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.

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The Resolution Law Group: FDIC Sued by JPMorgan Chase in $1B Securities Case Involving Washington Mutual Purchase & Mortgage-Backed Securities

JPMorgan Chase (JPM) is suing the Federal Deposit Insurance Corp. for over $1 billion dollars related to the bank’s purchase of Washington Mutual (WMIH). The financial firm said that the FDIC did not honor its duties per the purchase agreement.

When Washington Mutual suffered the biggest bank failure in our nation’s history during the financial crisis in 2008, FDIC became its receiver and brokered the sale of assets. JPMorgan, which made the purchase for $1.9 billion, says that the FDIC promised to protect or indemnify the bank from liabilities. Regulators had encouraged the firm to buy Washington Mutual hoping this would help bring back stability to the banking system.

Since then, however, contends JPMorgan, the FDIC has refused to acknowledge mortgage-backed securities claims by investors and the government against the firm. The bank says that the cases should have been made against the receivership instead. (In its lawsuit, JPMorgan says there are enough assets in the receivership to cover a settlement with mortgage companies Freddie Mac (FMCC) and Fannie Mae (FNMA) and other claims, such as a slip and fall personal injury case involving a Washington Mutual branch.) Meantime, the FDIC maintains that JPMorgan is the one who should be accountable for any liabilities from its acquisition of Washington Mutual.

Since 2008, JPMorgan has agreed to multiple MBS settlements. Investors lost millions from bundled mortgages as the housing market crumbled and they wanted their money back. Recent settlements include last month’s $13 billion deal with the Justice Department and state regulators over mortgage-linked bonds, and another $4.5 million agreement with 21 institutional investors.

JPMorgan also says that it wants the FDIC receivership to separately take care of possible damages from the litigation brought by Deutsche Bank National Trust Company. The latter wants up to $10 billion on behalf of over 100 trusts that have Washington Mutual-issued bonds that have performed poorly.

If you suspect you sustained losses caused by institutional investor securities fraud, contact The The Resolution Law Group today.

The Resolution Law Group: Fannie Mae Sues UBS, Bank of America, Credit Suisse, JPMorgan Chase, Citigroup, & Deutsche Bank, & Others for $800M Over Libor

Fannie Mae is suing nine banks over their alleged collusion in manipulating interest rates involving the London Interbank Offered Rate. The defendants are Bank of America (BAC), JPMorgan Chase (JPM), Credit Suisse, UBS (UBS), Deutsche Bank (DB), Citigroup (C), Royal Bank of Scotland, Barclays, & Rabobank. The US government controlled-mortgage company wants over $800M in damages.

Regulators here and in Europe have been looking into claims that a lot of banks manipulated Libor and other rate benchmarks to up their profits or seem more financially fit than they actually were. In its securities fraud lawsuit, Fannie Mae contends that the defendants made representations and promises regarding Libor’s legitimacy that were “false” and that this caused the mortgage company to suffer losses in mortgages, swaps, mortgage securities, and other transactions. Fannie May believes that its losses in interest-rate swaps alone were about $332 million.

UBS, Barclays, Rabobank, and Royal Bank of Scotland have already paid over $3.6 billion in fines to settle with regulators and the US Department of Justice to settle similar allegations. The banks admitted that they lowballed their Libor quotes during the 2008 economic crisis so they would come off as more creditworthy and healthier. Individual traders and brokers have also been charged.

Libor
Libor is used to establish interest rates on student loans, derivatives, mortgages, credit card, car loans, and other matters and underpins hundreds of trillions of dollars in transactions. The rates are determined through a process involving banks being polled on borrowing costs in different currencies over different timeframes. Responses are then averaged to determine the rates that become the benchmark for financial products.

Also a defendant in Fannie Mae’s securities case is the British Bankers’ Association, which oversees the process of Libor rate creation.

Earlier this year, government-backed Freddie Mac (FMCC) sued over a dozen large banks and the British Bankers’ Association also for allegedly manipulating interest rates and causing it to lose money on interest-rates swaps. Defendants named by the government-backed home loan mortgage corporation included Bank of America, JP Morgan Chase, Citigroup, Credit Suisse, and UBS.

The Resolution Law Group represents investors with securities claims against financial firms, investment advisers, brokerage firms, brokers, and others. Contact our securities fraud law firm today.

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.

J.P. Morgan’s $13B Residential Mortgage-Backed Securities Deal with the DOJ Stumbles Into Obstacles

Reuters is reporting that according to a source in the know, J.P. Morgan Chase & Co.’s (JPM) tentative $13 billion residential mortgage-backed securities settlement with the US Justice Department has hit a couple of stumbling blocks. The firm is reportedly trying to include a provision that would close any criminal probes into its packaging and sale of mortgage securities—except for an inquiry by California prosecutors. This counters the bank’s earlier decision to agree to keep criminal investigations out of the deal.

The settlement, preliminarily reached last week, includes $4 billion to resolve claims made by the Federal Housing Finance Agency, which contends that J.P. Morgan misled Freddie Mac (FMCC) and Fannie Mae (FNMA) about the quality of loans the latter two bought from the investment bank before the 2008 economic crisis. Another $4 billion is for consumer relief, while $5 billion is for penalties.

The agreement also would settle a separate mortgage securities lawsuit filed separately by NY AG Eric Schneiderman against the firm over Bear Stearns (BSC)-packaged mortgage bonds. The state’s top prosecutor contended that Bear Stearns misled investors about the faulty loans behind the securities, neglected to complete assess the debt, disregarded defects that were found, and concealed its failure to properly examine the loans or reveal their risks.

The deal isn’t final and certain matters still need to be resolved, such as the disagreement with the Federal Deposit Insurance Corp. over who should be responsible for legal liabilities stemming from the bank’s takeover of Washington Mutual’s (WAMUQ) obligations and assets during the economic collapse. JPMorgan paid $1.9 billion to acquire that bank from FDIC. However, the firm is disputing its degree of responsibility for investor losses on the failed savings holding company’s mortgage securities. The DOJ wants a provision that will stop the bank from attempting to move WaMu liabilities covered under the agreement to the FDIC.

Other Recent JPMorgan Settlements
Also last week, JPMorgan consented to pay $100 million to the Commodity Futures Trading Commission over its “London whale” trades debacle. The CFTC accused the bank’s London traders of employing a reckless derivatives strategy that cost JPMorgan $6.2 billion in losses. While the firm didn’t deny or admit to the agency’s finding that there was a violation, it did agree about “certain facts.” For one, J.P. Morgan admitted that it did not properly supervise the traders who tweaked prices to lower the bank’s losses at cost to investors.

That settlement comes a month after the firm said it would pay $920 million over related charges to the Securities and Exchange Commission, the Federal Reserve, Office of the Comptroller of the Currency in the US and the Financial Conduct Authority in the UK.

Please contact our RMBS fraud lawyers if you think you might have grounds for a mortgage-backed securities case.

The Resolution Law Group: In a trial now pending in the U.S. District Court, Southern District of New York (Manhattan), The Government is suing Bank of America’s Countrywide unit for issuing defective mortgages and then selling them to Fannie Mae.

In a trial now pending in the U.S. District Court, Southern District of New York (Manhattan), The Government is suing Bank of America’s Countrywide unit for issuing defective mortgages and then selling them to Fannie Mae.

An ex-Countrywide employee has testified that pursuant to the company’s “High Speed Swim Lane” program, loan applications were pushed through without taking the time to evaluate the application. Evidence was presented at trial showing that the entire review process for one loan was 13 minutes, from beginning to end. The review process began at 3:53 pm and the loan was “cleared to close” at 4:06pm!

Geoffrey Broderick, the senior partner of the Resolution Law Group, says “Obviously, the review process must take more than 13 minutes to complete. A bank employee would have to review, at a minimum, title searches, deeds, taxes, a review of the applicant’s credit and employment history, a determination of whether the home was located in a flood zone, property appraisals, and a comparison with similar properties, among other things.“

Mr. Broderick adds that “The housing market will continue to suffer until it is fixed by the Courts or the Legislature. Somebody has to fix the problem. That is why The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.”

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.

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, visit its website at www.TheResolutionLawGroup.com.

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.