Archives: Residential Mortgage-Backed Securities (RMBS)

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Big Banks Argue that Shorter Limitations Period Should Apply to MBS Claims

Recently, the defendants in FDIC as Receiver for Colonial Bank v. Chase Mortgage Finance Group, et al (Civ No. 1:12-cv-06166) filed a motion for judgment on the pleadings, asking the court to dismiss as time-barred the securities violations alleged against them by the FDIC.  In light of the Supreme Court’s holding in CTS Corp. v. … Continue Reading

Lenders More Likely to Make Jumbo Loans

As we continue to distance ourselves from the advent of the real estate downturn, residential mortgage loan lenders seem to be increasingly willing to explore ways to loan money outside of the “qualified mortgage” arena. For instance, as the author pointed out in a recent N.Y. Times article, lenders are becoming more likely to make … Continue Reading

Judge Denied Bank of America’s Motion to Dismiss $850M Mortgage Fraud Case

Last week, Magistrate Judge David S. Cayer of the U.S. District Court for the Western District of North Carolina denied Bank of America’s motion to dismiss the Security and Exchange Commission’s claims against it in SEC v. Bank of America Corporation, et al. The SEC’s complaint is founded upon allegations that “[t]he Bank of America  … Continue Reading

Recently Unveiled “HOME Forward” Housing Act May Signal the End of Fannie and Freddie

Momentum in housing-finance reformation picked up speed last month as the House Financial Services Committee unveiled the proposed Housing Opportunities Move the Economy (HOME) Forward Act of 2014. The proposed HOME Forward Act was introduced by Rep. Maxine Waters, who stated that the Act provides “an opportunity to address some of the fundamental flaws of the … Continue Reading

Bank of America’s $8.5 Billion Settlement Will Not Be Delayed by AIG

Late last month, a New York state judge denied AIG’s request to delay approval of Bank of America’s $8.5 billion settlement with private investors in connection with certain mortgage-backed securities that had soured. Bank of America agreed to the settlement in June 2011 in order to resolve claims brought by institutional investors such as Black … Continue Reading

Bank of America Foreign Exchange and Mortgage Practices Under Investigation

On Tuesday, Bank of America disclosed in its annual report with the US Securities and Exchange Commission (SEC) that “government regulators” in North America, Europe and Asia are investigating its foreign exchange and mortgage practices and that the U.S. Department of Justice (DOJ) and state attorneys general are also investigating its handling of mortgage loans … Continue Reading

FHFA Says Fannie and Freddie Still Take on Risky Mortgages

Fannie Mae and Freddie Mac have continued to spend billions of dollars on questionable mortgage loans despite previous alerts to potential issues with their appraisals, the Federal Housing Finance Agency’s Office of Inspector General said Thursday. According to a new report, the mortgage giants ignored warnings from the FHFA’s data portal about underwriting violations, such … Continue Reading

Federal Court Follows Recent Statute of Limitations Decision for Mortgage Buyback Claims

ACE Securities Case Determined that Statute of Limitations Begins at Sale of the Loan; Other Courts Have Begun to Follow Suit We recently posted about a critical ruling out of New York’s intermediate state appellate court, the case of ACE Securities Corp. v. DB Structured Products, Inc., 977 N.Y.S.2d 229, 231 (N.Y.A.D. 1st Dept. Dec. 19, 2013). … Continue Reading

Mortgage Crisis Penalty for the Real Wolves of Wall Street Could Top $50 Billion

The real wolves of Wall Street–sixteen of America’s largest banks–could end up shelling out more than $50 billion to secure settlements from the federal government in connection with their alleged roles in the mortgage crisis. Of this amount, up to $15 billion would go directly to affected homeowners in the form of cash payments and/or … Continue Reading

NY Appellate Court Reverses Decision on Statute of Limitations for Mortgage Buyback Claims

On December 19, 2013, correspondent lenders were the beneficiaries of a long-awaited common sense ruling on when the statute of limitations begins to run under New York law for purposes of a mortgage buyback claim. The common-sense answer: when the loan was sold by the correspondent lender (as we have been saying all along!). Statute … Continue Reading

FHFA Announces $1.9 Billion Settlement With Deutsche Bank

On December 20, 2013, the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, announced that it will receive settlement payments of $1.925 billion from Deutsche Bank AG in connection with claims of alleged violations of federal and state securities laws related to private-label, residential mortgage-backed securities purchased by Fannie Mae … Continue Reading

JPMorgan Chase Agrees to $13 Billion Settlement with the U.S. Justice Department for Knowingly Selling Toxic Mortgage-Backed Securities

On Tuesday, the United States Justice Department announced that it finalized a settlement agreement with JPMorgan Chase for $13 billion. This settlement will resolve a multitude of state and federal investigations into JPMorgan Chase’s sale of residential mortgage-backed securities to investors between 2005 and 2008. In addition to paying fines for securities violations, the proceeds … Continue Reading

FHFA’s $5.1 Billion Settlements With J.P. Morgan Chase

On October 25, 2013, the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, announced that it will receive settlement payments of $5.1 billion with J.P. Morgan Chase & Co. in connection with claims of alleged violations of federal and state securities laws related to private-label, residential mortgage-backed securities purchased by Fannie … Continue Reading

LXBN TV Video Interview regarding Bank of America Lawsuits

Following up on my recent post on the cases, I had the opportunity to speak with  Colin O’Keefe of LXBN TV  regarding the recent fraud suits filed by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) against Bank of America. The suits accuse Bank of America of allegedly defrauding buyers of mortgage-backed securities by … Continue Reading

Judge Limits Damages Recoverable On Repurchase Claims

 “Purchase Price” used as contractual measure of damages In an opinion refusing to dismiss a lawsuit by several RMBS mortgage trusts in connection with $1.6 billion of mortgage loans, Judge Harold Baer, Jr. of the U.S. District Court for the Southern District of New York, held that the plaintiffs would be limited to the loan … Continue Reading

Federal Criminal Investigation of JPMorgan

Preliminary conclusions suggest that JPMorgan may have broken federal laws with its sale of mortgage securities The civil division of the Justice Department has preliminarily concluded that JPMorgan broke federal laws in connection with its sale from 2005 to 2007 of subprime and Alt-A residential mortgage securities, and the bank is now under criminal investigation. Federal prosecutors are examining … Continue Reading

Proposed Legislation Would Replace Fannie Mae, Freddie Mac

The Future of Housing Reform A bipartisan group of U.S. Senators recently proposed a bill that would replace Fannie Mae and Freddie Mac over the next 5 years. If passed by congress, the legislation would replace Fannie and Freddie with a newly created government reinsurer called Federal Mortgage Insurance Corporation (FMIC), modeled after the Federal … Continue Reading

Questions Swirl About Implications of Bernanke Comments for Housing

The Fed indicates a reduction in its quantitative easing program While mortgage interest rates have repeatedly hit new lows over the past few years helping to spur a recovery in the housing sector, recent comments by Federal Reserve Chairman Bernanke could signal that those days are coming to an end. On June 19, Bernanke indicated that, under a … Continue Reading

DOJ Lawsuit Against S&P and McGraw Hill

Last week, the Department of Justice (DOJ) filed a civil suit in the Central District of California against Standard & Poor’s Financial Services (S&P) and its parent company McGraw-Hill. The suit alleges that S&P engaged in a scheme to defraud investors in Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations(CDOs). As noted in the DOJ’s … Continue Reading

New Precedent that Holds Banks Responsible?

Judge Rakoff awards $90.1 million judgment to Assured Guaranty Corp The legal press is abuzz with reports of a New York federal judge’s award of a $90.1 million judgment to mortgage insurer Assured Guaranty Corp. after a lengthy trial in its suit against Flagstar Bank FSB. The lawsuit arose from Assured’s claims that Flagstar had … Continue Reading

Wells Fargo: Department of Justice Not Playing Fair

Crying Foul Wells Fargo has recently cried foul, claiming that the Department of Justice’s latest lawsuit against it in the Southern District of New York violates the terms of a settlement agreement Wells had previously reached with the federal government. And not just any settlement; Wells Fargo is referring to the infamous “Robo-signing” “deal” among … Continue Reading

SEC Investigating ResCap for Possible Mortgage Fraud

The U.S. Securities and Exchange Commission is investigating bankrupt Ally Financial mortgage unit Residential Capital, LLC, for possible misconduct and misrepresentation in its mortgage lending and underwriting practices. The SEC disclosed in court documents on Monday that it formerly commenced an investigation in February of this year to probe possible fraud in the offer and … Continue Reading

The FHFA’s New Buy-Back Statement

Higher Degree of Certainty and Clarity? The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, released a statement yesterday saying it was working with those two entities, which are the nation’s major government-backed mortgage securities investors, to “provide lenders a higher degree of certainty and clarity around repurchase exposure and liability … Continue Reading
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