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
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
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
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
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
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
“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
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
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
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
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
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
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
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
Judge Rakoff Not Going Out Quietly In a story we’ve been following since the outset, on Monday, Judge Rakoff filed his brief before the Second Circuit Court of Appeals. It is not every day that you see a federal judge litigating against two parties who were theoretically adverse before him. But that is precisely the … Continue Reading
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
Recently, U.S. District Judge Shira A. Scheindlin, Southern District of New York, rejected the contentions of Morgan Stanley & Co. Inc. and several ratings agencies, including Standard & Poor’s, Moody’s and Fitch, that credit ratings are merely “predictive opinions” that cannot give rise to actions for negligence. The suit involves a consolidation of two lawsuits brought … Continue Reading
A Rare Point of Agreement Margaret Chadbourn of Reuters recently reported {April 23} that both Republicans and Democrats have “found a rare point of agreement.” They want to phase out or at least substantially reduce the role of the Federal National Mortgage Association (Fannie Mae ) and the Federal Home Loan Mortgage Corporation (Freddie Mac … Continue Reading
Charged for Misleading Investors as the Subprime Mortgage Crisis Began to Deepen The interplay of federal judges, the SEC and the Residential Mortgage Backed Securities disaster continues (and probably will for a long time to come). In Los Angeles, U.S. District Judge David Carter fined former Brookstreet Securities Corp CEO, Stanley Brooks, the sum of … Continue Reading
Bank of America (aka BofA) has decided to stop selling mortgages to Fannie. (Check out David Benoit’s recent Wall Street Journal blog post.) This development underscores yet another reason why mortgage loan originators should be extremely hesitant to enter into big-dollar “global” settlements with BofA. Estimated Future Losses A large component of the “damages” that BofA … Continue Reading
Citimortgage Admits Liability On February 15th, 2012, in a clearly pre-negotiated deal between the US Attorney’s Office, on behalf of the Department of Housing and Urban Development and CITIMORTGAGE, INC. (a subsidiary of CITIBANK, N.A., and “CMI”), a complaint was filed against CMI in the US District Court in Manhattan and simultaneously settled for $158.3 … Continue Reading
