The Resolution Law Group: Bank of America’s Countrywide to Pay $17.3M RMBS Settlement to Massachusetts

According to Massachusetts Attorney General Martha Coakley, Countrywide Securities Corp. (CFC) will pay $17 million to settle residential mortgage backed securities claims. The settlement includes $6 million to be paid to the Commonwealth and $11.3 million to investors with the Pension Reserves Investment Management Board. Countrywide is a Bank of America (BAC) unit.

Coakley’s office was the first in the US to start probing and pursuing Wall Street securitization firms for their involvement in the subprime mortgage crisis. Other RMBS settlements Massachusetts has reached include: $34M from JPMorgan Chase & Co. (JPM), $36M from Barclays Bank (ADR), $52 million from Royal Bank of Scotland (RBS), $102 million from Morgan Stanley (MS), and $60 million from Goldman Sachs. (GS).

Meantime, a federal judge is expected to rule soon on how much Bank of America will pay in a securities fraud verdict related to the faulty mortgages that Countrywide sold investors. A jury had found the bank and ex-Countrywide executive Rebecca Mairone liable for defrauding Freddie Mac and Fannie Mae via the sale of loans through that banking unit. The US government wants Bank of America to pay $863.6 million in damages. Mairone denies any wrongdoing.

The case focused on “High Speed Swim Lane,” a mortgage lending process that rewarded employees for the volume of loans produced rather than the quality. Checkpoints that should have made sure the loans were solid were eliminated.

In other recent Countrywide news, a federal judge has given final approval to Bank of America’s $500 million settlement with investors who say the unit misled them, which is why they even invested in high-risk mortgage debt. A number of investors, including union and public pension funds, said they were given offering documents about home loans backing the securities that they purchased and that the content of this paperwork was misleading. They contend that a lot of securities came with high credit ratings that ended up falling to “junk status” as conditions in the market deteriorated.

This payout is the biggest thus far to resolve federal class action securities litigation involving mortgage-backed securities. The second largest was the $315 million reached with Merrill Lynch (MER), which is also a Bank of America unit. That agreement was approved in 2012.

Also, Bank of America was recently named the defendant in a lawsuit filed by the California city of Los Angeles over allegedly discriminatory lending practices that the plaintiff says played a part in causing foreclosures. LA is also suing Citigroup (C) and Wells Fargo (WFC).

The city says that Bank of America offered “predatory” loan terms that led to discrimination against minority borrowers. This resulted in foreclosures that caused the City’s property-tax revenues to decline. BofA, Wells Fargo, and Citibank have said that the claims are baseless.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: Wells Fargo Reaches $591 Million Mortgage Deal with Fannie Mae

Wells Fargo & Co. (WFC) has arrived at a $591 million mortgage settlement with Fannie Mae (FNMA). The arrangement resolves claims that the banking institution sold faulty mortgages to the government run-home loan financier and covers loans that Wells Fargo originated more than four years ago.

Fannie Mae and Freddie Mac (FMCC) were taken over by the US government five years ago as they stood poised to fail due to faulty loans they bought from Wells Fargo and other banks. The two mortgage companies had bundled the mortgages with securities.

With this deal, Wells Fargo will pay $541 million in cash to Fannie Mae while the rest will be taken care of in credits from previous buy backs.

It was just a couple of months ago that Wells Fargo settled its disputes over faulty loans it sold to Freddie Mac with an $869 million mortgage buyback deal. According to Compass Point Research and Trading LLC, between 2005 and 2008, Wells Fargo sold $345 billion of mortgages to Freddie Mac. Compass says the bank sold another $126 billion to Freddie in 2009.

Also settling with Freddie Mac today is Flagstar Bank (FBC) for $10.8M over loans it sold to the mortgage company between 2000 and 2008. That agreement comes following Flagstar and Fannie Mae settling mortgage claims for $93 million over loans the former sold to the latter between January 2000 and December 31, 2008.

Fannie Mae and Freddie Mac have been trying to get banks to repurchase these trouble loans for some time now. In light of this latest settlement with Wells Fargo, Fannie Mae has reached settlements of about $6.5 billion over loan buy backs, including a $3.6 billion deal with Bank of America Corp. (BAC) and Countrywide Financial Corp. and $968 million with Citigroup (C). Earlier this month, Deutsche Bank (DB) consented to pay $1.9 billion to the Federal Housing Finance Agency over claims that it misled Freddie and Fannie about the mortgage backed securities that the latter two purchased from the bank.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

AIG Settles Ex-Executive’s $274M Lawsuit Over Alleged Failure to Pay Him During 2008 Economic Crisis

American Insurance Group (AIG) and one of its ex-executives, Kevin Fitzpatrick, have reached a settlement deal over his $274 million lawsuit against the insurer. Fitzpatrick, the former president of the AIG Global Real Estate Investment Corp. unit, claims that his then-employer would not pay him during the 2008 economic crisis. The insurer’s refusal to pay occurred not long after the US government said yes to the first part of what would turn into a $182 billion bailout.

Fitzpatrick, who worked for AIG for 22 years, said that AIG breached agreements it had with him and entities under his control. He claims the agreements entitled him to a share of profits made on the insurer’s real estate investments but that on October 2008 AIG stopped paying him and others who were entitled to profit distributions. Fitzpatrick then quit.

Fitzpatrick sued in 2009, claiming that AIG owed him $274 million and that he wanted interest and punitive damages, which is right around the time that the insurer was trying to get past public disapproval over $165 million in bonuses that were paid to employees in the AIG Financial Products unit. That is the group that handled the complex financial instruments that led to its huge losses.

AIG denied wrongdoing and said that Fitzpatrick was paid what he was owed. The insurer contended that Fitzpatrick actually was fired and that he stole data that was confidential and belonged to the company.

In other AIG-related news, a district court judge just threw out a shareholder lawsuit accusing Bank of America (BAC) of not telling them that the insurer was planning to sue the bank with a $10 billion fraud lawsuit. AIG accused Bank of America of misrepresenting the quality of more than $28 million of MBSs that AIG bought from the latter and its Countrywide and Merrill Lynch (MER) units.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: Bank of America defrauded investors of ‘prime’ mortgage securities

Bank of America defrauded investors who bought securities backed by prime mortgages that eventually soured, concealing information about the risks of the loans, federal authorities said in two lawsuits Tuesday.

The civil complaints by the Justice Department and the Securities and Exchange Commission say the bank told investors the securities were backed by prime mortgage loans – those with a higher credit quality – when they were actually much riskier.

The Charlotte-based bank ignored its own underwriting standards when it originated the so-called “jumbo” loans, mortgages typically used for higher-end homes, the Justice Department contends. The bank represented the loans as prime even though employees and internal performance reports had raised concerns about their quality, the Justice Department said.

“Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” Anne Tompkins, U.S. attorney for the Western District of North Carolina, said in a press release. “Now, Bank of America will have to face the consequences of its actions.”

Tompkins, who is based in Charlotte, added, “Our investigation into Bank of America’s mortgage and securitization practices continues.”

According to the Justice Department, five investors, including Wachovia Bank, bought roughly $850 million worth of the securities from Bank of America in early 2008. Federal officials claim that, as of June, at least 23 percent of the 1,191 securitized mortgages had defaulted or were delinquent.

Investors’ losses so far total $70 million, the Justice Department said. An additional $50 million in losses is expected, the department said, citing an estimate from Fitch Ratings.

The Justice Department and SEC have not specified how much in penalties Bank of America would pay if it is found guilty.

The cases are the first brought by federal authorities in connection with prime mortgages rather than the subprime loans that have been the subject of other litigation in the aftermath of the downturn.

Originated by Bank of America

The case centers on mortgages originated by Bank of America, unlike other litigation in which investors have claimed losses stemming from securities backed by Countrywide Financial Corp. home loans. Bank of America bought Countrywide in 2008. In a separate case, pending in New York, the bank and 22 institutional investors are seeking approval of an $8.5 billion settlement to resolve claims stemming from Countrywide loans.

Responding to Tuesday’s lawsuits, Bank of America said the investors knew what they were getting into when they bought the securities.

“These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that,” bank spokesman Lawrence Grayson said. “The loans in this pool performed better than loans with similar characteristics originated and securitized at the same time by other financial institutions.

“We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result.”

The Justice Department, in its lawsuit, argues that the proportion of mortgages that defaulted or became delinquent is “abnormally high” for a pool of prime mortgages and “cannot be explained solely by the downturn in the real estate market over the last few years.” Federal officials said Bank of America sold them as “prime securitization appropriate for the most conservative” mortgage-backed securities investors.

Bank of America originated the loans in 2007 and sold them as securities in 2008, federal officials said. Each of the loans sold as securities had an initial principal balance of around $420,000, with some as high as $1.6 million, according to court documents.

According to government officials, the cases mark the first federal lawsuit brought by the federal government’s Residential Mortgage Backed Securities Working Group. President Barack Obama created the state-federal task force last year to investigate illegal activity – stemming from residential mortgage-backed securities – that contributed to the financial crisis.

Red flags

Federal officials say Bank of America employees had raised red flags to bank officials about the questionable quality of the loans.

According to the Justice Department’s lawsuit, a Bank of America trader expressed concerns in 2007 about the quality of the loans proposed for the securitization. The bank then decided to postpone the sale of the securities until January 2008, but that month the bank “again made efforts to put poor quality mortgages,” worth $24 million, into the pool, the lawsuit says.

The SEC’s lawsuit says a Bank of America bond trader in late 2007 began receiving an increase in complaints from his customers experiencing unexpectedly early cases of default in residential mortgage-backed securities sold by the bank.

The nation’s second-largest lender by assets also misled investors by telling them that bank officials were receiving documentation that verified borrowers’ income, when in many cases they were not, according to federal officials.

The SEC, in its lawsuit, says Bank of America violated federal securities laws by failing to disclose how many of the mortgages were originated through outside brokers not affiliated with the bank.

According to the SEC, about 70 percent of the mortgages fell into that category.

Bank of America, the SEC says in its lawsuit, knew that loans originated by outside brokers – in the bank’s wholesale channel – were “significantly more likely than loans originated by (Bank of America) employees to be subject to material underwriting errors, become severely delinquent, fail early in the life of the loan or prepay,” all of which hurt investors in residential mortgage-backed securities.

Bank of America exited the business of making loans through independent brokers in 2010.

‘A target on its back’

The latest two lawsuits create more legal headaches for Bank of America, which has been dogged by litigation in the wake of the housing downturn.

“Bank of America, ever since acquiring Countrywide and the mortgage market meltdown, has had a target on its back,” said Guy Cecala, publisher of Inside Mortgage Finance, an industry publication based in Bethesda, Md.

He said loans made through independent brokers have come back to haunt lots of lenders.

“Brokers weren’t sufficiently supervised back then,” he said. “The problems hadn’t really surfaced yet and people were still doing business with them.”

Around the time of the Bank of America deal, banks were struggling to find buyers for loans packaged into securities, which could have pressured issuers to slip loans of lower quality into deals labeled as prime, he said.

“This certainly could be an indication that they are going to go after other big issuers of securities,” Cecala said. “A lot of Wall Street firms could fall into the same category.”

Only Bank of America and its subsidiaries, including Merrill Lynch, are named as defendants in the two lawsuits, not individuals who worked for the bank.

If you feel you are the victim of Mortgage Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

The Resolution Law Group: UBS to Pay Fannie Mae and Freddie Mac $885M to Settle RMBS Lawsuit

UBS (UBS) will pay $885 million to settle Federal Housing Finance Agency to settle allegations that it misrepresented mortgage-backed bonds during the housing bubble. $415 million of the mortgage settlement will go to Fannie Mae, while $470 million will be paid to Freddie Mac, both government-sponsored enterprises, over the $200 million in mortgage-backed securities that were sold to them.

According to FHFA, UBS misrepresented the quality of loans that were underlying residential mortgage-backed securities worth billions of dollars that Freddie Mac and Fannie Mae ended up buying. Both firms were seized in 2008 when losses from subprime mortgages brought them close to insolvency. They still are under US conservatorship.

UBS is the third to settle with FHFA over RMBS allegations. Citigroup (C) and General Electric Co. (GE) were the first.

The federal regulator is suing 18 banks, and already, Deutsche Bank (DB) and Credit Suisse (CS) have put money aside for their potential settlements. Analysts are estimating that European banks may end up paying $11 billion for mortgage-related litigation in the US, with Royal Bank of Scotland (RBS) perhaps having to pay $1.6 billion, HSBC $900 million, and Barclays (BCS) $1.1 billion.

Other banks that FHFA is suing on behalf of Freddie and Fannie:

Bank of America Corp. (BAC)
Countrywide Financial Corp.
• Ally Financial
• First Horizon National Corporation
Goldman Sachs & Co. (GS)
JPMorgan Chase 7 Co. (JPM)
• HSBC North America Holdings, Inc.
Morgan Stanley (MS)
Merrill Lynch & Co. (MER)
• Nomura Holding America Inc.
• Société Générale

The securities complaints were filed in state and federal courts and invoke government is seeking, in addition to compensatory damages  GE was the first to settle FHFA’s mortgage bond case against it. The company was one of the underwriters to the RMBS that were sold to Fannie and Freddie. The terms of the settlement, however, remain confidential. However, FHFA did accuse GE of misleading Freddie Mac into purchasing $549 million of securities.  Citibank’s RMBS settlement with FHFA was also resolved with the terms left confidential. That mortgage-backed securities lawsuit was over allegations that it misled Freddie Mac and Fannie Mae into purchasing $3.5B of the securities.
Residential Mortgage-Backed Securities
RMBS are a type of MBS with a cash flow that comes from, residential debt, including home-equity loans, residential mortgages, and subprime mortgages, rather than commercial debt. At The Resolution Law Group, our securities lawyers help investors that suffered losses from mortgage-backed securities in getting their investments back from negligent brokerage firms, brokers, and investment advisers. We represent corporations, high net worth individuals, banks, partnerships, financial firms, private foundations, large trusts, charitable organizations, school districts, retirement plans, and municipalities.

If you feel you are the victim of Mortgage Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners suing lenders and servicers for, among other things, the illegal use of MERS, robo-signing, and intentionally ignoring underwriting standards and encouraging inflated appraisals.

While the “fiscal cliff” drama received all the headlines this past week, the United States Government quietly, but firmly, confirmed the partnership it has with big banks, and Congress and Congressmen continue to receive personal benefits from banks in exchange for bailouts and governmental protection, without any regard for conflicts of interest or ethical violations.

Geoffrey Broderick, Esq., the senior partner of The Resolution Law Group, says “it is no surprise that homeowners cannot rely on Congress to police those members who received favors from Countrywide.” The pending litigation aims to provide substantial relief for homeowners.

The United States Congress performed some year- end housecleaning, and The House Ethic Committee just announced that NO ETHICS BREACHES were found among House members and its investigation involving the scandal surrounding Countrywide “VIP Loans” and the “Friends of Angelo.”

Back in July, 2012, another House Committee, for Oversight and Government Reform, found that “Countrywide used its VIP Program to aid its lobbying efforts as well as to strengthen its relationship with taxpayer backed Fannie Mae.” Despite that finding, Congress isn’t going to do anything about the rampant conflicts of interest.

Specifically, the Oversight and Government Reform Committee found that: “Countrywide lobbyists and CEO Angelo Mozillo used discounted loans as a tool to ingratiate itself with policymakers in an effort to benefit the company’s business interests.” VIPs included Members and employees of Congress, the White House, Fannie Mae, Freddie Mac, federal agencies, and other governmental entities.

Actually, the House Ethic Committee found that it was improper for at least six current and former Members of Congress to ask for and receive discounted loans from Countrywide, but that this occurred more than six years prior to the current Congress, so the Committee lacked jurisdiction to impose any discipline or further investigate possible wrongdoing.

Despite this latest “news,” Mr. Broderick says that this is “business as usual for Congress” and that “only through litigation can any meaningful relief be obtained for injured borrowers.”

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, prospective clients are invited to call the law firm or visit its website at www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

The Resolution Law Group: AIG Drops RMBS Lawsuit Against New York Fed, Fights Bank of America’s $8.5B MBS Settlement

American International Group (AIG) and Maiden Lane II dismissing lawsuit against the Federal Reserve Bank of New York regarding the $182.3 billion financial bailout that the insurer received during the 2008 economic crisis. In dispute was whether AIG still had the right to pursue a lawsuit over residential mortgage-backed securities losses and if the company had moved $18 billion of litigation claims to Maiden Lane, which is a New York Fed-created entity.

An AIG spokesperson said that in the wake of a recent ruling by a district judge in California that the company did not assign $7.3 billion of the claims to Maiden Lane, both are dropping their action without prejudice. This means that AIG can now pursue Bank of America (BAC) for these claims, which is what the insurer wants to do.

Bank of America had said that AIG could not sue it over the allegedly fraudulent MBS because the latter transferred that right when the New York Fed bought the instruments in question 2008. However, according to Judge Mariana R. Pfaelzer, even if the New York Fed meant for Maiden Lane II to have these claims, that intention was not made clear.

On Tuesday, in New York State Supreme Court, the insurer argued that the proposed $8.5 billion settlement reached between the bank and investors in MBS from Countrywide Financial Corp. is not enough. The judge there is trying to determine whether to approve the settlement, reached with investors who claimed that the firm had misrepresented the mortgages backing the securities.

AIG is one of a number of entities that oppose the settlement. At the hearing, one of its lawyers questioned why the settlement was merely $8.5 billion when investors initially asked for $50 billion.

AIG also is arguing that there may be a conflict of interest with those that arrived at the proposed settlement amount. The insurer is questioning whether trustee Bank of New York Mellon (BK), which does a lot of its trustee business with Bank of America, did a good enough job of researching the risks involving successor liability and investigating the loan files. Bank of NY Mellon also is the trustee for 530 trusts that are holding the securities under dispute. Another investor supporting the current proposed settlement is BlackRock Inc, which also has a strategic relationship with the bank.

Meantime, the attorney who negotiated the $8.5 billion proposed settlement between BofA 22 institutional investors says that not only is this the biggest settlement in the history of private litigation, but also it is worth almost two times as much as Countrywide, which is valued at $4.8 billion.

If you suspect that you are the victim of securities fraud, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation. Our securities fraud attorneys are here to help institutional investors recoup losses that are a result of a financial scam or negligence. Your consultation with us is free.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud