal in late 2010 when it was revealed employees “robo signed” documents without verifying them as is required by law.

But problems have persisted. Since 2012, more than 18,000 homeowners have filed complaints about Bank of America with the Consumer Financial Protection Bureau, a new agency created to help protect consumers. Recently, the attorney generals of New York and Florida accused Bank of America of violating the terms of last year’s settlement.

The government created HAMP in 2009 in response to the foreclosure epidemic and to encourage banks to give homeowners loan modifications, allowing some borrowers to stay in their homes.

THE BLITZ

The court documents paint a picture of customer service operations where managers roamed the floor with headsets, able to listen into any call without warning. Service representatives were told to lie to homeowners, telling them their paperwork and payments had not been received, when in reality they had.

“This is exactly what’s been happening to homeowners for years,” said Danielle Kelley, a foreclosure defense lawyer in Florida. “No matter how many times they send in their paperwork, or how often they make their payments, they simply can’t get loan modifications. They wind up in foreclosure instead.”

The former employees said they were told to falsify electronic records and string homeowners along in foreclosure as long as possible. The problem was exacerbated because the bank did not have enough employees handling modifications, adding to the backlog of cases purged during the “blitz” operations.

 

 

DOJ Probes Wells Fargo: Unravelling the Scam Piece by Piece

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NOTE: For Legal Representation in Florida,  Ohio and California, please call our customer service number 520-405-1688

Editor’s Comment and Analysis: For those, like myself, frustrated with the pace of the investigation, we must remember that the convoluted manner in which money and documents were handled was intended to obscure the PONZI scheme at the root of the securitization scam and false claims based upon securitization.

None of us saw anything this complex and after devoting 6 years of life to unraveling this mess I am still learning more each day , even with an extensive background on Wall Street and even with my experience with bond trading, investment banking and related matters.

So first they are going after the low-hanging fruit, which is the obvious misrepresentations to the investors who actually comprise most of the same people who were foreclosed. It was pension funds and retirement accounts managed directly or indirectly by the Wall Street banks that bought these bogus “mortgage-backed” bonds. Those same funds are now underfunded and headed for another bailout fight with the Congress.

The problem is that DOJ is still looking at documents and representations when they should be probing the actual movement of money. It is there that they will find the holy grail of prosecutable crimes. The money just didn’t go the way the banks said it would. The banks took trading profits out of the money before it even landed in an account which incidentally was never titled in the name of the REMIC that issued the fake mortgage bonds backed by loans that did not exist in the “the pool.”

Nonetheless I am encouraged that DOJ is chipping away at this, and getting their feet wet, as they get to understand what was really happening, to wit: a simple PONZI scheme in which the deal would fold as soon as there were no more investments by investors.

This simple core was covered by multiple layers of false documentation, robo-signed documents and other transmissions with disclaimers, such that there would be plausible deniability. In the end it is nothing different than Madoff, Drier or other schemes that have landed many titans in prison for the rest of their lives — unless they died before serving their sentence.

I’m an optimist: I still believe that in the end, these banksters will be brought to  justice for real crimes they committed or were directing through their position in the institutions they supposedly represented. The end result is going to be an overhaul of banking like we have not seen before perhaps in all of U.S. history.

The fact remains that the assets on the balance sheets of these banks are (a) overstated by assets that are either non existent or overvalued and (b) understated by the amount of money they parked off-shore in “off balance sheet transactions.”

In the end, which I predict could still be five years away or more, the large banks will have disappeared and the banking industry will return to the usual marketplace of large, medium and small banks, each easily subject to regulation and audits.

How the staggering toll exacted from the middle class will be handled is another story. Nobody in power wants to give the ordinary guy money even if he was defrauded. But unless they give restitution to the pension funds and homeowners, the economy will continue to drag and lag behind where it should be.

Wells Fargo Wachovia Unit Faces Probe Over Mortgage Practices

Reuters

Nov 6 (Reuters) – The government’s investigation of mortgage-related practices at Wells Fargo & Co includes the making and packaging of home loans by its Wachovia unit, the bank said in a filing Tuesday.

The No. 4 U.S. bank by assets disclosed in February that it may face federal enforcement action related to mortgage-backed securities deals leading to the financial crisis.

In Tuesday’s quarterly securities filing, Wells Fargo reiterated that it’s being investigated for whether it properly disclosed in offering documents the risks associated with its mortgage-backed securities.

The bank also said the government is investigating whether Wells Fargo complied with applicable laws, regulations and documentation requirements relating to mortgage originations and securitizations, including those at Wachovia.

San Francisco-based Wells Fargo acquired Wachovia at the peak of the financial crisis in 2008 as losses in the Charlotte, North Carolina-based bank’s mortgage portfolio ballooned.

Mortgages packaged into securities for investors during the housing boom still haunt big banks years later. Banks have been accused of failing to ensure the quality of the loans and for misrepresenting their risk to investors.

In January, the Obama administration set up a special task force to investigate practices related to mortgage-backed securities at banks.

In the group’s first action, New York State Attorney General Eric Schneiderman last month filed a civil suit against JPMorgan Chase & Co for alleged fraud at Bear Stearns, which JPMorgan bought at the government’s request in 2008.

“INCURABLE RECESSION”: BEAR MARKET AGAIN UNTIL HOUSING CRISIS FIXED

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“The same bankers are feeding the legal system with fraudulent and futile fabrications of documents for transactions that never existed, as loans were “securitized” but somehow never moved from their originators. Promissory notes failed to reveal the true terms of the deal just as bogus mortgage bonds failed to reveal the truth to investors. Even combining the promissory notes and the mortgage bonds, the documentation is insufficient to describe the real transactions in which money exchanged hands. Investors are left thinking they are owed money when their agents have already collected it. Borrowers are left thinking they owe money when the debt has already been paid several times over.” Neil F Garfield www.livinglies.wordpress.com

EDITOR’S NOTE: Eventually the general consensus will be that the Banks did this to us and the banks will bear the brunt of the fix — without that, the $2 trillion they are officially holding and not investing and lending to the national and world economy will continue to sit as a hammer over our lives. Add to that what I estimate is another $2.6 trillion that these management of the mega banks control in off-shore hidden “reserves” and it is easy to see why the death grip, valued at $4.6 trillion (over 1.3 of our GDP and more than 100% of all profits) is causing a bear market. The recession never ended and for many the uneven distribution of apparent wealth has made the situation more like the great depression.

Blaming homeowners or borrowers simply won’t cut it. Even if the 100 million defective mortgage transactions were caused by consumers or prospective borrowers all awakening one morning with the singular idea of bringing the world economy to a standstill, it was within the power of the banks and government to prevent it. This current condition that has persisted for 4 years arose because of deadbeat bankers not irresponsible borrowers.

The bankers, playing with OPM (other people’s money) turned themselves into marketing machines and sold money from investors (what was left of it after Wall Street grabbed its hidden share) to borrowers in completely unworkable deals based upon fraudulent and futile fabrication of property values, borrower income, and the true effects of loans that were certain to go under water for decades, and certain to reset to payments that exceeded the actual annual income of the borrower. They knew it and they did it anyway because they were able to without regulators taking an interest in what was actually happening out there in the banking world. They wanted to do it because with the foreknowledge of voluntary and involuntary defaults, they were able to bet on the system going bankrupt.

The same bankers are feeding the legal system with fraudulent and futile fabrications of documents for transactions that never existed, as loans were “securitized” but somehow never moved from their originators. Promissory notes failed to reveal the true terms of the deal just as bogus mortgage bonds failed to reveal the truth to investors. Even combining the promissory notes and the mortgage bonds, the documentation is insufficient to describe the real transactions in which money exchanged hands. Investors are left thinking they are owed money when their agents have already collected it. Borrowers are left thinking they owe money when the debt has already been paid several times over.

The truth is revealed. And the tide has turned. The economy and prospects of the world depend upon the United States fixing its housing problem regardless of what it takes. Housing drives the consumer markets. The consumers’ collective spending drives 70% of the economy. Either fix housing or write off 2/3 of our GDP and resign ourselves to third world status.

S&P 500 enters bear market territory

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NEW YORK | Tue Oct 4, 2011 9:52am EDT

(Reuters) – The S&P 500 entered bear market territory after the open on Tuesday, down over 20 percent from its 2011 high, as European officials considered making banks take bigger losses on Greek debt and fears of contagion in the world’s financial system grew.

COMMENTS:

WILLIAM LARKIN, FIXED INCOME PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, SALEM, MASSACHUSETTS:

“My take on it is that Europe, from a leadership standpoint, is looking a little more unstable, so you’ve got that feeding in, and we are also coming into earnings season. There are a lot of excuses to disappoint, and guidance going forward is going to be very challenging, which means that a lot of the valuations are likely to get dinged in here. From that standpoint, why not raise some cash, be more defensive going into that. It is too much of a headwind.

We are going to see lower (Treasuries) yields if it is possible. If you had asked me a year ago that yields would get this low I would say that you are crazy. 2.72 percent on the 30-year? That is beyond my comprehension.

Cash looks great. Right now you have to be very careful.”

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK

“There are two separate issues here. Are financial markets pricing in more risk and uncertainty? Yes, no question. Will things get worse before they get better? Yes. The same pattern we’ve been seeing of people allocating away from stocks and toward cash and bonds should continue until a Greek resolution is in place. That’s the most important issue. But this does not imply a double-dip recession in the United States. There is stimulus in the pipeline here that should help maintain growth in the future despite all these ongoing debt difficulties. A double-dip scenario in Europe is also unlikely given continued export-led growth in Germany.”

SAID JOSEPH TREVISANI, CHIEF MARKET ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY

“The dollar gets stronger, there are more safe haven flows. Nobody is going to dollar assets for return, just for safety.”

LINDSAY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

“We saw a lot of back and forth between the U.S. and China about this impending trade war. Just the fact that we’re going back and forth over raising further barriers to growth is causing anxiety.

“Another factor is Dexia — the Belgian bank coming under structural problems and needing to get bailed out. The European banking community is continuing to hold this unsavory debt on their balance sheets and they continue to try to work through that.

“More and more analysts in the U.S. are suggesting that there is no solution to the European problem and they’re just pushing the problem down the road.

“If we do see a European recession that would be very very bad for the equity markets. That will dampen global growth prospects.”

ERIC GREEN, SENIOR PORTFOLIO MANAGER AND DIRECTOR OF RESEARCH AT PENN CAPITAL MANAGEMENT IN PHILADELPHIA, WHICH OVERSEES $6.5 BILLION

“The bear market is just a number that the media likes to use; I don’t see people changing strategies because of it. It feels like we’re getting oversold, but the weakness has persisted a lot longer than people were anticipating.”

AMBAC SUES BANK OF AMERICA FOR MASSIVE FRAUD: $16.7 billion

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Somebody get me the complaint so I can post it here.

Editor’s Note: AMBAC is one of the insurers of loan portfolios, like AIG. The insurance paid off when the Master Servicer declared the portfolio had “failed,” based upon standards that were set by the Master Servicer and Underwriter. The insurer had waived its right to challenge that assessment and waived subrogation. It is through this mechanism that many loans that are still performing, many loans that are in current foreclosure proceedings, and many loans that were foreclosed were either paid off or the delinquency was paid by the carrier. In the contract of insurance the insurer expressly waives any right of subrogation. Thus the receiver of the proceeds of insurance gets to keep the money and the portfolio too which was largely performing.

This is why we have said that the defenses of payment and denial of default are entirely meritorious defenses and claims along with claims for slander of title (preventing people from refinancing) and wrongful foreclosure. The fact is that upon delivery of a proper accounting from the creditor side (rather than the debtor/borrower side) you will discover that the notices of default are fatally defective and even fraudulent. The fact that the borrower did not make a payment was used as an excuse to invoke a contractual right to receive payment on the entire portfolio based upon a formula that was determined solely in the discretion of the underwriter and Master Servicer. This overpayment was hotly contested by the insurers and the U.S. government although eventually they gave in and paid 100 cents on the dollar.

The investors were kept ignorant of the receipt of these payments by the underwriter and the borrower got the same treatment of non-disclosure. Thus the distribution report to the investor never mentioned receipt of the insurance money and the borrower’s end of month statement never mentioned the credit against the obligation due. No allocation was ever made in favor of either the investor or the borrower. This was an instant replay of the fact that no disclosure or allocation was made to the benefit of either the investor or the borrower for the tier 2 yield spread premium: the money that was taken out of the funds advanced by the lenders before actually applying it to funding loans.

What was missed completely by AMBAC, AIG and other insurers is that the party who received the proceeds of insurance lacked an insurable interest and therefore had nothing to insure. The fraud they cite is correct but they are missing the forest for the trees. It’s true the loans were improperly described and that no underwriting process was used in accordance with industry standards. That was a lie. But the bigger lie was that the insured had any asset to insure. If they kept the money, which they did, then the insurance company has a claim to recapture at least some of that money. Or, more likely, the investors should have been given the money which would have reduced the obligations, which should have been credited to the borrowers.

2010-09-29 19:00 (UTC)

By Jonathan Stempel

NEW YORK, Sept 29 (Reuters) – Ambac Financial Group Inc sued Bank of America Corp, alleging a ‘massive fraud’ that caused it several hundred million dollars of losses from insuring mortgage securities that went sour.

In a complaint filed Tuesday in the New York State Supreme Court in Manhattan, Ambac said the bank’s Countrywide mortgage unit misled it about loan quality and underwriting guidelines when sponsoring $16.7 billion of residential mortgage-backed securitizations between 2004 and 2006.

According to the complaint, the transactions concerned home equity loans, and contained more than 268,000 loans that backed the $16.7 billion of securities, some of which Ambac insured.

Ambac said it has paid $466 million on claims after an ‘extraordinary’ $2 billion of the loans went into default or were written off.

It also said that 97 percent of the 6,533 loans it has reviewed did not meet Countrywide’s underwriting guidelines, and that Countrywide has refused to meet its obligation to buy back some of these loans or bring them into compliance.

‘Countrywide’s pervasive misrepresentations and breaches pierce the very heart — and amount to a total repudiation — of the bargain struck by the parties,’ the complaint said.

Ambac is ‘entitled to redress for Countrywide’s massive fraud,’ it added.

Bank of America bought Countrywide in July 2008. A spokeswoman, Shirley Norton, said the Charlotte, North Carolina-based bank had no comment. Peter Tomlinson, a lawyer for Ambac, had no immediate comment.

Based in New York, Ambac had been the second-largest U.S. bond insurer before losses on risky debt, including mortgages, caused it in 2008 to lose the ‘triple-A’ credit ratings on which it had depended to insure bonds, mostly municipal debt.

Earlier this year, Ambac said its liquidity might run out before the second quarter of 2011, and said it might try to restructure its debt through a prepackaged bankruptcy.

In March its primary regulator, Wisconsin Insurance Commissioner Sean Dilweg, seized $64 billion of its worst assets and put them into a segregated account.

Bank of America has faced many lawsuits over Countrywide’s lending and disclosures. Late Tuesday, a Manhattan federal judge dismissed a lawsuit by two investment funds accusing Countrywide of misleading it about risk..

An Oct. 19 trial is scheduled in a U.S. Securities and Exchange Commission civil fraud lawsuit over Countrywide.

The SEC accused onetime Chief Executive Angelo Mozilo and two other executives of hiding Countrywide’s worsening loan portfolio. Mozilo also faced an insider-trading charge. The defendants have denied wrongdoing.

In afternoon trading on the New York Stock Exchange, Bank of America shares fell 9 cents to $13.18, and Ambac fell 1 cent to 56 cents.

The case is Ambac Assurance Corp et al v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 651612/2010.

(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn and Gerald E. McCormick) Keywords: BANKOFAMERICA/AMBAC LAWSUIT

(jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)

Mortgage Meltdown: State and Local Action Could Save Everyone

 

  • By slowing down the progression of foreclosures in the courts, judicial sales and bankruptcies, states can effectively bring the fall of housing to a point of equilibrium where at least the opportunity will arise for recovery. It is distinctly possible, particularly with the effect of inflation and devaluation of the dollar, that the numbers can work out even without a strong market. 
  • Borrowers, lenders, investment bankers and owners of CMOs might breathe a sigh of relief in a few years if they cooperate in these procedural mechanisms designed to slow down foreclosures. Kudos to Philadelphia Sheriff John Green who took the stand. That’s not just politics, it is courage. 
  • And it’s not socialism, it is reality: those people who would oppose these measures are arguing against their own interests. These measures are what Government is for — to step in and NOT let the the fabric of society get ripped apart and by the way, to prevent the precipitous decline in YOUR equity in YOUR home even though YOU are not in foreclosure. Do you really think that this mortgage meltdown is not going to cost YOU?
Philadelphia suspends sales of foreclosed homes (more socialism will fix it).

Reuters ^ | March 28th, 2008 | Jon Hurdle 

Posted on March 31, 2008 6:50:08 AM MST by 2banana

PHILADELPHIA (Reuters) – Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments — potential relief for tens of thousands of struggling debtors.

Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.

Philadelphia becomes the first U.S. city to halt foreclosure sales in the current crisis, although Cleveland and Baltimore are considering similar measures, said ACORN, an advocacy group for low-income families.

The group said 45,470 subprime foreclosures are expected in Pennsylvania between the third quarter of 2007 and the end of 2009.

Green, the sheriff of Philadelphia city and county, is trying to identify and track homeowners with weak credit histories who took out the loans with initially low repayments but who are no longer able to afford them because their rates have adjusted sharply higher.

Such loans are expected to lead to a flood of foreclosures throughout the United States this year, and have led to severe losses among financial firms trading in securities backed by the mortgages. ACORN estimates 2.2 million mortgage loans will go into foreclosure in 2008 due to the subprime crisis.

“Given the severity and complexity of mortgage foreclosures, a moratorium will allow for more time to identify and help distressed home owners,” Green said in a statement.

  • There is a most interesting by-product of all this is that the refusal of the Federal Government to get involved in the remedy to a problem that was created by intentional non-regulation and non-enforcement at the Federal level: 
  • States are rediscovering their power, their rights and their obligations. The fact is that the Federal government cannot be be trusted (or at least IS not trusted) by most participants in the mortgage meltdown. 
  • The unintended consequence of the mortgage meltdown, which adds to the Katrina fall-out is that states will take action on their own and that they might form regional unions through agreements that will look very much like treaties between sovereign nations.

 

 

States Tackle Foreclosures In Absence of Federal Help

By Dina ElBoghdady and Renae Merle
Washington Post Staff Writers
Wednesday, April 16, 2008; A01

 

This month alone, Philadelphia‘s sheriff delayed foreclosure auctions of 759 homes at the city council’s urging. Maryland extended the time it takes to complete a foreclosure. State leaders in Ohio recruited more than 1,000 lawyers to aid distressed borrowers.

Frustrated by the slow pace of federal action on behalf of struggling homeowners, some states and cities have struck out on their own to stem an alarming rise in foreclosures that has depressed home prices in most parts of the country and eroded local governments’ revenues as property taxes and utility bills go unpaid.

Nine states have committed more than $450 million to “loan funds” aimed at refinancing the mortgages of at-risk borrowers, according to a study by the Pew Charitable Trusts. A handful have brokered deals with major lenders who have pledged to ease terms for some troubled loans. A few states have lengthened the time it takes to complete a foreclosure.

“What the states are saying is: ‘We can’t wait any longer for the federal government. We have to get ahead of this,’ ” said Tobi Walker, a senior officer at the Pew Charitable Trusts. “The states are experiencing this pain more directly than the federal government is.”

 

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