Citigroup Mortgage Division Agrees to Pay $158.3 Million in HUD Settlement. Citigroup Inc. (C) agreed to pay $158 million to settle a whistle-blower’s claims that a unit of the third-biggest U.S. lender deliberately reduced oversight of its loan origination process, causing a surge in borrower defaults. Manhattan U.S.
Attorney Preet Bharara today said the federal government had joined and resolved a civil lawsuit alleging that the unit, CitiMortgage, violated the requirements of a Federal Housing Administration program that allowed the lenders to decide for which of their home loans they would be federally insured against loss. CitiMortgage admitted to falsely stating that some loans met FHA and U.S. “For far too long, lenders treated HUD’s insurance of their mortgages like they were playing with house money,” Bharara said in the statement.
U.S. 49-State Settlement The settlement is independent of the $25 billion, 49-state settlement with the biggest U.S. mortgage lenders announced by the states’ attorneys general on Feb. 9. 30,000 Loans Das declined to comment. Citigroup. Citi to Pay $158 Million in Mortgage Settlement. John O’Brien: Mortgage Settlement Fails to Address Banking Criminal Enterprise. Yves here. The release by San Francisco county assessor-recorder Phil Ting of a study of document irregularities in foreclosures has put a spotlight on the failure of Federal banking regulators and state officials to do anything beyond cursory examinations of servicers’ bad practices. If a country official with limited resources can show that there are widespread abuses, what is the excuse of state and Federal officials for their failure to understand the depth and severity of these problems?
As Dave Dayen has pointed out, it was two county registers of deeds, Jeff Thigpen in Guiford County, North Carolina, and John O’Brien of South Essex County, Massachusettes, who were the first to look at their own records to see how extensive the frauds were. O’Brien has called his office a “crime scene” and refused to register any more fraudulent deeds. Register John O’Brien revealed the results of an independent audit of his registry. By John L. Let’s not forget that foreclosures benefit no one. “Mortgage Fraud is a Top Priority for This Administration” By Matt Stoller, the former Senior Policy Advisor to Rep.
Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Since the President is now establishing yet another committee to look into the mortgage fraud crisis, I figured it would be useful to look into the history of the Obama and Bush administrations’ approaches to the problem of vast financial fraud. As with most Obama government activities, it’s largely a story of policy continuity with the last administration, though the boom-bust cycle meant that there was not a huge amount of public pressure on the Bush administration to act, so their PR apparatus was less visible. In 2009, President Obama established the Financial Fraud Enforcement Network, whose purpose was “to hold accountable those who helped bring about the last financial crisis, and to prevent another crisis from happening.”
Here’s what I mean. US Attorney Lawrence Brown, Oct, 2009 U.S. The Big Picture » How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis » Print. I am in New York this afternoon attending and speaking at the Bank Credit Analyst Conference. I have to say that the panel on emerging markets gave me some real food for thought and an idea or two for a future e-letter. I have been a fan of emerging markets in general (with some exceptions) for some time but I should become even more so I think. For today’s Outside the Box I have something a little different. Michael Hudson has written a book called The Monster about the Mortgage industry, and specifically Ameriquest and Lehman. It is an easy read, well written and lots of great quotes and stories.
You ready for the World Series analyst, John Mauldin, Editor Outside the Box The Monster : How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis Michael W. Introduction: Bait and Switch A few weeks after he started working at Ameriquest Mortgage, Mark Glover looked up from his cubicle and saw a coworker do something odd. Ameriquest was not alone. The Top Twelve Reasons Why You Should Hate the Mortgage Settlement. As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far. The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks.
Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost. The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998.
The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. 1. “It’s not new money. The Times is also subdued: 2. 1. Fed Independence 2025. Headline: The Fed just forced mortgage servicers that got caught submitting "documents that were not properly notarized," among other sins, to cough up money towards principal reduction, for people unaffected by the notarization scandal, as well as to fund "nonprofit housing counseling organizations" and other policy objectives. Deeper question: What will the Fed look like in 2025? How long can it stay independent as it takes on more and more power, and uses that power for these kinds of political policy actions? Act 1: Three recent news items add up to a scary picture.Item 1: Led by the White House, the state Attorneys General announced their "settlement" with banks. Here's what happened. Suzie, Bob, and Joe each bought $300,000 houses, that are now worth $200,000.
The banks got caught robo-signing Suzie's paper work. There is a story for doing this. There are also costs. As you can guess, I think it's a rotten idea. But that's not important here. Let's put two and two together. Cochrane Sees Moral Hazard Only in One Direction. Several people have been writing about John Cochrane’s post on Federal Reserve independence, but few have mentioned what is actually making Cochrane mad. Why does Cochrane feel something has gone terribly wrong? Here’s a quick scan: Led by the White House, the state Attorneys General announced their “settlement” with banks….There are also costs. This money comes from somewhere…To say nothing of the blatant unfairness, and moral hazard…or the larger moral hazard of using the threat of prosecution for procedural errors to force anyone to cough up money towards unrelated policy goals… Heavens, what a scandal…Documents not properly notarized!
I once got into a disagreement with someone over whether or not libertarians care about fraud. Look at Cochrane’s post – the robosigning and subsequent scandals are viewed as nothing of significance. Like this: Like Loading... Great Leap Forward » State AGs Cave to Banksters. Author: L. Randall Wray · · Share This Print Yves Smith at Naked Capitalism has long been skeptical of the negotiations by the State Attorneys General and the banksters over the foreclosure frauds (see here And while I had held out some hope that California and New York would either refuse to join, or would insist on good terms, today’s announcement of the settlement makes it clear that the banksters had their way.
I expect that the US Attorney General, Eric Holder and HUD Secretary Shaun Donovan played important roles in making sure the bank frauds would only get little slaps on the wrist. Some of the details are not clear, but apparently the 750,000 people who had their homes stolen from them will get a mere $2000 a piece in compensation. That is how this Administration values homeownership. It also gives you some idea of the cost of buying out 49 states: $2.75 billion. Why the Foreclosure Deal May Not Be So Hot After All | Matt Taibbi. Why Millions Won’t Get Help From Big Mortgage Settlement.
Freddie Mac and Fannie Mae’s opposition to principal reductions on mortgages means about half of homeowners in the U.S. couldn’t qualify for the most significant help from banks’ settlement today with states. Abandoned houses at the Desert Mesa subdivision are pictured in North Las Vegas on Nov. 13, 2011. (Jewel Samad/AFP/Getty Images) The Obama administration is billing today's $25 billion agreement [1] between most states and five banks that engaged in flawed or deceptive practices as a big win [2] for struggling homeowners. Most of the money in the settlement isn't a penalty, or a fine levied on the banks.
Instead, the biggest slice of the settlement will be money banks put toward principal reduction [3] -- reducing the amount owed by struggling or underwater borrowers [4]. Getting a break on their mortgages could help the millions of homeowners who owe more on their home than it is worth. The two companies aren't directly part of the settlement. Quelle Surprise! Taxpayers Will Be Paying for Part of Mortgage Settlement. The whole purpose of a settlement is that a party pays damages to rid themselves of liability, and the amount they pay (and “pay” can include the cost of reforming their conduct) is less than what they expect to suffer if they were sued and lost the case (otherwise, it would make more sense for them to fight). But in the topsy-turvy world of cream for the banks, crumbs for the rest of us, we have, in the words of Scott Simon, head of the mortgage business at bond fund manager Pimco, in an interview with MoneyNews, lots of victims paying for banks’ misdeeds: “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this.
Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load…“Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that.’” The Belated Mortgage Fraud/Crisis Investigation. The most interesting news from the SOTU address was the very belated appointment of a mortgage investigation task force, the Office 0f Mortgage Origination and Securitization Abuses.
You may recall that back in April of 2011, I presented to the National Association of Attorneys General a short keynote speech. It was titled “How Systemic Bank Fraud Contributed to the Financial Crisis.”In particular, you should review pages 14-17, and 22-30. But meanwhile you may be asking why in 2012 — 4 years after the great financial collapse, 3 years after the recovery began, and in the last year of the President’s term — Mr. Obama finally decided to investigate the role of Fraud in the entire crisis. The politics are obvious: Both Occupy Wall Street and the Tea Party were very unhappy with the bailouts, and even more unhappy with the lack of prosecutions. So its obviously good politics. But the suspicions on the Left have already begun; consider: What is the thought process about this? What say ye? Bank of America Settlements Impede Fraud Probe, Arizona Says. (Adds Arizona’s participation in multistate settlement in 13th paragraph.)
Jan. 26 (Bloomberg) -- Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say. The Arizona Attorney General’s office is asking a court to block those aspects of the settlements and require the bank to turn over all the agreements. The bank denies any wrongdoing. One 2011 accord involving a borrower facing foreclosure who defaulted on a $253,142 mortgage included a $5,000 payment, plus $7,500 for legal fees, and the defaulted payments were waived and the loan was modified to a 40-year term with a 2 percent interest rate, court documents show.
The terms of the original loan and the borrower’s complaint about the lender weren’t described in the documents. Non-Disparagement A hearing is set for Feb. 1 on the dispute. Senate Report details elaborate Wall Street Mortgage Fraud. A report released by the U.S. Senate paints a scathing picture of mortgage fraud on Wall Street enabled by the malfeasance and blatant disregard for oversight by Federal agencies that regulated them.
A 650-page report (PDF), titled “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,” released by the U.S. Senate Permanent Subcommittee on Investigations chaired by Sen. Carl Levin (D-Mich) cites 5,800 internal documents and the private communications of bank executives, credit rating agencies, investors and regulators and details Wall Street's fraudulent business practices and conflicts of interest that fueled the mortgage meltdown, undermined public trust in the U.S. markets in the months leading to the financial crisis, and reveals reckless activities that were ignored by the banks and their federal regulators. Read more...