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.

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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.

The Resolution Law Group: JPMorgan’s Admission to CFTC of “Reckless” Trading Could Lead to More Securities Fraud Cases

According to one brokerage executive who spoke with Advisen, JPMorgan Chase & CO.’s (JPM) admission to the Commodities Futures Trading Commission when settling securities allegations over its London Whale debacle that it engaged in “reckless” trading could get the financial firm into more legal trouble with investors.

The CFTC implied that because of certain “manipulative” actions, JPMorgan managed to sell $7B in derivatives in one day, including $4.6 billion in three hours. That the term “manipulate” was used could prove useful to plaintiffs (The regulator also accused the firm of using manipulative device related to credit default swaps trading, which violated a Dodd-Frank provision prohibiting such behavior). JPMorgan will pay $100 million to settle the securities fraud cause with the agency.

With the Securities and Exchange Commission also now seeking to obtain admission of wrongdoing from defendants in certain instances, such acknowledgments to regulators could impact firm’s insurance coverage terms. Right now, standard directors and officers coverage policies exclude personal profiting, fraud, and other illegal conduct. Admissions of fraud, however, could nullify such policies.

Now, in the wake of JPMorgan’s tentative $13B residential mortgage backed securities settlement with the federal government and the possibility that the firm might take the bulk of the penalty as a tax deduction, US Representatives Luis Gutierrez (D, Ill.) and Peter Welch (D., Vt.) have introduced the “Stop Deducting Damages Act,“ which would prevent companies from being able to deduct from their taxes damages that they paid to the government. The two lawmakers have even written JPMorgan CEO James Dimon asking him to not take a tax deduction and agree to be responsible for the full payment. Also expected to speak out against JPMorgan taking any tax deduction on CFTC settlement are Americans for Tax Fairness and the US Public Interest Research Group.

The Wall Street Journal says that the firm’s earlier $5.1 million settlement with Freddie Mac (FMCC) and Fannie Mae (FNMA) will be completely tax deductible and could save JPMorgan close to $1.5 billion in taxes. The firm has declined to confirm this.

Meanwhile, government authorities are continuing with certain probes into numerous business lines at some of the biggest banks in the country, as the number of investigations, settlements, and lawsuits against the latter continue to rise in numbers. For example, there are investigators who are looking into possible global foreign-exchange markets manipulation involving UBS (UBS), Credit Suisse (CS), Barclays, Deutsche Bank (DB), Royal Bank of Scotland (RBS), Citigroup (C), and JPMorgan.

Also under the microscope is Bank of America (BAC). The bank said that a US attorney intends to recommend that the Department of Justice file a civil RMBS lawsuit against it. The group looking into this matter is made up federal and state prosecutors. According to one source, they are also conducting similar probes into several other banks, including Citigroup, Wells Fargo (WFC), UBS (UBS), Goldman Sachs (GS), RBS, Morgan Stanley (MS), Credit Suisse, and Deutsche 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.

The Resolution Law Group: New York to Sue Wells Fargo Over Mortgage Settlement

Eric Schneiderman is the attorney general of New York.Mike Groll/Associated Press Eric Schneiderman is the attorney general of New York.

Fielding complaints from borrowers struggling to save their homes, New York’s top prosecutor is preparing a lawsuit against Wells Fargo, accusing the bank, the nation’s largest home lender, of flouting the terms of a multibillion-dollar settlement aimed at stanching foreclosure abuses.

The lawsuit, which is expected to be filed as early as Wednesday, accuses Wells Fargo of violating the guidelines of a broad agreement reached last year between five of the nation’s largest banks and 49 state attorneys general.

Under that deal, the banks must comply with 304 servicing standards. The guidelines map out how banks should field and process requests from distressed homeowners.

Vickee J. Adams, a spokeswoman for Wells Fargo, said the bank had not been served with a copy of the lawsuit. But, she added, “if true, it is very disappointing that the New York attorney general continues to pursue his course, given our commitment to the terms of the National Mortgage Settlement and ongoing engagement.

“Wells Fargo has been a leader in preventing foreclosures, helping families maintain homeownership with more than 880,000 modifications nationwide and 26,000 in New York over the last four years,” she said.

The New York attorney general, Eric T. Schneiderman, sent a previous warning shot to Bank of America and Wells Fargo, announcing in May that he had found that both banks violated the terms of the mortgage settlement. That announcement prompted negotiations between the New York prosecutor’s office and the two banks.

The outcomes for the lenders are starkly different. While Wells Fargo is bracing for a lawsuit, Bank of America is poised to announce a series of additional protections that it has adopted after discussions with Mr. Schneiderman’s office. Those additional protections — including an agreement to designate a “high-level” employee dedicated to fielding and responding to questions from housing counselors — appear to have won the bank a reprieve from a lawsuit.

“We are pleased to resolve these matters without litigation,” said a spokesman for Bank of America, Dan B. Frahm. “Along with the settlement monitoring committee, we continue to improve the experience for eligible customers and groups that represent them.”

Wells Fargo is also working with the monitor on additional consumer protections.

More state attorneys general may follow Mr. Schneiderman’s lead. The Massachusetts attorney general, Martha Coakley, has also sent a letter to Joseph A. Smith, the settlement monitor, outlining “recurring issues” with servicers, according to a copy of the letter reviewed by The New York Times.

For Wells Fargo, though, the discussions with the New York attorney general’s office resulted in a standoff. Mr. Schneiderman’s office, people briefed on the matter said, had pushed Wells Fargo to acknowledge a systematic pattern of mortgage servicing errors and to commit to a new agreement codifying changes to the way the bank services mortgages. Wells Fargo balked, the people said, and the talks broke down last week.

Amid the languishing talks, the bank sent a letter to Mr. Schneiderman’s office, reiterating its commitment to “helping borrowers maintain homeownership and achieve long-term financial success,” according to a copy of the letter reviewed by The Times.

Mr. Schneiderman had found 210 separate violations involving the bank and 96 borrowers. Four of those borrowers, the letter said, were not Wells Fargo customers. In its letter, the bank said it “disagrees with allegations” related to the remaining borrowers. Of the remainder, the bank has approved loan modifications for 39 customers and made a final decision on the loan modification applications for 28 others. Beyond helping the homeowners identified by the attorney general’s office, Wells Fargo voluntarily improved its processes, the bank argued in its letter.

Those concessions apparently did not appease Mr. Schneiderman’s office. Part of the problem, the people briefed on the matter said, was that Wells Fargo refused to improve their processes in a formal agreement.

Some within the attorney general’s office also felt the bank’s proposed fixes constituted a Whac-a-Mole approach in which it addressed only the cases originally highlighted, the people briefed on the matter said. The New York attorney general’s office still receives more complaints about Wells Fargo’s servicing than for any other lender, they added.

The settlement guidelines include requirements that banks provide homeowners with a single point of contact and notify borrowers of missing documentation within five days.

They are intended to help homeowners who are looking to modify their mortgages — a process that can prove frustrating for homeowners asked to submit the same documents again and again.

Such delays can mean the difference between saving a home and losing it to foreclosure, according to housing counselors. When applications for relief languish with borrowers caught in a bureaucratic maze, homeowners amass additional costs.

Ms. Adams of Wells Fargo said that the bank “continuously implements additional customer-focused measures based on the constructive feedback we receive from our customers, the monitoring committee and individual states, including New York.” She added that the bank believed a “collaborative approach” was better for homeowners than “protracted litigation.”

The move against Wells Fargo is the first time that an attorney general has sued one of the five participating banks on charges related to the settlement. That settlement, reached in 2012, sprung from an investigation that began in 2010 amid a national outcry that banks were relying on mass-produced documents to evict homeowners wrongfully.

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.

 

The Resolution Law Group: Shutdown could slow mortgage lending

The government shutdown could make it difficult, or even impossible, for banks to close on your mortgage.

One problem lenders might face involves the Internal Revenue Service.

Before closing on a mortgage backed by Fannie Mae or Freddie Mac, banks must verify a borrower’s income with the IRS. But IRS operations are curtailed because of the shutdown, and the agency won’t be available to handle the paperwork the banks need to close on the loans.

Mortgages insured by the Federal Housing Administration could also face delays. The agency is operating with a skeleton staff — its shutdown plan called for furloughing 96% of its workers — and loan processing will suffer.

However, many of the biggest FHA lenders have the authority to make their own underwriting decisions and won’t need to wait for the IRS to come back online, and FHA mortgages issued through those firms will move forward.

Related: FHA will keep lending during shutdown

The shutdown’s effect on the Social Security Administration could also cause a snag for borrowers. Lenders often turn to that agency to verify a borrower’s identity and prevent fraud on mortgage applications.

For borrowers who are far along in the mortgage process, the good news is the shutdown likely won’t stop your loan from going through.

But those who apply for new mortgages, including refinancings, during the shutdown should be prepared to wait.

Wells Fargo, the nation’s biggest mortgage lender, said new applications will not get completed until after the shutdown ends and when borrower’s income claims can be officially verified.

Related: Learn more about the government shutdown

Other banks take a similar position.

“All the banks I deal with have told us they would not be able to close,” said Dan Frommeyer, president of the National Association of Mortgage Brokers.

There are some banks that might be willing to close on a loan without verifying income with the IRS.

TD Bank, for example, will continue to process loans, according to Mike Copley, head of retail lending. TD plans to keep the loans on its books until the shutdown is over and then sell them to Fannie and Freddie once they can finish the verification process.

If the shutdown ends quickly, its impact on mortgage lending and the housing market will be slight, according to Keith Gumbinger of HSH.com, a mortgage information company. If it lasts a few weeks or longer, he said, home sales will slow and that could be a significant brake on the nation’s economy.

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.

 

The Resolution Law Group: NCUA Sues Morgan Stanley, JPMorgan, UBS, & Other Banks Over $2.7B in Allegedly Fraudulent RMBS Sales to Credit Unions

The National Credit Union Administration has filed residential mortgage-backed securities lawsuits against JPMorgan (JPM), Morgan Stanley (MS), UBS (UBS), Royal Bank of Scotland Group (RBS), Barclays (BARC), and Credit Suisse (CS) accusing the financial firms of selling $2.7 billion of these fraudulent securities to the credit unions. The Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union paid over $416 million for the RMBS in the case against Morgan Stanley and $1.9 billion from the other defendants. One of the credit unions contends that Wachovia (WB), Goldman Sachs (GS), Ally Securities and Wells Fargo (WFC) also defrauded it.

According to the NCUA’s RMBS fraud lawsuits, the investment banks issued misrepresentations related to the underwriting and sale of the securities. Offering documents allegedly contained false statements or omitted facts that were material. The government regulator is accusing the originators of systematically ignoring underlying guidelines in offering documents, which made the mortgage-backed securities’ risks higher than what was presented.

The MBS fraud lawsuits make claims under state and federal securities laws. Whatever is recovered will go toward the Temporary Corporate Credit Union Stabilization Fund.

Already, NCUA has settled RMBS fraud lawsuits against Bank of America (BAC), Citibank (C), Deutsche Bank (DB), and HSBC for more than $335 million.

Contact The resolution Law Group. Our institutional investor fraud law firm to find out whether you have grounds for securities case. Your RMBS fraud case consultation is free.

The Resolution Law Group: Morgan Stanley Now Owns Smith Barney, Wells Fargo & JPMorgan Defeat Estimates, MLB All-Star Sues UBS for $7.6M, & Ray Lucia, His Firm Fined Over “Buckets of Money” Strategy

Morgan Stanley Buys Smith Barney from Citigroup
Morgan Stanley (MS) now owns Smith Barney, which it just bought from Citigroup (C) for $9.4 billion. Smith Barney’s new name is Morgan Stanley Wealth Management. Based on its new number of financial advisers, the deal makes Morgan Stanley the largest Wall Street firm and comes in the wake of Federal Reserve approval.

Wells Fargo & JPMorgan Defeat Analysts’ Estimates
JPMorgan Chase (JPM) says it experienced a 31% rise in second quarter earnings, surpassing analysts expectations it would garner $5.47 billion on $24.84 billion, and, instead generating, $6.5 billion in earnings and $25 billion of revenue. A year ago for the same period, revenue for the financial firm was at $22 billion.

Meantime, Wells Fargo (WF) is also reporting a 19% profit rise for Q2. This is its 14th quarterly profit increase in a row and 9th consecutive record report. While net income for the same period last year was at $4.6 billion, its net income second quarter for 2013 was $5.5 billion.

5-Time MLB All-Star Sues UBS for $7.6 Million
Retired fiive-time Major League Baseball All-Star Mike Sweeney is suing UBS Financial Services Inc. (UBS) and his former broker there for $7.6 million. Per the securities fraud case, broker Ralph A. Jackson III invested half of Sweeney’s portfolio, worth millions of dollars, in high-risk private placements that failed.

Sweeney contends that he was an inexperienced investor who trusted Jackson to make sure his money was being invested conservatively. He says that over a five-year period, the UBS broker put $6.85M of his portfolio in private-equity investments that were misrepresented to him as safe and suitable, as well $2.7M into other investments without his consent. Sweeney, who hit it big when he signed with the Kansas City Royals, claims he lost $4.9M.

Ray Lucia, His Firm Fined Over “Buckets of Money” Strategy
Financial adviser and nationally syndicated radio host Ray Lucia and his firm Raymond J. Lucia Cos. Inc. must pay fines for allegedly providing misleading information related to his wealth-management strategy known as “Buckets of Money.” The Securities and Exchange Commission is accusing the California adviser of causing retirees to believe that his approach would allow them to make income that was inflation-adjusted for life.

Now, an administrative-law judge has taken away Lucia’s adviser registration and fined him $50,000. His firm, which must pay $250,000, also has lost its license. Judge Cameron Elliot found that for years, Lucia misrepresented any purported back-testings’ validity in seminars about saving for retirement. The SEC contends that Lucia and the firm hardly, if at all, conducted any back-tests.

The Resolution Law Group represents institutional and individual investors that have sustained losses due to Securities Fraud.

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.

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