Thursday, December 31, 2009
Wednesday, December 23, 2009
Commercial Loan Compliance | Multifamily Record Vacancies
The Federal Deposit Insurance Corp. reported that the number of multifamily loans 90 days for more past due has doubled since last year and hit 3.6% in the third quarter — the highest since 1993.
The multifamily sector is experiencing record vacancy rates due to high unemployment and low household formation, according to Freddie Mac.
Freddie Mac and Fannie Mae are major investors in multifamily loans, and could experience greater delinquencies if the situation persists.
High jobless rates among teenagers (27%) and 20-24-year olds is forcing many to postpone household formation or a move back with family and friends, according to Freddie Mac chief economist Frank Nothaft.
In addition, the vacancy rates have moved up as federal tax credits for first-time homebuyers have encouraged renters to become homeowners. A Census Bureau report shows the vacancy rate on buildings with ten or more apartments is 13.5% as of Sept. 30.
For apartments built since the start of 2000, the vacancy rate is 23.2%, "reflecting in part the slow rental rate of newly built dwellings," Mr. Nothaft says in a paper on housing trends. "As a result of rising vacancies and lack of opportunity to increase rents, multifamily property values are falling and delinquency rates on multifamily mortgages are rising,” said Nothaft.
The Freddie economist points out that the National Council of Real Estate Fiduciaries has reported that multifamily property values have declined 29% from their mid-2008 peak.
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The multifamily sector is experiencing record vacancy rates due to high unemployment and low household formation, according to Freddie Mac.
Freddie Mac and Fannie Mae are major investors in multifamily loans, and could experience greater delinquencies if the situation persists.
High jobless rates among teenagers (27%) and 20-24-year olds is forcing many to postpone household formation or a move back with family and friends, according to Freddie Mac chief economist Frank Nothaft.
In addition, the vacancy rates have moved up as federal tax credits for first-time homebuyers have encouraged renters to become homeowners. A Census Bureau report shows the vacancy rate on buildings with ten or more apartments is 13.5% as of Sept. 30.
For apartments built since the start of 2000, the vacancy rate is 23.2%, "reflecting in part the slow rental rate of newly built dwellings," Mr. Nothaft says in a paper on housing trends. "As a result of rising vacancies and lack of opportunity to increase rents, multifamily property values are falling and delinquency rates on multifamily mortgages are rising,” said Nothaft.
The Freddie economist points out that the National Council of Real Estate Fiduciaries has reported that multifamily property values have declined 29% from their mid-2008 peak.
_______________________
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Tuesday, December 22, 2009
Mortgage Loan Compliance | Delinquent Prime Loans Double
According to the Office of the Comptroller of the Currency and Office of Thrift Supervision the delinquency rate on prime loans has doubled over the past year.
The delinquency rate is up 20% from the second quarter to 3.6% in the third quarter.
The third quarter report also shows continued deterioration in the performance of payment-option adjustable rate mortgages. Only 67.7% of options ARMs are performing, 16% are seriously delinquent and 11.9% are in the process of foreclosure. In the second quarter, 15.2% were seriously delinquent and 10% were in the process of foreclosure.
The national bank and thrift servicers completed more than 130,000 loan modifications in the third quarter. In total, more than 680,000 home loan modifications and payment plans, including those done on a trial basis, were implemented during the period. Despite the growth of loan modifications, more than half of all modifications are 60-days or more past due after six months.
In cases where the monthly principal and interest payment is reduced by at least 20%, the re-default rate is only 26.7%. After 12 months, the re-default rate is 38.6%, compared to 66% where the modification leaves the borrower's payment unchanged.
Overall, 87% of the loans in the servicing portfolios of large banks and thrifts are performing and 6.2% are 60-days or more past due, according to the OCC/OTS quarterly Mortgage Metrics Report.
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The delinquency rate is up 20% from the second quarter to 3.6% in the third quarter.
The third quarter report also shows continued deterioration in the performance of payment-option adjustable rate mortgages. Only 67.7% of options ARMs are performing, 16% are seriously delinquent and 11.9% are in the process of foreclosure. In the second quarter, 15.2% were seriously delinquent and 10% were in the process of foreclosure.
The national bank and thrift servicers completed more than 130,000 loan modifications in the third quarter. In total, more than 680,000 home loan modifications and payment plans, including those done on a trial basis, were implemented during the period. Despite the growth of loan modifications, more than half of all modifications are 60-days or more past due after six months.
In cases where the monthly principal and interest payment is reduced by at least 20%, the re-default rate is only 26.7%. After 12 months, the re-default rate is 38.6%, compared to 66% where the modification leaves the borrower's payment unchanged.
Overall, 87% of the loans in the servicing portfolios of large banks and thrifts are performing and 6.2% are 60-days or more past due, according to the OCC/OTS quarterly Mortgage Metrics Report.
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Monday, December 21, 2009
Mortgage Loan Compliance | Ohio AG Sues HomEq For Unfair Mods
Richard Cordray, Ohio Attorney General, has filed a lawsuit that alleges unfair loan modification agreements and faulty customer service against Barclays Capital Real Estate dba HomEq Servicing.
Filed in Montgomery County Common Pleas Court, the lawsuit alleges that at-risk homeowners "were forced to enter into one-sided agreements," that released HomEq of all liabilities requiring borrowers to waive their defense rights and pay additional fees.
"In Ohio we have zero tolerance for any more excuses," Mr. Cordray said, while stating that "many servicers" are aggravating the crisis through noncompliance and excuses.
The Attorney General has so far filed at least two similar lawsuits against other companies.
A HomEq spokesperson told reporters the lawsuit is "a meritless complaint" and that HomEq will vigorously defend itself against it. "HomEq is committed to quality customer service and to working with financially distressed borrowers to help them remain in their homes," he said.
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Filed in Montgomery County Common Pleas Court, the lawsuit alleges that at-risk homeowners "were forced to enter into one-sided agreements," that released HomEq of all liabilities requiring borrowers to waive their defense rights and pay additional fees.
"In Ohio we have zero tolerance for any more excuses," Mr. Cordray said, while stating that "many servicers" are aggravating the crisis through noncompliance and excuses.
The Attorney General has so far filed at least two similar lawsuits against other companies.
A HomEq spokesperson told reporters the lawsuit is "a meritless complaint" and that HomEq will vigorously defend itself against it. "HomEq is committed to quality customer service and to working with financially distressed borrowers to help them remain in their homes," he said.
_______________________
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Friday, December 18, 2009
Commercial Loan Compliance | Hawaiian Bank CRE Business Slump
Central Pacific Bank, Honolulu, will close its four California commercial real estate loan offices and wind down its West Coast operations by 2012. The offices are in Newport Beach, Pasadena, Rossville and San Diego.
In the third quarter, its parent company Central Pacific Financial Corp. lost nearly $72 million.
"We have not made a loan in California in more than 18 months and have been diligent in reducing our loan portfolio there," said Ronald K. Migita, chairman, president and chief executive.
"By the end of the third quarter, we've reduced our total loans and leases by $622.6 million, or 15.3% from a year ago, many of which were in California. Our mainland team continues to reduce our exposure in California as we shift gears to fully concentrate on the Hawaii market”, Migita added.
Central Pacific has accelerated its efforts to reduce credit risk by pursuing loan sales, including potential bulk sales, in addition to loan restructuring and pay downs. As of the end of September 2009, the bank's mainland construction and commercial real estate loans totaled $865.8 million.
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In the third quarter, its parent company Central Pacific Financial Corp. lost nearly $72 million.
"We have not made a loan in California in more than 18 months and have been diligent in reducing our loan portfolio there," said Ronald K. Migita, chairman, president and chief executive.
"By the end of the third quarter, we've reduced our total loans and leases by $622.6 million, or 15.3% from a year ago, many of which were in California. Our mainland team continues to reduce our exposure in California as we shift gears to fully concentrate on the Hawaii market”, Migita added.
Central Pacific has accelerated its efforts to reduce credit risk by pursuing loan sales, including potential bulk sales, in addition to loan restructuring and pay downs. As of the end of September 2009, the bank's mainland construction and commercial real estate loans totaled $865.8 million.
_______________________
Commercial Loan Compliance® | A Certified Forensic Audit Company
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Wednesday, December 16, 2009
Mortgage Loan Compliance | Rescue and Fraud Schemes
The U.S. Attorney for Eastern District of Pennsylvania has indicted five people for a $14.6 million mortgage fraud scheme that resulted in at least 35 fraudulent loans.
According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants allegedly took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.
Named in the 15-count indictment are Edward McCusker and John Alford Bariana, owners of Axxium Mortgage Inc.; McCusker's wife, Jacqueline; and Jeffrey Bennett and Stephen Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C. They are charged with conspiracy to commit mail fraud, wire fraud, and money laundering. Mr. Doherty is also charged with bankruptcy fraud.
Edward McCusker and Bariana, along with Jacqueline McCusker allegedly obtained the mortgages by submitting false documents to lenders and making false claims about the straw purchasers' finances, the indictment said.
Doherty allegedly used fraudulent bankruptcy filings for some borrowers to delay foreclosure until McCusker had obtained an investor and a mortgage.
Bennett allegedly handled the closings for the real estate transfers.
Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Stephen Doherty faces 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment.
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According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants allegedly took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.
Named in the 15-count indictment are Edward McCusker and John Alford Bariana, owners of Axxium Mortgage Inc.; McCusker's wife, Jacqueline; and Jeffrey Bennett and Stephen Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C. They are charged with conspiracy to commit mail fraud, wire fraud, and money laundering. Mr. Doherty is also charged with bankruptcy fraud.
Edward McCusker and Bariana, along with Jacqueline McCusker allegedly obtained the mortgages by submitting false documents to lenders and making false claims about the straw purchasers' finances, the indictment said.
Doherty allegedly used fraudulent bankruptcy filings for some borrowers to delay foreclosure until McCusker had obtained an investor and a mortgage.
Bennett allegedly handled the closings for the real estate transfers.
Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Stephen Doherty faces 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment.
_______________________
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Mortgage Loan Compliance | Rescue and Fraud Schemes
The U.S. Attorney for Eastern District of Pennsylvania has indicted five people for a $14.6 million mortgage fraud scheme that resulted in at least 35 fraudulent loans.
According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants allegedly took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.
Named in the 15-count indictment are Edward McCusker and John Alford Bariana, owners of Axxium Mortgage Inc.; McCusker's wife, Jacqueline; and Jeffrey Bennett and Stephen Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C. They are charged with conspiracy to commit mail fraud, wire fraud, and money laundering. Mr. Doherty is also charged with bankruptcy fraud.
Edward McCusker and Bariana, along with Jacqueline McCusker allegedly obtained the mortgages by submitting false documents to lenders and making false claims about the straw purchasers' finances, the indictment said.
Doherty allegedly used fraudulent bankruptcy filings for some borrowers to delay foreclosure until McCusker had obtained an investor and a mortgage.
Bennett allegedly handled the closings for the real estate transfers.
Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Stephen Doherty faces 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment.
_______________________
Mortgage Loan Compliance® | A Certified Forensic Audit Company
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According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants allegedly took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.
Named in the 15-count indictment are Edward McCusker and John Alford Bariana, owners of Axxium Mortgage Inc.; McCusker's wife, Jacqueline; and Jeffrey Bennett and Stephen Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C. They are charged with conspiracy to commit mail fraud, wire fraud, and money laundering. Mr. Doherty is also charged with bankruptcy fraud.
Edward McCusker and Bariana, along with Jacqueline McCusker allegedly obtained the mortgages by submitting false documents to lenders and making false claims about the straw purchasers' finances, the indictment said.
Doherty allegedly used fraudulent bankruptcy filings for some borrowers to delay foreclosure until McCusker had obtained an investor and a mortgage.
Bennett allegedly handled the closings for the real estate transfers.
Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Stephen Doherty faces 385 years imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment.
_______________________
Mortgage Loan Compliance® | A Certified Forensic Audit Company
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Thursday, December 10, 2009
Mortgage Loan Compliance | New Century Subprime Fraud Charges
SEC Director of Enforcement Robert Khuzami said investors in the once publicly traded New Century "took a double-hit: The company's mortgage assets and business performance became increasingly impaired, and management manipulated its numbers and concealed its deteriorating performance."
At one time, New Century's shares traded for $50, New Century was a top-ranked subprime lender and at one point management was considering selling the company to Merrill Lynch. Then New Century filed for bankruptcy protection in April 2007.
Now the Securities and Exchange Commission has charged three former executives of now-defunct subprime mortgage giant New Century Financial with fraud for misleading investors as their business was "collapsing" in 2006.
Former top managers accused of fraud include Brad Morrice (Vice Chairman/President), Patti Dodge (EVP) and David Kenneally (SVP).
The complaint, filed in federal court in the Central District of California, seeks civil penalties and from Morrice and Dodge reimbursement of bonuses and other incentive or equity-based compensation. The agency is seeking a severe personal penalty against the three: a bar against ever again serving as officers or directors of a publicly traded company.
Josh Epstein, a spokesman for Proskauer, the law firm representing Mr. Morrice, told reporters that the SEC's charges against the former executive are "flatly false." He said, "Brad did all he could to save the company and to accurately report the company's numerous challenges to its shareholders. While his efforts failed, there was no fraud."
Morrice remained a large shareholder until the end, losing millions of dollars when New Century filed for bankruptcy in April 2007, Mr. Epstein said.
John Vandevelde, an attorney for Mr. Kenneally, said the former executive was never a top executive there but a new accountant who lost "every penny he ever invested" in the company he believed in. "Kenneally never signed any financial statements and relied on the outside auditors for accounting treatment now under question by the SEC," his lawyer said.
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At one time, New Century's shares traded for $50, New Century was a top-ranked subprime lender and at one point management was considering selling the company to Merrill Lynch. Then New Century filed for bankruptcy protection in April 2007.
Now the Securities and Exchange Commission has charged three former executives of now-defunct subprime mortgage giant New Century Financial with fraud for misleading investors as their business was "collapsing" in 2006.
Former top managers accused of fraud include Brad Morrice (Vice Chairman/President), Patti Dodge (EVP) and David Kenneally (SVP).
The complaint, filed in federal court in the Central District of California, seeks civil penalties and from Morrice and Dodge reimbursement of bonuses and other incentive or equity-based compensation. The agency is seeking a severe personal penalty against the three: a bar against ever again serving as officers or directors of a publicly traded company.
Josh Epstein, a spokesman for Proskauer, the law firm representing Mr. Morrice, told reporters that the SEC's charges against the former executive are "flatly false." He said, "Brad did all he could to save the company and to accurately report the company's numerous challenges to its shareholders. While his efforts failed, there was no fraud."
Morrice remained a large shareholder until the end, losing millions of dollars when New Century filed for bankruptcy in April 2007, Mr. Epstein said.
John Vandevelde, an attorney for Mr. Kenneally, said the former executive was never a top executive there but a new accountant who lost "every penny he ever invested" in the company he believed in. "Kenneally never signed any financial statements and relied on the outside auditors for accounting treatment now under question by the SEC," his lawyer said.
_______________________
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Friday, December 4, 2009
Mortgage Loan Compliance | Risk Retention Changes
The House Financial Services Committee completed action on the reform package yesterday when it approved a bill to set up a resolution process for "too big to fail" institutions.
The "systemic risk" bill also gives regulators the discretion to set risk retention requirements as high as 5% on Federal Housing Administration, Fannie Mae and Freddie Mac loans. The regulatory reform package also includes bills that create a Consumer Finance Protection Agency, regulates the trading of derivatives, and a bill (H.R. 1728) the House passed in May that curbs subprime lending practices.
The mortgage industry prefers the risk retention provisions in H.R. 1728, which totally exempts lenders and securitizers from retaining a portion of the credit risk on FHA and GSE loans.
Some industry lobbyists have been wondering how committee chairman Barney Frank, D-Mass., would deal with the different risk retention provisions. Rep. Frank told reporters he would drop the original provision in H.R. 1728. "The risk retention section of the subprime bill will conform to what we did in the systemic risk bill," the chairman said.
The House of Representatives is slated to debate and vote on a massive regulatory reform package next week that includes several bills addressing abusive mortgage lending practices and risk retention on sales and securitizations of mortgages.
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The "systemic risk" bill also gives regulators the discretion to set risk retention requirements as high as 5% on Federal Housing Administration, Fannie Mae and Freddie Mac loans. The regulatory reform package also includes bills that create a Consumer Finance Protection Agency, regulates the trading of derivatives, and a bill (H.R. 1728) the House passed in May that curbs subprime lending practices.
The mortgage industry prefers the risk retention provisions in H.R. 1728, which totally exempts lenders and securitizers from retaining a portion of the credit risk on FHA and GSE loans.
Some industry lobbyists have been wondering how committee chairman Barney Frank, D-Mass., would deal with the different risk retention provisions. Rep. Frank told reporters he would drop the original provision in H.R. 1728. "The risk retention section of the subprime bill will conform to what we did in the systemic risk bill," the chairman said.
The House of Representatives is slated to debate and vote on a massive regulatory reform package next week that includes several bills addressing abusive mortgage lending practices and risk retention on sales and securitizations of mortgages.
_______________________
Mortgage Loan Compliance® | A Certified Forensic Audit Company
Get The Facts on Your Loan and Protect Your Rights! | $59 Rapid Report Forensic Audits and $295 Certified Forensic Compliance Audits
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Wednesday, December 2, 2009
Mortgage Loan Compliance | Treasury Forcing The Loan Mod Issue
Starting Today, Treasury/Fannie teams will visit the eight largest servicers for three days to monitor their Home Affordable Modification Program efforts and troubleshoot any problems.
One-third of the 375,000 borrowers have submitted all the necessary documentation to qualify for a permanent loan modification and they "deserve" a timely decision from their servicer, said Treasury Assistance Secretary Michael Barr to reporters.
Meanwhile, 37% of the borrowers have submitted some documentation and more 20% have not submitted anything.
"Borrowers need to submit the necessary information or they could lose their eligibility for a permanent affordable modification," said Phyllis Caldwell, who joined Treasury in November to oversee the conversion campaign.
"We are also working with 300 outreach partners — including state, local and community officials as well as homeownership counselors and advocacy groups," Ms. Caldwell said. Several years ago she headed community development banking for Bank of America.
Servicers are expected to continue their outreach efforts while Treasury engages in a "robust" communications and outreach campaign to reach those borrowers.
In addition, each HAMP participating servicer will report to Treasury twice a day on their conversion progress during the month of December, according to Mr. Barr.
In a month-long campaign to convert 375,000 borrowers in payment trials into permanent loan modifications, Treasury Department and Fannie Mae staffers will be hounding servicers on a daily basis to achieve the highest conversion rate.
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One-third of the 375,000 borrowers have submitted all the necessary documentation to qualify for a permanent loan modification and they "deserve" a timely decision from their servicer, said Treasury Assistance Secretary Michael Barr to reporters.
Meanwhile, 37% of the borrowers have submitted some documentation and more 20% have not submitted anything.
"Borrowers need to submit the necessary information or they could lose their eligibility for a permanent affordable modification," said Phyllis Caldwell, who joined Treasury in November to oversee the conversion campaign.
"We are also working with 300 outreach partners — including state, local and community officials as well as homeownership counselors and advocacy groups," Ms. Caldwell said. Several years ago she headed community development banking for Bank of America.
Servicers are expected to continue their outreach efforts while Treasury engages in a "robust" communications and outreach campaign to reach those borrowers.
In addition, each HAMP participating servicer will report to Treasury twice a day on their conversion progress during the month of December, according to Mr. Barr.
In a month-long campaign to convert 375,000 borrowers in payment trials into permanent loan modifications, Treasury Department and Fannie Mae staffers will be hounding servicers on a daily basis to achieve the highest conversion rate.
_______________________
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Tuesday, December 1, 2009
Commercial Loan Compliance | Multifamily Origination Drops 40%
Over the past year multifamily loan defaults have been on the rise even though housing analysts believe there will be more renters because of a weak job market.
The origination of commercial mortgages backed by apartment buildings fell 40% in 2008 to $88 billion with a small cadre of lenders dominating the market, according to an analysis released by the Mortgage Bankers Association.
The trade group said 2,877 different lenders funded multifamily loans during the year with PNC Real Estate, Wachovia (now part of Wells Fargo), Wells Fargo, Capmark Financial and Deutsche Bank Commercial Real Estate having the largest market shares. (Capmark recently filed for bankruptcy protection.)
The Mortgage Bankers Association found that 26% of lenders that funded Multi-Family loans made just one mortgage on these properties in 2008. And two-third of originators made five or less.
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The origination of commercial mortgages backed by apartment buildings fell 40% in 2008 to $88 billion with a small cadre of lenders dominating the market, according to an analysis released by the Mortgage Bankers Association.
The trade group said 2,877 different lenders funded multifamily loans during the year with PNC Real Estate, Wachovia (now part of Wells Fargo), Wells Fargo, Capmark Financial and Deutsche Bank Commercial Real Estate having the largest market shares. (Capmark recently filed for bankruptcy protection.)
The Mortgage Bankers Association found that 26% of lenders that funded Multi-Family loans made just one mortgage on these properties in 2008. And two-third of originators made five or less.
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Monday, November 30, 2009
Mortgage Loan Compliance | Defaulted Loan Buybacks Surge
Fannie does not disclose buyback information. However, Freddie Mac forced its seller/servicers to buy back $960 million in bad mortgages in third quarter. Ginnie Mae and Federal Housing Administration also require buybacks and indemnifications on bad loans.
In total Banks had to buy back $7.1 billion in defaulted single-family loans in the third quarter to reimburse mortgage investors, up from $1.9 billion in the previous quarter.
Federal Deposit Insurance Corp. Call Report information shows that most of the buyback demands fell on JPMorgan Chase and Bank of America. Chase repurchased $2.7 billion in defaulted loans and Bank of America repurchased $2.3 billion to satisfy investor demands. Both are on the hook for troubled loans they took control of when they purchased ailing mega-thrifts — Countrywide in the case of Bank of America and Washington Mutual by Chase.
The FDIC information also lists buybacks by Citibank $898 million, National City Bank $361.6 million, Wells Fargo Bank $266 million and SunTrust Bank $232.3 million.
Investors like Fannie Mae and Freddie Mac can require lenders to buy back defaulted loans that don't comply with their underwriting requirements.
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In total Banks had to buy back $7.1 billion in defaulted single-family loans in the third quarter to reimburse mortgage investors, up from $1.9 billion in the previous quarter.
Federal Deposit Insurance Corp. Call Report information shows that most of the buyback demands fell on JPMorgan Chase and Bank of America. Chase repurchased $2.7 billion in defaulted loans and Bank of America repurchased $2.3 billion to satisfy investor demands. Both are on the hook for troubled loans they took control of when they purchased ailing mega-thrifts — Countrywide in the case of Bank of America and Washington Mutual by Chase.
The FDIC information also lists buybacks by Citibank $898 million, National City Bank $361.6 million, Wells Fargo Bank $266 million and SunTrust Bank $232.3 million.
Investors like Fannie Mae and Freddie Mac can require lenders to buy back defaulted loans that don't comply with their underwriting requirements.
_______________________
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Residential and Commercial Audits | Get The Facts on Your Loan and Protect Your Rights! | $59 Rapid Report Forensic Audits and $295 Certified Forensic Compliance Audits
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Tuesday, November 24, 2009
Mortgage Loan Compliance | HELOC Lawsuits
JPMorgan Chase had a motion denied by a U.S. District Court judge in California to dismiss a lawsuit that alleges the bank illegally reduced a couple's home equity line of credit.
Chase argued that the plaintiffs, Jeffrey and Jenifer Schulken, are former customers of Washington Mutual and they should sue the Federal Deposit Insurance Corp. - which approved Chase's acquisition of WaMu - not Chase. But the judge sided with the Schulkens.
According to the plaintiffs' attorney Jay Edelson, "Chase's unprecedented position was simple: Chase can harm former WaMu customers with impunity and anyone who suffers damage should sue the FDIC."
Chase acquired the troubled WaMu with the approval of the FDIC in September 2008. The bank moved to reduce the plaintiffs' HELOC in March 2009, claiming their income had declined. Plaintiffs claim their income hasn't changed and sued Chase for violating the Truth in Lending Act.
If the judge certifies the class act lawsuit, the plaintiffs' attorneys want the class to cover all Chase HELOC customers as well as former WaMu customers. A Chase spokeswoman said the bank does not comment on litigation.
Chicago-based Kamber-Edelson LLC also is pursuing class action litigation against two large institutions that are among Chase's peers for suspending and reducing HELOCs. An FDIC spokesman did not have an immediate comment pending a review of the case by the FDIC's legal team.
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Chase argued that the plaintiffs, Jeffrey and Jenifer Schulken, are former customers of Washington Mutual and they should sue the Federal Deposit Insurance Corp. - which approved Chase's acquisition of WaMu - not Chase. But the judge sided with the Schulkens.
According to the plaintiffs' attorney Jay Edelson, "Chase's unprecedented position was simple: Chase can harm former WaMu customers with impunity and anyone who suffers damage should sue the FDIC."
Chase acquired the troubled WaMu with the approval of the FDIC in September 2008. The bank moved to reduce the plaintiffs' HELOC in March 2009, claiming their income had declined. Plaintiffs claim their income hasn't changed and sued Chase for violating the Truth in Lending Act.
If the judge certifies the class act lawsuit, the plaintiffs' attorneys want the class to cover all Chase HELOC customers as well as former WaMu customers. A Chase spokeswoman said the bank does not comment on litigation.
Chicago-based Kamber-Edelson LLC also is pursuing class action litigation against two large institutions that are among Chase's peers for suspending and reducing HELOCs. An FDIC spokesman did not have an immediate comment pending a review of the case by the FDIC's legal team.
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Thursday, November 19, 2009
Mortgage Loan Compliance | The Health of FHA
Citing FHA's deteriorating financial position, Reps. Spencer Bachus (Ala.) and Shelley Capito (W. Va.) are urging committee chairman Barney Frank, D-Mass., to schedule a hearing as soon as possible.
Republican leaders on the House Financial Services Committee are calling for hearings on the financial health of the ailing Federal Housing Administration reserve fund, which recently reported a sharp drop in its capital ratio to 0.57%.
"If home prices do not recover, the economic value of the Mutual Mortgage Insurance Fund could fall below zero. We are concerned that such a drop could force HUD to request an appropriation from Congress," the two Republican lawmakers say in a letter.
FHA officials maintain that they have taken corrective actions and the insurance fund is in no imminent danger of running out of cash. If necessary, the agency could raise the FHA upfront premium to keep the fund in the black.
However, Reps. Bachus and Capito also have concerns about FHA's technological and management capacity.
"It is incumbent upon our committee to get prompt answers to many of the questions surrounding FHA's risk management practices and finances," the Republicans say in a letter to Rep. Frank.
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Republican leaders on the House Financial Services Committee are calling for hearings on the financial health of the ailing Federal Housing Administration reserve fund, which recently reported a sharp drop in its capital ratio to 0.57%.
"If home prices do not recover, the economic value of the Mutual Mortgage Insurance Fund could fall below zero. We are concerned that such a drop could force HUD to request an appropriation from Congress," the two Republican lawmakers say in a letter.
FHA officials maintain that they have taken corrective actions and the insurance fund is in no imminent danger of running out of cash. If necessary, the agency could raise the FHA upfront premium to keep the fund in the black.
However, Reps. Bachus and Capito also have concerns about FHA's technological and management capacity.
"It is incumbent upon our committee to get prompt answers to many of the questions surrounding FHA's risk management practices and finances," the Republicans say in a letter to Rep. Frank.
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Wednesday, November 18, 2009
Mortgage Loan Compliance | Clarified HOEPA Short-Term Standards
The Federal Reserve Board has clarified its new HOEPA lending standard so that lenders can refinance short-term balloon mortgages on farmhouses and other rural residences.
Rural lenders make nonconforming 3-year and 5-year balloon mortgages that they hold in portfolio. They raised concerns that the Home Ownership and Equity Protection Act regulations that went into effect Oct. 1, 2009 could prohibit such products.
The HOEPA rule requires lenders to evaluate the borrower's ability to repay a loan. On higher-cost balloon mortgages with a term of less than seven years, it appeared the borrower must be able to pay off the mortgage in full at the end of the term.
Sandra Braunstein, Federal Reserve Board Director of Consumer Affairs, said there is "no" such pay off requirement since it would effectively ban short-term balloon loans.
"If the Board had intended to ban such products it would have done so explicitly," she says in a letter to banking trade groups and bank examiners. In making the loan, the lender should "verify that the consumer would likely be able to satisfy the balloon payment obligation by refinancing the loan or through income or assets other than the collateral," Mrs. Braunstein says.
American Bankers Association regulatory counsel Rod Alba said, "most of our members" are satisfied with this clarification. But some are concerned that they may still be open to possible private litigation or borrowers exercising a right of rescission, he said.
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Rural lenders make nonconforming 3-year and 5-year balloon mortgages that they hold in portfolio. They raised concerns that the Home Ownership and Equity Protection Act regulations that went into effect Oct. 1, 2009 could prohibit such products.
The HOEPA rule requires lenders to evaluate the borrower's ability to repay a loan. On higher-cost balloon mortgages with a term of less than seven years, it appeared the borrower must be able to pay off the mortgage in full at the end of the term.
Sandra Braunstein, Federal Reserve Board Director of Consumer Affairs, said there is "no" such pay off requirement since it would effectively ban short-term balloon loans.
"If the Board had intended to ban such products it would have done so explicitly," she says in a letter to banking trade groups and bank examiners. In making the loan, the lender should "verify that the consumer would likely be able to satisfy the balloon payment obligation by refinancing the loan or through income or assets other than the collateral," Mrs. Braunstein says.
American Bankers Association regulatory counsel Rod Alba said, "most of our members" are satisfied with this clarification. But some are concerned that they may still be open to possible private litigation or borrowers exercising a right of rescission, he said.
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Wednesday, November 11, 2009
Mortgage Loan Compliance | FHA’s New Condo Rules
The Federal Housing Administration has issued new condominium lending policies that go into effect Dec. 7. But the agency is making several temporary exceptions to the new rules due to the "volatility" in the condo market.
The new FHA lending policies spelled out in Mortgagee Letter 2009-46 B limit the number of condo units in one complex that can be financed with FHA-insured loans at 30%. And 50% of the units must be owner-occupied before FHA financing can be used.
However, Mortgagee Letter 2009-46 A allows exceptions to the FHA concentration and owner-occupancy requirements until Dec. 31, 2010. One exception allows FHA lenders to ignore foreclosed units in calculating the owner-occupancy rate until the end of next year.
The Department of Housing and Urban Development will allow FHA lenders to use a "Spot Loan Approval Process" for condominium units until Feb. 1, 2010.
Spot approvals allow FHA lenders to finance one condominium unit in a building that has not been approved by HUD. The new condo lending policies gives FHA direct endorsement lenders the authority to approve condominium projects for the first time ever.
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The new FHA lending policies spelled out in Mortgagee Letter 2009-46 B limit the number of condo units in one complex that can be financed with FHA-insured loans at 30%. And 50% of the units must be owner-occupied before FHA financing can be used.
However, Mortgagee Letter 2009-46 A allows exceptions to the FHA concentration and owner-occupancy requirements until Dec. 31, 2010. One exception allows FHA lenders to ignore foreclosed units in calculating the owner-occupancy rate until the end of next year.
The Department of Housing and Urban Development will allow FHA lenders to use a "Spot Loan Approval Process" for condominium units until Feb. 1, 2010.
Spot approvals allow FHA lenders to finance one condominium unit in a building that has not been approved by HUD. The new condo lending policies gives FHA direct endorsement lenders the authority to approve condominium projects for the first time ever.
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Tuesday, November 10, 2009
Mortgage Loan Compliance | Credit Union Mortgages and Fannie Mae Settlement
Fannie Mae has given more than three-dozen credit unions until next week to accept an offer of pennies on the dollar for some $125 million of their mortgages that defunct U.S. Mortgage/CU National Mortgage fraudulently sold to Fannie.
So far, only two of the credit unions have accepted the offer, detailed in a letter to Fannie Mae's federal regulator from National Credit Union Administration chairman Deborah Matz, who expressed concern at the losses faced by affected credit unions.
"I appreciate Fannie Mae is also a victim of this crime," said Mrs. Matz in a letter to Edward DeMarco, acting director of the Federal Housing Finance Agency. "However, the financial impact of CU National's fraud on these member-owned cooperatives is significant. Indeed, for some of the credit unions, their losses will be so great as to force our agency to take drastic action under the prompt corrective action rules."
Both the credit unions and Fannie were victims of a massive fraud perpetrated by Michael McGrath, the president of U.S. Mortgage and its CU National subsidiary which sold $140 million of mortgages held on behalf of credit unions to the GSE without authorization and kept the money. McGrath has pleaded guilty to the huge fraud, agreeing to forfeit almost $15 million in assets, leaving a $125 million loss for the CUs.
Fannie has given the credit unions until Nov. 16 to accept the offer but so far only two have agreed. Fannie, which has rejected requests to give the mortgages back, has offered to settle with the credit unions for what would amount to less than 20% of the value of the mortgages. If those credit unions realize the 80% of losses it could push several of them into insolvency.
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So far, only two of the credit unions have accepted the offer, detailed in a letter to Fannie Mae's federal regulator from National Credit Union Administration chairman Deborah Matz, who expressed concern at the losses faced by affected credit unions.
"I appreciate Fannie Mae is also a victim of this crime," said Mrs. Matz in a letter to Edward DeMarco, acting director of the Federal Housing Finance Agency. "However, the financial impact of CU National's fraud on these member-owned cooperatives is significant. Indeed, for some of the credit unions, their losses will be so great as to force our agency to take drastic action under the prompt corrective action rules."
Both the credit unions and Fannie were victims of a massive fraud perpetrated by Michael McGrath, the president of U.S. Mortgage and its CU National subsidiary which sold $140 million of mortgages held on behalf of credit unions to the GSE without authorization and kept the money. McGrath has pleaded guilty to the huge fraud, agreeing to forfeit almost $15 million in assets, leaving a $125 million loss for the CUs.
Fannie has given the credit unions until Nov. 16 to accept the offer but so far only two have agreed. Fannie, which has rejected requests to give the mortgages back, has offered to settle with the credit unions for what would amount to less than 20% of the value of the mortgages. If those credit unions realize the 80% of losses it could push several of them into insolvency.
_______________________
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Tuesday, November 3, 2009
Mortgage Loan Compliance | Commercial Real Estate Workout Guidance
Federal regulators have issued guidance that encourages banks to refinance or restructure commercial real estate loans despite declines in property values and rents.
A policy statement issued by the Federal Financial Institutions Examination Council provides examples of prudent CRE workouts. It also stresses the importance of the borrower's willingness and capacity to repay the mortgage.
The guidance tells examiners not to adversely classify prudent workouts, even in cases where the borrower is associated with an industry that is facing financial difficulties.
"The financial regulators recognize that prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions," according to the policy statement.
CRE loans that are "renewed or restructured in accordance with prudent underwriting standards should not be adversely classified or criticized unless well-defined weaknesses exist that jeopardize repayment," the guidance says.
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A policy statement issued by the Federal Financial Institutions Examination Council provides examples of prudent CRE workouts. It also stresses the importance of the borrower's willingness and capacity to repay the mortgage.
The guidance tells examiners not to adversely classify prudent workouts, even in cases where the borrower is associated with an industry that is facing financial difficulties.
"The financial regulators recognize that prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions," according to the policy statement.
CRE loans that are "renewed or restructured in accordance with prudent underwriting standards should not be adversely classified or criticized unless well-defined weaknesses exist that jeopardize repayment," the guidance says.
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Mortgage Loan Compliance | RESPA Kickback Lawsuit Reinstated
A lawsuit alleging Countrywide Financial Corp. violated the Real Estate Settlement Procedures Act through a mortgage insurance captive reinsurance kickback scheme has been reinstated by a federal appeals court.
Edward W. Ciolko, a partner with Barroway Topaz Kessler Meltzer & Check, the law firm that brought the suit, said "Consumers faced with inherently opaque real estate settlements have the right under RESPA to be compensated if they are subjected to practices such as kickbacks or unearned closing fees. These abusive practices eliminate competition and increase prices over time, and they are what RESPA is specifically intended to address."
The suit, Alston v. Countrywide, was originally filed in December 2006. In 2008, a trial court judge dismissed the suit, ruling there was a lack of jurisdiction. But in a new ruling, Judge Maryanne Trump Barry of the U.S. Court of the Appeals for the Third Circuit, said "What is before us for decision turns on a question of statutory interpretation - does or does not the plain language of RESPA Section 8 indicate that Congress created a private right of action without requiring an overcharge allegation? We conclude that it does."
The decision also states that the "filed rate doctrine" does not apply because those suing are challenging Countrywide's alleged wrong conduct and not the "reasonableness or propriety of the rate that triggered the conduct."
According to the attorneys for the plaintiffs, who are seeking class action status, Countrywide allegedly assigned each loan which lacked a 20% down payment to one of seven private mortgage insurance companies on a rotating referral fee basis. The MI companies allegedly then were required to reinsure the policy with a Countrywide subsidiary, Balboa Reinsurance Co. The plaintiffs claim that between 2000 and 2006, Balboa collected $892 million in reinsurance premiums and paid $0 in claims.
Barroway Topaz said it has brought similar lawsuits against Washington Mutual, GMAC and Wells Fargo that were on hold pending this ruling. A representative of Bank of America, the current owners of Countrywide said "At this point we evaluating the ruling and will respond in court at the appropriate time."
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Edward W. Ciolko, a partner with Barroway Topaz Kessler Meltzer & Check, the law firm that brought the suit, said "Consumers faced with inherently opaque real estate settlements have the right under RESPA to be compensated if they are subjected to practices such as kickbacks or unearned closing fees. These abusive practices eliminate competition and increase prices over time, and they are what RESPA is specifically intended to address."
The suit, Alston v. Countrywide, was originally filed in December 2006. In 2008, a trial court judge dismissed the suit, ruling there was a lack of jurisdiction. But in a new ruling, Judge Maryanne Trump Barry of the U.S. Court of the Appeals for the Third Circuit, said "What is before us for decision turns on a question of statutory interpretation - does or does not the plain language of RESPA Section 8 indicate that Congress created a private right of action without requiring an overcharge allegation? We conclude that it does."
The decision also states that the "filed rate doctrine" does not apply because those suing are challenging Countrywide's alleged wrong conduct and not the "reasonableness or propriety of the rate that triggered the conduct."
According to the attorneys for the plaintiffs, who are seeking class action status, Countrywide allegedly assigned each loan which lacked a 20% down payment to one of seven private mortgage insurance companies on a rotating referral fee basis. The MI companies allegedly then were required to reinsure the policy with a Countrywide subsidiary, Balboa Reinsurance Co. The plaintiffs claim that between 2000 and 2006, Balboa collected $892 million in reinsurance premiums and paid $0 in claims.
Barroway Topaz said it has brought similar lawsuits against Washington Mutual, GMAC and Wells Fargo that were on hold pending this ruling. A representative of Bank of America, the current owners of Countrywide said "At this point we evaluating the ruling and will respond in court at the appropriate time."
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Tuesday, October 27, 2009
Mortgage Loan Compliance | Combating Loan Mod Fraud
Local, state and national government agencies, nonprofits and other financial institutions gathered in Los Angeles to enter into an alliance that aims to help homeowners protect themselves from loan modification fraud.
"As the foreclosure rate grows more and more homeowners are being deceived by scam artists who prey on their fears," said the COO of NeighborWorks, Eileen Fitzgerald. "Knowledge is the best defense, which is why the campaign equips homeowners with the tools they need to minimize their risk."
The "Loan Modification Scam Alert" campaign is the first of a number of other events that will be announced in major cities around the country. Partners include some of the country's largest organizations.
NeighborWorks will coordinate the efforts with partner organizations such as the Department of Housing and Urban Development, the Federal Trade Commission, the U.S. Department of Treasury, Fannie Mae, Freddie Mac, and the Lawyers' Committee for Civil Rights Under Law.
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"As the foreclosure rate grows more and more homeowners are being deceived by scam artists who prey on their fears," said the COO of NeighborWorks, Eileen Fitzgerald. "Knowledge is the best defense, which is why the campaign equips homeowners with the tools they need to minimize their risk."
The "Loan Modification Scam Alert" campaign is the first of a number of other events that will be announced in major cities around the country. Partners include some of the country's largest organizations.
NeighborWorks will coordinate the efforts with partner organizations such as the Department of Housing and Urban Development, the Federal Trade Commission, the U.S. Department of Treasury, Fannie Mae, Freddie Mac, and the Lawyers' Committee for Civil Rights Under Law.
_______________________
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Friday, October 23, 2009
Mortgage Loan Compliance | California Mortgage Defaults Trend Down
The number of default notices filed against California homeowners fell in the third quarter of 2009 compared with the prior three-month period, the result of lenders' evolving foreclosure policies and an uptick in the number of mortgages being renegotiated, according to San Diego-based MDA DataQuick, which monitors real estate activity nationwide.
A total of 111,689 default notices were sent out during the July-through-September period. That was down 10.3% from 124,562 for the second quarter, and up 18.5% from 94,240 in third quarter 2008.
"It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings. If so, it's not out of the goodness of their hearts. Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses," said John Walsh, DataQuick president.
The lenders that originated the most loans that went into default in the third quarter were Countrywide (7,583), Washington Mutual (5,146) and Wells Fargo (4,425). Along with Bank of America (1,979) and World Savings (4,237), they were also the most active lenders in the second half of 2006. The quarter's default rate on loans originated in the second half of 2006 ranged from 1.7% or Bank of America to 11.9% for World Savings.
Smaller subprime lenders had far higher default rates for the period: ResMAE Mortgage was at 73.9%, OwnIt Mortgage 69.5%, BNC Mortgage 61.4%, Argent Mortgage 59.9% and First Franklin 59.4%. While these and most other subprime lenders are long gone, their loans were bundled, resold and now live on as "troubled assets," Mr. Walsh said.
"There's a batch of truly nasty loans that were made in mid 2006. There's another batch made in late 2006. These are worse than the mortgages before and after, and it's taking a long time to process them."
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A total of 111,689 default notices were sent out during the July-through-September period. That was down 10.3% from 124,562 for the second quarter, and up 18.5% from 94,240 in third quarter 2008.
"It may well be that lenders have intentionally slowed down the pace of formal foreclosure proceedings. If so, it's not out of the goodness of their hearts. Trying to keep motivated, employed homeowners in their homes might be the most cost-efficient way to stem losses," said John Walsh, DataQuick president.
The lenders that originated the most loans that went into default in the third quarter were Countrywide (7,583), Washington Mutual (5,146) and Wells Fargo (4,425). Along with Bank of America (1,979) and World Savings (4,237), they were also the most active lenders in the second half of 2006. The quarter's default rate on loans originated in the second half of 2006 ranged from 1.7% or Bank of America to 11.9% for World Savings.
Smaller subprime lenders had far higher default rates for the period: ResMAE Mortgage was at 73.9%, OwnIt Mortgage 69.5%, BNC Mortgage 61.4%, Argent Mortgage 59.9% and First Franklin 59.4%. While these and most other subprime lenders are long gone, their loans were bundled, resold and now live on as "troubled assets," Mr. Walsh said.
"There's a batch of truly nasty loans that were made in mid 2006. There's another batch made in late 2006. These are worse than the mortgages before and after, and it's taking a long time to process them."
_______________________
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Wednesday, October 21, 2009
Mortgage Loan Compliance | HUD Seek Courts Help To Stop FHA Fraud
In a joint statement from the U.S. Attorney for the Eastern District of New York, and the HUD Inspector General's office, the government says Lend America "falsely certified" that borrowers met FHA underwriting requirements. Using the civil courts, the government is seeking injunctive relief from both the company and its chief business strategist Michael Ashley.
Lend America issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed."
The U.S. Attorney and Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product.
Lend America services about $850 million in GNMA-backed products and currently ranks 18th nationwide in GNMA MBS issuance. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.
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Lend America issued a statement saying it was taken by surprise by the complaint and expects to continue doing business. It added that it plans to "respond more completely once all allegations are reviewed."
The U.S. Attorney and Department of Housing and Urban Development are seeking a court injunction to ban Lend America, Melville, N.Y., from originating FHA loans, accusing the nonbank lender with fraud in regard to $14 million in product.
Lend America services about $850 million in GNMA-backed products and currently ranks 18th nationwide in GNMA MBS issuance. Lend America recently stepped up plans for expansion into correspondent mortgage banking and wholesale that included FHA production.
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Monday, October 19, 2009
Mortgage Loan Compliance | Suspicious Activity Highest In Los Angeles
From Jan. 1, 2009 to June 30, 2009 filers submitted 32,926 mortgage loan fraud Suspicious Activity Reports (SARs), less than a 1% increase over the 32,660 SARs filed in the same period in 2008.
The Los Angeles and Miami areas saw the most reported fraud for the first half of 2009, according to the Financial Crimes Enforcement Network's updated Suspicious Activity Report Activity Review.
According to FinCen's updated SAR report, Los Angeles and Miami each saw 6,300 SAR subjects. Following these, the urban areas with the largest number of mortgage fraud SAR subjects were New York with 4,500, Chicago with 3,200 and the District of Columbia with 2,200.
Ranked by total reported subjects, the top 10 states included California, Florida, New York, Illinois, Georgia, Texas, Arizona, Michigan, Virginia and New Jersey.
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The Los Angeles and Miami areas saw the most reported fraud for the first half of 2009, according to the Financial Crimes Enforcement Network's updated Suspicious Activity Report Activity Review.
According to FinCen's updated SAR report, Los Angeles and Miami each saw 6,300 SAR subjects. Following these, the urban areas with the largest number of mortgage fraud SAR subjects were New York with 4,500, Chicago with 3,200 and the District of Columbia with 2,200.
Ranked by total reported subjects, the top 10 states included California, Florida, New York, Illinois, Georgia, Texas, Arizona, Michigan, Virginia and New Jersey.
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Wednesday, October 14, 2009
Mortgage Loan Compliance | A Not So New Modification Program
The Obama administration is set to announce a new program to help troubled borrowers whose mortgages are deemed ineligible for modification.
"Maybe this week but certainly next week," said Laurie Maggiano of the Treasury Department's Office of Homeownership Preservation. Speaking at the Mortgage Bankers Association's annual convention, Ms. Maggiano said Treasury would set out the parameters under which servicers can earn financial incentives if they offer borrowers the option of participating in a short sale and deed in lieu of foreclosure.
"We are hoping to set an industry standard so investors will know exactly what they can expect," she said. "There's really no magic. We haven't reinvented the wheel," Ms. Maggiano told industry executives in San Diego. To cut down on the paperwork, the program will provide a standardized set of forms.
The program will also cap the amount of money that can be paid to subordinate lien holders who agree to waive their interest in a property. The government expects that some second mortgage investors will "walk away" from the program because the compensation being offered will be too little. But Ms. Maggiano, who is director of policy in the preservation office, told a standing room only session that by setting a limit, the White House is hoping to eliminate time consuming back-and-forth negotiations between servicers, borrowers and investors.
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"Maybe this week but certainly next week," said Laurie Maggiano of the Treasury Department's Office of Homeownership Preservation. Speaking at the Mortgage Bankers Association's annual convention, Ms. Maggiano said Treasury would set out the parameters under which servicers can earn financial incentives if they offer borrowers the option of participating in a short sale and deed in lieu of foreclosure.
"We are hoping to set an industry standard so investors will know exactly what they can expect," she said. "There's really no magic. We haven't reinvented the wheel," Ms. Maggiano told industry executives in San Diego. To cut down on the paperwork, the program will provide a standardized set of forms.
The program will also cap the amount of money that can be paid to subordinate lien holders who agree to waive their interest in a property. The government expects that some second mortgage investors will "walk away" from the program because the compensation being offered will be too little. But Ms. Maggiano, who is director of policy in the preservation office, told a standing room only session that by setting a limit, the White House is hoping to eliminate time consuming back-and-forth negotiations between servicers, borrowers and investors.
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Tuesday, October 13, 2009
Mortgage Loan Compliance | Is Obama’s Mod Plan Outdated?
The Treasury Department's "own projections" show that "fewer than half of the projected foreclosures" will be prevented by the Home Affordable Modification Program, a new Congressional Oversight Panel report says.
Residential servicers using the Obama administration's loan modification program are ramping up to modify 25,000 to 30,000 a week, but it will not be enough to keep pace with rising foreclosures, according to the Congressional Oversight Panel, which watches over the Troubled Asset Relief Program.
The oversight panel also warns that HAMP is not designed to address defaults associated with negative equity and the coming wave of resets on interest-only and payment-option mortgages. The authors note that negative equity has become a drag on self cure rates.
Historically, "nearly half of all prime defaults would cure on their own," but now it is only 6.6%. The COP also cites research showing that 77% of payment option ARMs are underwater and 25% are seriously delinquent or in foreclosure. "It increasingly appears that HAMP is targeted at the housing crisis that existed six months ago, rather than as it exists right now," the report says.
The Interest Only and Pay Option Arms resets will last through 2012.
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Residential servicers using the Obama administration's loan modification program are ramping up to modify 25,000 to 30,000 a week, but it will not be enough to keep pace with rising foreclosures, according to the Congressional Oversight Panel, which watches over the Troubled Asset Relief Program.
The oversight panel also warns that HAMP is not designed to address defaults associated with negative equity and the coming wave of resets on interest-only and payment-option mortgages. The authors note that negative equity has become a drag on self cure rates.
Historically, "nearly half of all prime defaults would cure on their own," but now it is only 6.6%. The COP also cites research showing that 77% of payment option ARMs are underwater and 25% are seriously delinquent or in foreclosure. "It increasingly appears that HAMP is targeted at the housing crisis that existed six months ago, rather than as it exists right now," the report says.
The Interest Only and Pay Option Arms resets will last through 2012.
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Sunday, October 11, 2009
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Friday, October 9, 2009
Mortgage Loan Compliance | HUD’s RESPA Rule Implementation
"We are absolutely moving forward on RESPA," HUD assistant secretary David Stevens told MortgageWire. "Jan. 1 is the implementation date."
The Department of Housing and Urban Department is going ahead with the implementation of a RESPA disclosure rule despite pleas by some industry groups to delay the effective date, according to a top HUD official.
Some industry groups are complaining that the new Real Estate Settlement Procedures Act rule is complex and HUD is still providing guidance on implementation issues. The RESPA rule requires lenders and mortgage brokers to disclose their fees upfront on a standardized good faith estimate. The originator's fees cannot be increased before closing. The layout of the GFE and the revised HUD-1 settlement sheet also provides a clearer disclosure of the closing costs and how much the consumer will pay.
"I think the new disclosures are going to have a very positive impact on consumers," Mr. Stevens said.
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The Department of Housing and Urban Department is going ahead with the implementation of a RESPA disclosure rule despite pleas by some industry groups to delay the effective date, according to a top HUD official.
Some industry groups are complaining that the new Real Estate Settlement Procedures Act rule is complex and HUD is still providing guidance on implementation issues. The RESPA rule requires lenders and mortgage brokers to disclose their fees upfront on a standardized good faith estimate. The originator's fees cannot be increased before closing. The layout of the GFE and the revised HUD-1 settlement sheet also provides a clearer disclosure of the closing costs and how much the consumer will pay.
"I think the new disclosures are going to have a very positive impact on consumers," Mr. Stevens said.
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Thursday, October 8, 2009
Mortgage Loan Compliance | Apartment Vacancies At Highest Levels
Apartment vacancies recently hit their highest level since 1986, surging in cities across the nation, according to research conducted by Reis Inc., New York.
Reis said some markets were still chugging along last year but the surge in unemployment has dampened the sector's outlook.
The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis which tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its analysis in 1980.
Weak apartment rentals could spell trouble for multifamily owners that need to refinance or sell their properties in the year ahead.
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Reis said some markets were still chugging along last year but the surge in unemployment has dampened the sector's outlook.
The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis which tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its analysis in 1980.
Weak apartment rentals could spell trouble for multifamily owners that need to refinance or sell their properties in the year ahead.
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Wednesday, October 7, 2009
Mortgage Loan Compliance | Anti-Predatory Laws and Foreclosure
A new UNC Center for Community Capital study found that national banks that did not comply with tough state laws due to federal preemption made riskier loans than the state-regulated lenders.
States that adopted tough anti-predatory lending laws have lower foreclosure rates than states that did not, according to University of North Carolina researchers.
"It appears that state laws did a better job of ensuring home loan quality than federal regulation, but their impact was diminished by preemption after 2004," said Robert Quercia, director of the UNC research center.
After the Comptroller of the Currency invoked preemption, subprime lending by national banks increased in those states with strict predatory lending laws and their share of the subprime market jumped from 9% to 20% by 2007, according to the UNC Center study.
North Carolina was one of the first states to enact a predatory lending law and it became a model for other states.
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States that adopted tough anti-predatory lending laws have lower foreclosure rates than states that did not, according to University of North Carolina researchers.
"It appears that state laws did a better job of ensuring home loan quality than federal regulation, but their impact was diminished by preemption after 2004," said Robert Quercia, director of the UNC research center.
After the Comptroller of the Currency invoked preemption, subprime lending by national banks increased in those states with strict predatory lending laws and their share of the subprime market jumped from 9% to 20% by 2007, according to the UNC Center study.
North Carolina was one of the first states to enact a predatory lending law and it became a model for other states.
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Tuesday, October 6, 2009
Mortgage Loan Compliance | $1.2 Trillion and Counting…
The combined Treasury and Federal Reserve investment in the U.S. mortgage market was above the $1.2 trillion level when the government's fiscal year ended earlier this week, according to the latest figures from the Federal Housing Finance Agency. But even at that, some $768 billion in liquidity is still available if needed, FHFA Acting Director Edward DeMarco said at the New England Mortgage Bankers Conference in Providence.
"This considerable backstop" has allowed enterprises to play a "critical role in bringing some measure of liquidity to the mortgage market," Mr. DeMarco told the conference. In particular, the government support has assured lenders that they will have an outlet for loan originations and kept mortgage rates at or around the 5% level.
As of Sept. 30, Fannie Mae and Freddie Mac had drawn $96 billion under the Treasury Department's $400 billion senior preferred stock purchase agreement.
Treasury also has purchased $181 billion of the enterprise's mortgage-backed securities. In addition to DoT's support, the Fed has purchased $885 billion worth of MBS securities, $813 billion of which was issued by Fannie and Freddie.
The Fed also has bought $131 billion in Fannie, Freddie and Federal Home Loan Bank debt obligations out of the $200 billion for which it is committed.
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"This considerable backstop" has allowed enterprises to play a "critical role in bringing some measure of liquidity to the mortgage market," Mr. DeMarco told the conference. In particular, the government support has assured lenders that they will have an outlet for loan originations and kept mortgage rates at or around the 5% level.
As of Sept. 30, Fannie Mae and Freddie Mac had drawn $96 billion under the Treasury Department's $400 billion senior preferred stock purchase agreement.
Treasury also has purchased $181 billion of the enterprise's mortgage-backed securities. In addition to DoT's support, the Fed has purchased $885 billion worth of MBS securities, $813 billion of which was issued by Fannie and Freddie.
The Fed also has bought $131 billion in Fannie, Freddie and Federal Home Loan Bank debt obligations out of the $200 billion for which it is committed.
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Monday, October 5, 2009
Mortgage Loan Compliance | Larger Down-payments for FHA
Republican congressmen, such as Ed Royce Rep-California, are becoming more concerned about the Federal Housing Administration's financial plight and they want to increase FHA's down-payment requirement to 5%.
"There are increasing reports of the likely necessity of a taxpayer bailout for the FHA and this legislation aims to implement reforms to try to prevent such a bailout from occurring," Rep. Scott Garrett, R-N.J., said at a House Financial Services Committee hearing.
The Garrett bill also calls for a General Accountability Office study to determine the appropriate leverage ratio for FHA. In the early 1990s, Congress mandated that FHA maintain a minimum 2% capital ratio. A recent audit shows that the federal mortgage insurance fund has fallen below the 2% minimum. But FHA officials say the insurance fund should be able to maintain a positive capital position and FHA will not need taxpayer assistance.
Royce said FHA is operating at the same dangerous leverage ratios that led to the takeover of Fannie Mae and Freddie Mac. Garrett said he has drafted a bill that would increase the FHA down-payment requirement to 5% from the current 3.5% level.
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"There are increasing reports of the likely necessity of a taxpayer bailout for the FHA and this legislation aims to implement reforms to try to prevent such a bailout from occurring," Rep. Scott Garrett, R-N.J., said at a House Financial Services Committee hearing.
The Garrett bill also calls for a General Accountability Office study to determine the appropriate leverage ratio for FHA. In the early 1990s, Congress mandated that FHA maintain a minimum 2% capital ratio. A recent audit shows that the federal mortgage insurance fund has fallen below the 2% minimum. But FHA officials say the insurance fund should be able to maintain a positive capital position and FHA will not need taxpayer assistance.
Royce said FHA is operating at the same dangerous leverage ratios that led to the takeover of Fannie Mae and Freddie Mac. Garrett said he has drafted a bill that would increase the FHA down-payment requirement to 5% from the current 3.5% level.
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Tuesday, September 29, 2009
Mortgage Loan Compliance | NAR’s Call for Change in HOEPA Laws
The Home Owners and Equity Protection Act regulation that goes onto effect this Thursday (October 1) "would prevent lenders from making higher-priced FHA loans," NAR says in a letter to the Fed.
Now the National Association of Realtors is urging the Federal Reserve Board to delay implementation of a HOEPA provision that could place higher-priced Federal Housing Administration loans in violation of new restrictions on prepayment penalties.
The American Bankers Association, Mortgage Bankers Association and Consumer Mortgage Coalition have asked the Fed to drop its treatment of post-payoff interest as a prepayment penalty.
"We are requesting this delay to give the Board, the Federal Housing Administration and Ginnie Mae an opportunity to correct the unintended consequences of the intersection" between the new HOEPA rule and Ginnie Mae's payoff requirements, NAR president Charles McMillan said.
Ginnie Mae requires that all interest on a mortgage must be paid for the full month. If an FHA loan is prepaid on October 9, for instance, the borrower has to pay interest for the rest of the month. The Fed views this extra interest as a prepayment penalty.
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Now the National Association of Realtors is urging the Federal Reserve Board to delay implementation of a HOEPA provision that could place higher-priced Federal Housing Administration loans in violation of new restrictions on prepayment penalties.
The American Bankers Association, Mortgage Bankers Association and Consumer Mortgage Coalition have asked the Fed to drop its treatment of post-payoff interest as a prepayment penalty.
"We are requesting this delay to give the Board, the Federal Housing Administration and Ginnie Mae an opportunity to correct the unintended consequences of the intersection" between the new HOEPA rule and Ginnie Mae's payoff requirements, NAR president Charles McMillan said.
Ginnie Mae requires that all interest on a mortgage must be paid for the full month. If an FHA loan is prepaid on October 9, for instance, the borrower has to pay interest for the rest of the month. The Fed views this extra interest as a prepayment penalty.
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Saturday, September 26, 2009
Mortgage Loan Compliance | Foreclosure Rescue Fraud
According to Rod J. Rosenstein, U.S. Attorney for the District of Maryland, Michael K. Lewis aired TV ads claiming he could help homeowners facing foreclosure improve their credit, save their homes from foreclosure and assist them with bankruptcy.
U.S. District Judge Deborah K. Chasanow in Maryland sentenced the two final conspirators of the fraud scheme led by Michael K. Lewis that targeted financially vulnerable homeowners facing foreclosure through local television ads.
Winston Thomas of New Carrollton, Md., was sentenced to 37 months in prison, followed by three years of supervised release.
Cheryl Brooke of Upper Marlboro, Md., was sentenced to 46 months in prison, followed by three years of supervised release.
Lewis along with Thomas, a loan officer, told the homeowners that the credit of Michael's brother Earnest Lewis would be used to refinance their homes if they temporarily signed their homes over to Earnest. They could remain in their homes by paying inflated "rent" and fees, which were directly debited from their bank accounts to an account Cheryl Brooke controlled.
The Lewis brothers and Thomas lied about the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buyback program worked, it is alleged.
Thomas also allegedly submitted false financial and employment information to mortgage lenders. After financing was obtained, Brooke filed motions to dismiss the homeowners' bankruptcy cases so that the settlements could take place.
Michael K. Lewis and Earnest Lewis were previously sentenced to 78 months and 54 months in prison, respectively.
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U.S. District Judge Deborah K. Chasanow in Maryland sentenced the two final conspirators of the fraud scheme led by Michael K. Lewis that targeted financially vulnerable homeowners facing foreclosure through local television ads.
Winston Thomas of New Carrollton, Md., was sentenced to 37 months in prison, followed by three years of supervised release.
Cheryl Brooke of Upper Marlboro, Md., was sentenced to 46 months in prison, followed by three years of supervised release.
Lewis along with Thomas, a loan officer, told the homeowners that the credit of Michael's brother Earnest Lewis would be used to refinance their homes if they temporarily signed their homes over to Earnest. They could remain in their homes by paying inflated "rent" and fees, which were directly debited from their bank accounts to an account Cheryl Brooke controlled.
The Lewis brothers and Thomas lied about the amount of money that the homeowners would receive at settlement, what would be done with any equity in the homes and the need to file for bankruptcy protection and failed to inform the homeowners of the particulars of how the lease/buyback program worked, it is alleged.
Thomas also allegedly submitted false financial and employment information to mortgage lenders. After financing was obtained, Brooke filed motions to dismiss the homeowners' bankruptcy cases so that the settlements could take place.
Michael K. Lewis and Earnest Lewis were previously sentenced to 78 months and 54 months in prison, respectively.
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Friday, September 25, 2009
Mortgage Loan Compliance | Loan Modification Ratings
"Homeowners are not receiving responses from banks as fast as they would like," said Treasury Assistant Secretary Herbert Allison. "To provide additional impetus for them to improve their service quality," Mr. Allison said Treasury would publish reports soon on the service quality of each bank.
Meanwhile, Treasury and the servicers are working on streamlining the documentation that homeowners have to provide servicers to qualify for a modification.
Mr. Allison noted that Treasury and other administration officials would be meeting the servicers in early October to discuss documentation and other efforts to improve the Home Affordable Modification Program.
The Treasury official also told the Senate Banking Committee that the first public-private investment partnership transaction would close at the end of this month. Mr. Allison did not provide any specifics, except to say that it involves that sale of non-agency residential and commercial MBS.
Mortgage servicers participating in the Obama Administration's loan modification program will soon be ranked on their response times and other indicators of service quality. Allison told a Senate panel that servicers have placed homeowners into nearly 400,000 trial modifications. However, Treasury, like members of Congress, continues to receive complaints about servicers.
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Meanwhile, Treasury and the servicers are working on streamlining the documentation that homeowners have to provide servicers to qualify for a modification.
Mr. Allison noted that Treasury and other administration officials would be meeting the servicers in early October to discuss documentation and other efforts to improve the Home Affordable Modification Program.
The Treasury official also told the Senate Banking Committee that the first public-private investment partnership transaction would close at the end of this month. Mr. Allison did not provide any specifics, except to say that it involves that sale of non-agency residential and commercial MBS.
Mortgage servicers participating in the Obama Administration's loan modification program will soon be ranked on their response times and other indicators of service quality. Allison told a Senate panel that servicers have placed homeowners into nearly 400,000 trial modifications. However, Treasury, like members of Congress, continues to receive complaints about servicers.
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Thursday, September 24, 2009
Mortgage Loan Compliance | Nationwide HELOC Scam
Yomi Jagunna, a New Jersey man responsible for digging up Social Security numbers and other personal data that was used to siphon millions of dollars from phony HELOC accounts at dozens of banks and credit unions has been sentenced to almost 11 years in prison.
Among the financial institutions harmed were Bank of America, JPMorgan Chase, Wachovia - now part of Wells Fargo, Navy Federal Credit Union in Virginia, and others.
Part of the scam involved using sophisticated dodges to circumvent the institutions' attempts to verify the wire transfers with telephone calls. In some cases, they convinced phone company employees to reroute their victims' calls. When the credit union or bank called the victim's home number, one of the suspects' cell phones rang, authorities said.
Jagunna, a Nigerian immigrant, is one of 17 individuals charged in the nationwide HELOC scheme that fooled credit union and bank employees into transferring funds to accounts in at least seven countries, authorities said. Jagunna pleaded guilty to selling Social Security numbers for $30 apiece to a group that may have siphoned as much as $5 million from financial institutions.
Jagunna, who set up the sham collection agency to gain access to Social Security numbers, was also ordered to pay $3.2 million in restitution.
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Among the financial institutions harmed were Bank of America, JPMorgan Chase, Wachovia - now part of Wells Fargo, Navy Federal Credit Union in Virginia, and others.
Part of the scam involved using sophisticated dodges to circumvent the institutions' attempts to verify the wire transfers with telephone calls. In some cases, they convinced phone company employees to reroute their victims' calls. When the credit union or bank called the victim's home number, one of the suspects' cell phones rang, authorities said.
Jagunna, a Nigerian immigrant, is one of 17 individuals charged in the nationwide HELOC scheme that fooled credit union and bank employees into transferring funds to accounts in at least seven countries, authorities said. Jagunna pleaded guilty to selling Social Security numbers for $30 apiece to a group that may have siphoned as much as $5 million from financial institutions.
Jagunna, who set up the sham collection agency to gain access to Social Security numbers, was also ordered to pay $3.2 million in restitution.
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Wednesday, September 23, 2009
Mortgage Loan Compliance | Prime, Subprime, Non-Prime
The definitions of “sub-prime” continue to vary from one source to the next, or, in some cases, from one state to the next. A bill that takes effect Oct. 1, 2009 in Connecticut defines a “nonprime home loan” as any loan or extended line of credit for the primary use personal family or household purposes.
The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009.
The delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report. The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March. Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report.
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The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009.
The delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime.
In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report. The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March. Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report.
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Mortgage Loan Compliance | Mortgage Fraud and Stolen Identity
According to Michael J. Garcia, U.S. Attorney for the Southern District of New York, Mr. Bernard B. Kerik, former New York City police commissioner and commissioner of the New York City Department of Corrections, allegedly borrowed part of his down-payment from a Manhattan Realtor, but falsely denied that he had done so to the bank that extended him the mortgage loan for his purchase of a apartment.
Kerik has been charged with making false statements on a loan application in connection with purchase of the apartment in Riverdale, N.Y.
In St Louis a man has been sentenced for filing for Chapter 13 bankruptcy using a false Social Security number. According to Michael W. Reap, U.S. attorney for the Eastern District of Missouri, between August and October 2005, Shawn Cannon, knowing he would be unable to qualify for a loan to purchase a home using his true identity, used fraudulent information, including a false Social Security number and false payroll information, to obtain a loan from Pulaski Bank to purchase a personal residence in Florissant, Missouri, for approximately $300,000.
Cannon failed to make required payments. In December 2008, Cannon filed a Chapter 13 bankruptcy petition in U.S. Bankruptcy Court, again using the false Social Security number.
After pleading guilty in June to charges connected to a scheme to use a stolen identity to buy a home, Cannon was sentenced to 60 months in prison.
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Kerik has been charged with making false statements on a loan application in connection with purchase of the apartment in Riverdale, N.Y.
In St Louis a man has been sentenced for filing for Chapter 13 bankruptcy using a false Social Security number. According to Michael W. Reap, U.S. attorney for the Eastern District of Missouri, between August and October 2005, Shawn Cannon, knowing he would be unable to qualify for a loan to purchase a home using his true identity, used fraudulent information, including a false Social Security number and false payroll information, to obtain a loan from Pulaski Bank to purchase a personal residence in Florissant, Missouri, for approximately $300,000.
Cannon failed to make required payments. In December 2008, Cannon filed a Chapter 13 bankruptcy petition in U.S. Bankruptcy Court, again using the false Social Security number.
After pleading guilty in June to charges connected to a scheme to use a stolen identity to buy a home, Cannon was sentenced to 60 months in prison.
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Tuesday, September 22, 2009
Mortgage Loan Compliance | Loan Modification Firms Sued by FTC
As loan modifications become more difficult to obtain some firms are turning to the dark side to get your money. Last week the Federal Trade Commission filed complaints against two loan modification companies for allegedly making false claims that they could obtain a mortgage modification in virtually all cases.
One complaint, filed in the U.S. District Court for the Central District of California's Southern Division, charges Infinity Group Services and its president, Kahram Zamani, with violating the FTC Act by falsely representing that they would obtain a loan modification in all instances and would allegedly obtain loan refinancing for an up-front fee.
The other complaint, filed in the U.S. District Court for the District of Columbia, charges Nations Housing Modification Center and its principals, Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg, with violating the FTC Act and the FTC's Telemarketing Sales Rule by allegedly misrepresenting themselves as a government agency and falsely claiming to obtain mortgage modifications for consumers. The FTC alleges that very few homeowners got modifications and the defendants accepted advance fees for their services.
The Federal Trade Commission alleges that Infinity Group Services often failed to obtain loan modifications and either failed to answer or return consumers' telephone calls or update them about their status.
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One complaint, filed in the U.S. District Court for the Central District of California's Southern Division, charges Infinity Group Services and its president, Kahram Zamani, with violating the FTC Act by falsely representing that they would obtain a loan modification in all instances and would allegedly obtain loan refinancing for an up-front fee.
The other complaint, filed in the U.S. District Court for the District of Columbia, charges Nations Housing Modification Center and its principals, Michael A. Trap, Glenn S. Rosofsky, and Bryan P. Rosenberg, with violating the FTC Act and the FTC's Telemarketing Sales Rule by allegedly misrepresenting themselves as a government agency and falsely claiming to obtain mortgage modifications for consumers. The FTC alleges that very few homeowners got modifications and the defendants accepted advance fees for their services.
The Federal Trade Commission alleges that Infinity Group Services often failed to obtain loan modifications and either failed to answer or return consumers' telephone calls or update them about their status.
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Tuesday, September 15, 2009
Mortgage Loan Compliance | New Consumer Protection Agency Bill
Many financial services groups and the U.S. Chamber of Commerce have lined up against the creation of a new agency that would write and enforce the rules for mortgage and other forms of consumer lending. But House Financial Services Committee Chairman Barney Frank, D-Mass., is trying to get small depositories on his side as his committee prepares to mark up a Consumer Financial Protection Agency bill on Sept. 23.
Frank said he is working with small banks and credit unions to craft a bill that will create a new consumer protection agency. "We are working with them on legitimate concerns and I am confident we will get a tough enforcement agency to protect consumers," Rep. Frank said in an interview with Bloomberg News.
"The better answer to consumer protection is to amend the charters of the existing prudential regulators, giving consumer protection parity with safety and soundness regulation," Roundtable president and chief executive Steve Bartlett said.
The Financial Services Roundtable opposes the idea of stripping the federal bank regulators of their consumer protection functions and giving the CFPA enforcement and rulemaking authority over national banks.
The Independent Community Bankers of America has been talking with Rep. Frank. "We have offered our ideas. We will have to see how far he goes," said ICBA's top lobbyist Steve Verdier.
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Frank said he is working with small banks and credit unions to craft a bill that will create a new consumer protection agency. "We are working with them on legitimate concerns and I am confident we will get a tough enforcement agency to protect consumers," Rep. Frank said in an interview with Bloomberg News.
"The better answer to consumer protection is to amend the charters of the existing prudential regulators, giving consumer protection parity with safety and soundness regulation," Roundtable president and chief executive Steve Bartlett said.
The Financial Services Roundtable opposes the idea of stripping the federal bank regulators of their consumer protection functions and giving the CFPA enforcement and rulemaking authority over national banks.
The Independent Community Bankers of America has been talking with Rep. Frank. "We have offered our ideas. We will have to see how far he goes," said ICBA's top lobbyist Steve Verdier.
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Mortgage Loan Compliance | Foreclosure Specialist Gets 30 Years Fixed
According to John E. Murphy, acting U.S. Attorney for the Western District of Texas, Rosario Divins was convicted in June of seven counts each of criminal contempt and mail fraud. The jury found that since January 2000, Divins engaged in a fraudulent foreclosure prevention scheme.
Divins continued to implement her scheme despite three separate sanctions from the U.S. Bankruptcy Court for the Western District of Texas ordering her to stop misrepresenting herself and making false promises to her clients.
In addition to the prison term, U.S. District Judge Fred Biery ordered that Divins pay $83,600 restitution to her victims.
Rosario Divins, a self-proclaimed foreclosure prevention specialist from San Antonio, was sentenced to 350 months in federal prison, followed by three years of supervised release, for criminal contempt and mail fraud.
Testimony during the three-day trial revealed that Divins collected more than $80,000 in cash from individuals in desperate financial situations who responded to her mail-out offering to stop their residential foreclosures.
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Divins continued to implement her scheme despite three separate sanctions from the U.S. Bankruptcy Court for the Western District of Texas ordering her to stop misrepresenting herself and making false promises to her clients.
In addition to the prison term, U.S. District Judge Fred Biery ordered that Divins pay $83,600 restitution to her victims.
Rosario Divins, a self-proclaimed foreclosure prevention specialist from San Antonio, was sentenced to 350 months in federal prison, followed by three years of supervised release, for criminal contempt and mail fraud.
Testimony during the three-day trial revealed that Divins collected more than $80,000 in cash from individuals in desperate financial situations who responded to her mail-out offering to stop their residential foreclosures.
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Monday, September 14, 2009
Mortgage Loan Compliance | 103 and Counting
As of September 11th this year's running tally of failed banks now stands at 103, including banks and credit unions that have been closed, acquired or placed into conservatorship.
Corus Bank, a $7 billion Chicago-based institution, was one of three banks closed by federal regulators on Sept. 11. Venture Bank of Lacy, WA. and Brickwell Community Bank of Woodbury, MN. were also closed and acquired by other institutions.
In June 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion.
Corus Bank, National Association, Chicago, Illinois, was closed by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A. to assume all of the deposits of Corus Bank, N.A.
Depositors of Corus Bank will automatically become depositors of MB Financial Bank.
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Corus Bank, a $7 billion Chicago-based institution, was one of three banks closed by federal regulators on Sept. 11. Venture Bank of Lacy, WA. and Brickwell Community Bank of Woodbury, MN. were also closed and acquired by other institutions.
In June 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion.
Corus Bank, National Association, Chicago, Illinois, was closed by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC entered into a purchase and assumption agreement with MB Financial Bank, N.A. to assume all of the deposits of Corus Bank, N.A.
Depositors of Corus Bank will automatically become depositors of MB Financial Bank.
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Mortgage Loan Compliance | Commercial Delinquencies Still Rising
Between the first and second quarters, the 30-plus day delinquency rate on loans held in commercial mortgage-backed securities rose 2.04 percentage points to 3.89%.
Delinquency rates are continuing to increase for all commercial/multifamily mortgage investor groups, according to the most recent Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association.
The 60-plus day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.15%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51%.
“The economic recession drove the latest surge in commercial and multifamily delinquency rates during the second quarter,” said Jamie Woodwell, Mortgage Bankers Association's vice president of commercial real estate research.
The 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.64 percentage points to 2.92%.
"Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties. That in turn has led to increased stress on the loans those properties support," Mr. Woodwell added.
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Delinquency rates are continuing to increase for all commercial/multifamily mortgage investor groups, according to the most recent Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association.
The 60-plus day delinquency rate on loans held in life company portfolios rose 0.03 percentage points to 0.15%. The 60-plus day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.17 percentage points to 0.51%.
“The economic recession drove the latest surge in commercial and multifamily delinquency rates during the second quarter,” said Jamie Woodwell, Mortgage Bankers Association's vice president of commercial real estate research.
The 90-plus day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.02 percentage points to 0.11%. The 90-plus day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.64 percentage points to 2.92%.
"Lower levels of employment, the pullback by consumers and other aspects of the slowdown translated into a difficult operating environment for many income-producing properties. That in turn has led to increased stress on the loans those properties support," Mr. Woodwell added.
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Saturday, September 12, 2009
Mortgage Loan Compliance | FDIC and the Little Guy
The Federal Deposit Insurance Corp. provides loss-sharing protection to banks and other acquirers of failed depositories so they will acquire and manage troubled assets. These acquirers also agree to follow a FDIC loan modification program for struggling borrowers.
Now the FDIC wants homeowners who lose their job to get immediate relief. "This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila Bair.
"With more Americans suffering through unemployment or cuts in the paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," Bair said.
FDIC is "encouraging" its loss-sharing partners to temporarily reduce mortgage payments for at least six months when borrowers lose their jobs.
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Now the FDIC wants homeowners who lose their job to get immediate relief. "This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila Bair.
"With more Americans suffering through unemployment or cuts in the paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," Bair said.
FDIC is "encouraging" its loss-sharing partners to temporarily reduce mortgage payments for at least six months when borrowers lose their jobs.
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Friday, September 11, 2009
Mortgage Loan Compliance | Investor Fraud
According to John J. Tuchi, interim U.S. attorney for the District of Arizona, participants in a real estate scheme recruited unqualified straw borrowers, submitted fraudulent loan applications on their behalf, obtained mortgage loans in excess of the selling price and then took the excess amount of the loans out through escrow.
Mario Bernadel, a real estate investor from Phoenix, has been convicted of running a mortgage fraud scheme involving at least 32 residential properties in the greater Phoenix area. Bernadel is the 20th defendant to date who has been convicted. U.S. District Judge Stephen M. McNamee set sentencing for late November.
Bernadel recruited and trained mortgage brokers, straw buyers and an escrow officer in the scheme and, following the funding of the loans, received cash back. Seven other co-conspirators were also charged and have pleaded guilty and await sentencing.
The homes purchased through the scheme have been foreclosed or sold at a loss. The scheme resulted in $20 million in loans obtained by fraud and a loss of more than $2 million.
Bernadel's conviction is part of "Operation Cash Back," in which 40 defendants were indicted and arrested.
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Mario Bernadel, a real estate investor from Phoenix, has been convicted of running a mortgage fraud scheme involving at least 32 residential properties in the greater Phoenix area. Bernadel is the 20th defendant to date who has been convicted. U.S. District Judge Stephen M. McNamee set sentencing for late November.
Bernadel recruited and trained mortgage brokers, straw buyers and an escrow officer in the scheme and, following the funding of the loans, received cash back. Seven other co-conspirators were also charged and have pleaded guilty and await sentencing.
The homes purchased through the scheme have been foreclosed or sold at a loss. The scheme resulted in $20 million in loans obtained by fraud and a loss of more than $2 million.
Bernadel's conviction is part of "Operation Cash Back," in which 40 defendants were indicted and arrested.
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Mortgage Loan Compliance | Former Bank CEO Found Dead
Finn Casperson, former Chief Executive Officer of Beneficial Finance, has been found dead in what authorities say is an apparent suicide.
Beneficial Finance was once one of the largest players in consumer home equity-based lending. When Finn Casperson became CEO of the firm he succeeded his father.
Casperson served as CEO from 1976 to 1998, during a time when the firm specialized in low loan-to-value ratio second liens backed by homes.
Later in 1998 Beneficial was sold to Household International for $9 billion. HSBC Holdings eventually bought Household for $14 billion. The British bank later booked huge losses on Household's subprime business.
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Beneficial Finance was once one of the largest players in consumer home equity-based lending. When Finn Casperson became CEO of the firm he succeeded his father.
Casperson served as CEO from 1976 to 1998, during a time when the firm specialized in low loan-to-value ratio second liens backed by homes.
Later in 1998 Beneficial was sold to Household International for $9 billion. HSBC Holdings eventually bought Household for $14 billion. The British bank later booked huge losses on Household's subprime business.
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Thursday, September 10, 2009
Mortgage Loan Compliance | Cram-Downs, Modifications, and Short Sales
House Financial Services Committee chairman Barney Frank, D-Mass., is threatening to attach a bankruptcy cram-down provision to a regulatory reform bill if servicers don't speed up the loan modification process.
Rep. Frank said he is "disappointed" in the servicers' efforts to implement the Obama administration's Home Affordable Modification Program. But he noted there are legal obstacles such as second mortgage and servicing agreements that made modification decisions difficult.
The 45 Home Affordable Modification Program servicers are now on track to meet the Obama administration's initial goal of starting 500,000 trial modifications by Nov. 1, according to Treasury Assistant Secretary Michael Barr. Servicers participating in the administration's Home Affordable Modification Program had over 360,000 homeowners in 90-day trial modifications as of the end of August up from 235,000 in July, according to the latest Treasury report.
While performance of individual servicers has been "uneven," Mr. Barr told a congressional panel, "we think all the servicers can do more than they are doing now and we would like to continue to work with them for better results."
If the frustration over voluntary modifications continues to build, Mr. Frank said, it will make it easier to pass a provision that allows bankruptcy judges to modify mortgages on a primary residence. "The best lobbyists we have for getting bankruptcy legislation passed are the servicers that are not doing a very good job of modifying mortgages. If they do not improve their performance then they improve the chances of the legislation," Chairman Frank said. Previously Frank has warned that a lack of progress on modifications could lead to more cram-down related legislation efforts.
Meanwhile the major mortgage servicers are preparing for the Treasury Department to roll out a short sale program and they are signing up vendors that specialize in handling these difficult real estate transactions that help troubled homeowners avoid foreclosure. Loan Resolution Corp. chief operating officer Travis Olsen said one of the top 10 servicers has hired his firm to manage the short sale process. "We will take their borrowers who have been denied a home retention plan and hand-hold them during the rest of the process," he said.
Treasury is expected to provide incentives for servicers to conduct short sales and share some of the costs of paying off second lien holders. "The final details of the short sale program are being finalized, and will be announced as soon as completed," HUD assistant secretary David Stevens told a congressional panel.
In a short sale, the lender agrees to accept a loss on the sale of the property and forgive the remaining balance on the mortgage. If a modification or short sale doesn't work, the next stop is foreclosure.
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Rep. Frank said he is "disappointed" in the servicers' efforts to implement the Obama administration's Home Affordable Modification Program. But he noted there are legal obstacles such as second mortgage and servicing agreements that made modification decisions difficult.
The 45 Home Affordable Modification Program servicers are now on track to meet the Obama administration's initial goal of starting 500,000 trial modifications by Nov. 1, according to Treasury Assistant Secretary Michael Barr. Servicers participating in the administration's Home Affordable Modification Program had over 360,000 homeowners in 90-day trial modifications as of the end of August up from 235,000 in July, according to the latest Treasury report.
While performance of individual servicers has been "uneven," Mr. Barr told a congressional panel, "we think all the servicers can do more than they are doing now and we would like to continue to work with them for better results."
If the frustration over voluntary modifications continues to build, Mr. Frank said, it will make it easier to pass a provision that allows bankruptcy judges to modify mortgages on a primary residence. "The best lobbyists we have for getting bankruptcy legislation passed are the servicers that are not doing a very good job of modifying mortgages. If they do not improve their performance then they improve the chances of the legislation," Chairman Frank said. Previously Frank has warned that a lack of progress on modifications could lead to more cram-down related legislation efforts.
Meanwhile the major mortgage servicers are preparing for the Treasury Department to roll out a short sale program and they are signing up vendors that specialize in handling these difficult real estate transactions that help troubled homeowners avoid foreclosure. Loan Resolution Corp. chief operating officer Travis Olsen said one of the top 10 servicers has hired his firm to manage the short sale process. "We will take their borrowers who have been denied a home retention plan and hand-hold them during the rest of the process," he said.
Treasury is expected to provide incentives for servicers to conduct short sales and share some of the costs of paying off second lien holders. "The final details of the short sale program are being finalized, and will be announced as soon as completed," HUD assistant secretary David Stevens told a congressional panel.
In a short sale, the lender agrees to accept a loss on the sale of the property and forgive the remaining balance on the mortgage. If a modification or short sale doesn't work, the next stop is foreclosure.
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Mortgage Loan Compliance | Fraudulent Loan Reselling
According to the Newark, N.J. office of the FBI, David Findel, from Colts Neck, N.J., surrendered himself to the FBI and made his initial appearance before Judge Mark Falk, regarding a complaint that alleges Mr. Findel, obtained more than $11 million from secondary market lenders through this scheme.
David Findel, the president and CEO of Morganville, N.J.-based Worldwide Financial Resources, was released on a $1 million secured bond.
Findel expanded Worldwide Financial Resources, originally a financial planning company, to include home mortgage origination and banking services. This allowed Worldwide Financial Resources to both originate and fund mortgages for its clients by borrowing money from a warehouse lender. To repay the lender, Findel would resell each mortgage the company originated in the secondary mortgage market.
Early in 2008 Worldwide Financial Resources began experiencing a liquidity crisis. Findel allegedly conducted a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions. Once Worldwide Financial Resources sold a mortgage, Mr. Findel would allegedly create a second set of fraudulent mortgage documents and resell the same mortgage to a different secondary market lender.
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David Findel, the president and CEO of Morganville, N.J.-based Worldwide Financial Resources, was released on a $1 million secured bond.
Findel expanded Worldwide Financial Resources, originally a financial planning company, to include home mortgage origination and banking services. This allowed Worldwide Financial Resources to both originate and fund mortgages for its clients by borrowing money from a warehouse lender. To repay the lender, Findel would resell each mortgage the company originated in the secondary mortgage market.
Early in 2008 Worldwide Financial Resources began experiencing a liquidity crisis. Findel allegedly conducted a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions. Once Worldwide Financial Resources sold a mortgage, Mr. Findel would allegedly create a second set of fraudulent mortgage documents and resell the same mortgage to a different secondary market lender.
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Sunday, September 6, 2009
Mortgage Loan Compliance | Taylor, Bean & Whitaker Employee Theft
Victor Cedeno was a loss mitigation negotiator in the loan resolution management department at the Ocala, Fla.-based company Taylor, Bean & Whitaker. A spokesman for the U.S. Attorney office said Mr. Cedeno is being sought by authorities.
Cedeno faces charges he allegedly stole more than $1.6 million from Taylor, Bean & Whitaker by depositing the funds into accounts he controlled at Navy FCU of Virginia.
The scheme allegedly began on July 16, 2008, when Mr. Cedeno opened an account at Navy Fed's branch in Winter Park under the name, "Tailor Bean W." The name "Tailor Whitaker" was listed as primary account holder.
Cedeno allegedly deposited checks made out to Taylor, Bean & Whitaker into this account from July 17, 2008, until as recently as Aug. 10, 2009 according to a criminal complaint filed by the U.S. Attorney's office.
A total of 58 checks worth $1.6 million were allegedly funneled into the "Tailor Bean W." account.
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Cedeno faces charges he allegedly stole more than $1.6 million from Taylor, Bean & Whitaker by depositing the funds into accounts he controlled at Navy FCU of Virginia.
The scheme allegedly began on July 16, 2008, when Mr. Cedeno opened an account at Navy Fed's branch in Winter Park under the name, "Tailor Bean W." The name "Tailor Whitaker" was listed as primary account holder.
Cedeno allegedly deposited checks made out to Taylor, Bean & Whitaker into this account from July 17, 2008, until as recently as Aug. 10, 2009 according to a criminal complaint filed by the U.S. Attorney's office.
A total of 58 checks worth $1.6 million were allegedly funneled into the "Tailor Bean W." account.
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Saturday, September 5, 2009
Former NFL Player and Others Charged in Fraud Scheme
Eugene Lockhart, Jr., a former player with the Dallas Cowboys, has been charged, along with eight others, with running an alleged mortgage fraud scheme in the Dallas area from 2001 through 2005.
According to James T. Jacks, U.S. attorney for the Northern District of Texas, the indictment alleges that the defendants, who were involved with several real estate entities, ran a scheme in which they located single-family residences for sale in the Dallas area -- including distressed and pre-foreclosure properties -- and negotiated a sales price with the seller.
The alleged scheme involved 54 fraudulent residential property loan closings resulting in the funding of $20.5 million in fraudulent loans.
In addition to Mr. Lockhart, the following defendants named in the indictment include - Lendell Beacham; Hubert Jones, III; Suzette Switzer Hinds; Patricia Ortega Suarez; William Randolph Tisdale, Jr.; Michael Anthony Caldwell; Donna Lois Kneeland; and Bryan J. Moorman.
The defendants allegedly recruited straw borrowers and caused the loan applications for each straw borrower to include false financial information. Prosecutors say they created surplus loan proceeds by inflating the sales price to an arbitrary amount more than the fair market value of the residence.
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According to James T. Jacks, U.S. attorney for the Northern District of Texas, the indictment alleges that the defendants, who were involved with several real estate entities, ran a scheme in which they located single-family residences for sale in the Dallas area -- including distressed and pre-foreclosure properties -- and negotiated a sales price with the seller.
The alleged scheme involved 54 fraudulent residential property loan closings resulting in the funding of $20.5 million in fraudulent loans.
In addition to Mr. Lockhart, the following defendants named in the indictment include - Lendell Beacham; Hubert Jones, III; Suzette Switzer Hinds; Patricia Ortega Suarez; William Randolph Tisdale, Jr.; Michael Anthony Caldwell; Donna Lois Kneeland; and Bryan J. Moorman.
The defendants allegedly recruited straw borrowers and caused the loan applications for each straw borrower to include false financial information. Prosecutors say they created surplus loan proceeds by inflating the sales price to an arbitrary amount more than the fair market value of the residence.
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Friday, September 4, 2009
Mortgage Loan Compliance | FHA Bends The Rules To Lend A Hand
The Census Bureau recently reported that multifamily starts fell to an all-time low of 80,000 units in July, 2009 down 72% from same time last year. Now the Federal Housing Administration is providing a helping hand to some multifamily developers that started construction but had their financing pulled after completing the foundation.
The FHA mortgagee letter indicates that the agency is not going to insure multifamily loans for condominium projects that are 90% complete and are trying to convert to rental units.
FHA generally does not insure multifamily projects where construction has already started. But for the next six months, the federal mortgage insurer is willing to consider applications in cases where construction was halted early and only site preparation and foundation work was completed.
To qualify, developers have to prove that their financing was cancelled and they have been unable to find alternative financing.
The mortgagee letter points out some lenders are backing out of commitments and refusing to fund construction draws. The Department of Housing and Urban Development said it is taking this step "due to the illiquidity in the financial markets."
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The FHA mortgagee letter indicates that the agency is not going to insure multifamily loans for condominium projects that are 90% complete and are trying to convert to rental units.
FHA generally does not insure multifamily projects where construction has already started. But for the next six months, the federal mortgage insurer is willing to consider applications in cases where construction was halted early and only site preparation and foundation work was completed.
To qualify, developers have to prove that their financing was cancelled and they have been unable to find alternative financing.
The mortgagee letter points out some lenders are backing out of commitments and refusing to fund construction draws. The Department of Housing and Urban Development said it is taking this step "due to the illiquidity in the financial markets."
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Mortgage Loan Compliance | FDIC Shut Down 85th Bank
The Federal Deposit Insurance Corp. (FDIC) has been appointed receiver of First Bank of Kansas City, based in Kansas City, Missouri.
First Bank had a total of $16 million in assets and $15 million in deposits as of June 30, 2009.
The failure of First Bank of Kansas City is expected to cost the already cash strapped FDIC's deposit insurance fund an estimated $6 million. The insurance fund has been so depleted by the epidemic of collapsing banks that some analysts believe it could sink into the red by the end of this year.
As of the end of June the fund fell 20 percent to $10.4 billion, the FDIC reported Thursday.
Sheila Bair, FDIC Chairman, said there were no immediate plans to borrow money from the government to replenish the insurance fund by tapping the agency's $500 billion credit line with the Treasury. The FDIC may, however, impose an additional fee on
U.S. banks this year to bolster the fund, atop the estimated $5.6 billion from a new emergency premium that took effect June 30.
Today the FDIC said First Bank of Kansas City deposits will be assumed by Great American Bank based in De Soto, Kan. Its sole branch will reopen Saturday as a branch of Great American Bank.
_________________
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The Facts on Your Loan and Protect Your Rights!
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First Bank had a total of $16 million in assets and $15 million in deposits as of June 30, 2009.
The failure of First Bank of Kansas City is expected to cost the already cash strapped FDIC's deposit insurance fund an estimated $6 million. The insurance fund has been so depleted by the epidemic of collapsing banks that some analysts believe it could sink into the red by the end of this year.
As of the end of June the fund fell 20 percent to $10.4 billion, the FDIC reported Thursday.
Sheila Bair, FDIC Chairman, said there were no immediate plans to borrow money from the government to replenish the insurance fund by tapping the agency's $500 billion credit line with the Treasury. The FDIC may, however, impose an additional fee on
U.S. banks this year to bolster the fund, atop the estimated $5.6 billion from a new emergency premium that took effect June 30.
Today the FDIC said First Bank of Kansas City deposits will be assumed by Great American Bank based in De Soto, Kan. Its sole branch will reopen Saturday as a branch of Great American Bank.
_________________
Mortgage Loan Compliance®
www.ml-compliance.com
Commercial and Residential Forensic Audits, Demand Letters, and Rapid Reports™ – Get
The Facts on Your Loan and Protect Your Rights!
We have extended our End of Summer Sale, Don’t Miss Your Chance to Save $100 Off Your Audits!
Thursday, June 25, 2009
Fraud Cases | LaSalle Title and 31 Others
LaSalle Title and 31 Others Charged in Fraud Cases
According to Patrick J. Fitzgerald, U.S. attorney for the Northern District of Illinois, 37 individuals and four businesses, including LaSalle, which closed on allegedly fraudulent loans, are facing charges relating to five mortgage fraud cases involving more than $48 million in fraudulently obtained mortgages in the Chicago area, including two in the suburbs of Wheaton and Glenview.
Various lending companies suffered millions of dollars in losses after the loans went into default and the properties were foreclosed upon. Forty-one defendants, including LaSalle Title Co., are facing federal charges relating to various mortgage fraud schemes in five separate cases in Chicago. In some of the schemes, the defendants face charges that they allegedly falsely inflated the values of dilapidated homes in urban areas. In other schemes, defendants are charged with deals involving million-dollar condominiums in a Chicago high-rise and homes in affluent suburbs. No one from LaSalle could be reached for comment.
According to Patrick J. Fitzgerald, U.S. attorney for the Northern District of Illinois, 37 individuals and four businesses, including LaSalle, which closed on allegedly fraudulent loans, are facing charges relating to five mortgage fraud cases involving more than $48 million in fraudulently obtained mortgages in the Chicago area, including two in the suburbs of Wheaton and Glenview.
Various lending companies suffered millions of dollars in losses after the loans went into default and the properties were foreclosed upon. Forty-one defendants, including LaSalle Title Co., are facing federal charges relating to various mortgage fraud schemes in five separate cases in Chicago. In some of the schemes, the defendants face charges that they allegedly falsely inflated the values of dilapidated homes in urban areas. In other schemes, defendants are charged with deals involving million-dollar condominiums in a Chicago high-rise and homes in affluent suburbs. No one from LaSalle could be reached for comment.
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